24% of women-run online businesses closed in June: BIGD study

Covid-19 has taken a heavy toll on woman entrepreneurs who retail their fashion, cosmetics, and other imported products through social media.

Twenty-four percent of the entrepreneurs, who were trying to reduce the loss in April by cancelling orders and selling off their stock, shut down their businesses in June. 

This grim picture came up in a survey conducted by Brac Institute of Governance and Development (BIGD) on female entrepreneurs who run their businesses through social media.

In a webinar hosted on Sunday, Mehnaz Rabbani, programme lead, Research, Policy, and Governance at BIGD, presented these alarming findings.

The survey was first conducted in April and then followed up in May-June, reads a press release.

The study found that within one month after the first round of survey, 121 employees were laid off. If things do not improve for these businesses, nearly 550 more people's jobs could be at stake within the next seven months.

Due to a nationwide shutdown, 79-84 percent of the entrepreneurs experienced lower revenue earnings than last year's Eid and Pahela Boishakh.

The study findings show that 21 percent of entrepreneurs are confident that their businesses will bounce back in June which was 15 percent in April.

With this, nearly half of the entrepreneurs believe that it will take six months to nearly a year to recover from the loss incurred.

According to the study, though fewer orders were cancelled in June compared to April, there was an increase in the percentage of entrepreneurs who were giving discounts — from about 13 percent in April to 33 percent in June.

Moreover, with nearly 4 percent increase since April, 14 percent of the businesses are laying off their employees.

The alarming rise in these desperate coping mechanisms -- such as cancelling orders, giving discounts, laying-off employees -- illustrates the scarcity of resources needed to sustain these online businesses.

As over 65 percent of these businesses do not have formal registration or a trade licence, they remain ineligible for the government's stimulus package.

This has forced over 68 percent of the entrepreneurs to rely on their personal savings and about 20 percent to take loans from their friends and families.

Moreover, with 63 percent of the entrepreneurs being unaware of where to seek government assistance from, many have turned to other support systems or avenues, such as online entrepreneur forums, webinars.

The study findings shows, the financial issues due to insufficient support or access have contributed to their increased stress levels, while staying indoors resulted in most of them spending a significant amount of time in household chores.

Mehnaz Rabbani said if entrepreneurs are not provided with adequate support, not only more employees will be laid-off—creating a surge in unemployment, but it will also put women's empowerment in jeopardy.

Selima Ahmed MP, Founder and President of Bangladesh Women Chamber of Commerce and Industry (BWCCI) said, "There is no noticeable mention of "women entrepreneurs" in the Covid-19 stimulus package circulars published by Bangladesh Bank, although women entrepreneurs continue to play an essential role in contributing to the economy of Bangladesh."

Maheen Sultan, Senior Fellow of Practice at BIGD, Brac University, said how the five percent allocated for women entrepreneurs in the Tk2,000 crore stimulus package by Bangladesh Bank, is clearly not being translated or communicated with commercial banks.

Dr Imran Matin, Executive Director, BIGD said "We believe this research can pave the way towards future strands of research in the digital space, which is our future thrust area. We are currently conducting a study on all kinds of MSMEs in Bangladesh - not just online businesses - and this research aims to be more representative in nature."

Researchers, policymakers, journalists participated in the webinar moderated by Maheen Sultan, Senior Fellow of Practice at BIGD, Brac University.