How small businesses grow faster in Covid time

Sirajul Islam from Bogura worked as a sales representative at a private company in the capital but lost his job following the Covid outbreak in March 2020.

Unable to get another job, he moved back to his home town and started a retail pharmacy at a small market in his village with the Tk4 lakh he saved during his service.

Sirajul Islam is not alone. At least four other people like him who lost their jobs in the pandemic started various small businesses at the market called Saharbazar in Shibganj upazila of Bogura.

They have set up separate shops for mobile accessories and parts, mobile financial services, fruit selling and battery-run rickshaw parts.

Like the four, many have made new investments in such small businesses across the country after losing their jobs in the pandemic.

According to the Local Government Division, it is mandatory to take trade licences for 294 categories of such small and large businesses from local government bodies such as city corporations, municipalities and union parishads. Additionally, every year these businesses have to renew their licence by paying VAT (value-added tax) and tax from their earnings.

A review of data available with the Local Government Division shows that in the last three years, the range of wholesale and retail businesses has increased considerably through small investments in different areas of the country during the Covid crisis.

A recent study by the Bangladesh Bureau of Statistics (BBS) says investment in these small businesses is about Tk3 lakh crore.

Local Government Division Secretary Mohammed Mezbah Uddin Chowdhury told TBS, "According to the Local Government Act, it is mandatory to obtain a trade licence for any type of business. Licence and renewal fees as well as VAT and income tax returns are increasing every year. But the extent of the increase in the last three years is sizable."

Reasons for the increase

Ahsan H Mansur, executive director of the Policy Research Institute (PRI), told TBS that in the pandemic, many companies, institutions and factories have laid off a large part of their workforce due to disruptions in business and production.

"Many of them might have had the opportunity to change careers while others are trying to make ends meet by establishing small businesses or going back to their home villages," he added.

Citing a study by the International Labour Organization, the eminent economist said during the three years of Covid, about 1.5 million people lost their jobs and professions in Bangladesh. A small fraction among them may have started these retail businesses.

Many people have stopped their businesses because they could not cope with the Covid shocks. That is why many businesses have closed down in the last three years.

In 2014, Mohsin Mia opened a restaurant beside the Dhaka-Rangpur highway in the Hatikumrul area of Sirajganj. When Covid broke out, he was forced to close down the restaurant due to deteriorating business conditions.

"The restaurant had 25 employees and daily sales amounted to over a lakh taka but after the onset of Covid, all the workers went back to their villages. At the same time, I got deeply worried due to the sudden closure of the business. As a result, I have not restarted the business," he said.

Small investments are not booming just because of Covid

Atiur Rahman, a former governor of the Bangladesh Bank, said there are about 3 lakh public and private companies in the country. There are also numerous small businesses.

"Development has touched every corner of the country. Now village people are getting civic benefits like urban people. Also, connectivity is increasing as the communication system of the country has improved," he added.

The noted economist said once people had to rely on district or upazila towns to buy many types of goods necessary for daily life. But due to increasing connectivity, many things are easily accessible even in remote areas. As a result, the wholesale and retail business is increasing and due to globalisation, such business is naturally growing.

According to a recent BBS study, there are 25.41 lakh small enterprises for retail and wholesale trade in the country. The total number of persons employed in these enterprises increased from 52.65 lakh in 2009 to 91.95 lakh by September 2021.

Average employed workforce size also increased from 1.99 in 2009 to 3.62 in 2021. The number of male workers has increased from 51.75 lakh to 89.92 lakh. Wholesale and retail trade plays a significant role in employment in Bangladesh.

Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry, told TBS that the statistics are calculated only on the basis of trade licences. But there are many types of businesses beyond trade licences that are not included in the account.

"We can say that large businesses such as import-export oriented businesses are constantly growing. Besides, small businesses are also growing according to demand," he added.