Covid-induced policy responses lack research-based evidences : Study
Dhaka November 7 2021 :
The exacerbated effects of COVID-19 are posing challenges to all areas of research and public policies across countries including Bangladesh. Real-time contemporary issues and concerns have replaced the conventional areas of research, evidence and policy recommendations with new perspectives, calling for up-to-date evidence as well as immediate-, short-, and/or medium-term solutions.
To keep pace with the dynamic nature of pandemic-induced challenges, extending across the traditional framework in terms of public policies and actions is imperative.
Moreover, this pandemic has demonstrated more than ever the critical research-policy interlinkage to explore more evidence-based and target-oriented solutions with a view to ensuring sustainable recovery. In fact, during the COVID pandemic, as many as 561 official orders have been released by the Government of Bangladesh of which 49 orders are related to SMEs and women-led enterprises. Despite the large number of public policy responses and associated measures, there is a dearth of reflection of research-based evidences.
These issues—based on a study undertaken by the Centre for Policy Dialogue (CPD)—were discussed at a policy workshop held on Sunday, 7 November 2021.
The policy workshop titled “COVID-induced Stimulus Packages for SMEs & Women-led Enterprises: Exploring Research-Policy Interlinkages” was organised by CPD in partnership with The Asia Foundation (the Foundation) – Bangladesh under the Women’s Economic Empowerment through Strengthening Market Systems (WEESMS) programme funded by the Embassy of Sweden and implemented through a partnership with iDE and the Foundation.
The policy workshop underscored the importance to examine the linkage between public policies and research during the pandemic and to define how the challenges of the marginalised businesses have been addressed.
The keynote presentation at the workshop was made by Dr Khondaker Golam Moazzem, Research Director, CPD.
The study has been carried out based on the primary and secondary data and the key informant interviews (KIIs) have been carried out in following categories of respondents: (a) Government officials; (b) Bank officials; and (c) Beneficiaries (SMEs and women-led enterprises).
The study pointed out that, during the pandemic, a total of twenty-seven (27) stimulus packages have been announced with a combined fiscal and financial support of BDT 1.29 trillion. However, the support for the small and medium enterprises (SMEs) and women entrepreneurs are insignificant. In fact, discrimination is visible between different categories of enterprises in terms of amount and disbursement, level of coverage, and number of beneficiaries.
Shedding light on the research-policy linkage aspect, the study revealed that the relevant policy-making was influenced by the urgent need of assistance of businesses raised by business associations and by the pressure from large borrowers.
There has been lack of sufficient guidance from the policymakers in case of selecting borrowers. Moreover, stringent regulatory challenges, lack of coordination between the government agencies, misinformation from the supply-side actors and lack of awareness among the demand-side actors, lack in market support and linkages—these have adverse effect on borrowing by SMEs.
In addition, the cottage, micro, small and medium enterprises (CMSMEs) do not have sufficient access to the financial support related packages. The study also pointed out the existing culture of the rural-urban difference as well as gender-based discrimination in disbursing the stimulus loan. Loan distribution based on “banker-client relationship” has been benefitting existing borrowers and leaving new borrowers behind.
Considering the remarkable potential of SMEs and increased women participation, our economic growth has been widened manifolds. In this context, the study put forward a set of concrete recommendations keeping COVID-induced public policy responses in mind. Better specification of stimulus packages in terms of level of vulnerability of different categories of entrepreneurs should be ensured.
Broad-based loan programmes are required. More robust studies as well as evidence-based research are needed. Moreover, inclusive policy-making is imperative where the voice of the marginalised groups—including SMEs and women-led enterprises—needs to be integrated. Formalisation of these small enterprises as well as availability of fund at the national level could further expedite relevant policy-making. Furthermore, monitoring the vulnerable groups through a digital dashboard or the local government offices or local government office branches is recommended.
Kazi Faisal Bin Seraj, Country Representative, The Asia Foundation – Bangladesh, delivered the introductory remarks. He said, resilience of Bangladesh economy has been tested during this year due to COVID-19. In this context, the event is a transition of knowledge to policy and to implementation, he said. He hoped that the outcome of the event will be tangibly fruitful for the SMEs and women—led enterprises across the country.
Dr Fahmida Khatun, Executive Director, CPD, moderated the workshop. She said, even though it is much appreciated that a number of packages as well as circulars have already been issued from the end of the government, complications are persistent regarding multiple factors. These include—fair disbursement of the stimulus, loan facilities for the SMEs and women-led enterprises, unavailability of the real-time data, etc. “There is room for a substantial synergy between relevant policies and policy recommendations,” she said.
Md Tajul Islam, MP, Ministe of Local Government, Rural Development & Cooperatives, Government of Bangladesh was present as the Chief Guest of the session.
He said that Bangladesh’s long-established history is rooted in the goal to achieve betterment of the poor. In line with that goal, the stimulus packages aim to cover each class of people inculcating the advantages both in urban and rural lives. Setting a positive tone, he further stated that the recommendations placed on the table today would definitely be taken into necessary cognisance.
One of the distinguished discussants Ms Liza Fahmida, Deputy General Manager, Department of Financial Institutions and Market, Bangladesh Bank, said Bangladesh Bank is aligned with the government’s strong determination to provide robust support in tackling the impacts of the pandemic.
Banks and financial institutions have been providing working capital loans under the stimulus package announced by the Prime Minister since 2020, and have provided at least 5 per cent of the stimulus packages to the women entrepreneurs this year.
She mentioned that alongside various other initiatives undertaken, the central bank has announced to extend existing COVID-related schemes and allows the repayment of working capital through equal monthly instalment to ease the monthly instalment. She called for a collective measure from the government as well as from all levels.
Farzana Khan, General Manager, Women entrepreneurship, technology, capacity and cluster development wing, SME Foundation, said that SME Foundation has been disbursing stimulus package amounted to BDT 300 crore through banks and financial institutions. Still, women are facing difficulties in getting the loan through banks even though they are now more aware of the documentation process. She also commented that there is a need for the extension of the loan repayment period.
Nasima Akter Nisha, Joint Secretary, e-Commerce Association of Bangladesh (e-CAB) also highlighted the importance of extending the two-year time period for loan repayment. She put emphasis on increasing awareness as well as easing the documentation process for the SMEs, especially women entrepreneurs.
The issue involving the lack of relevant database was echoed in the discussion delivered by Dr M Abu Eusuf, Professor & former Chair, Department of Development Studies, University of Dhaka. Updates on the disbursement of the stimulus packages should be made public on a regular basis, he added.
He felt that the bank-client relationship should be more women-friendly and unbiased. He also shed light on issues including collateral guarantor, one stop service, etc.
Another Discussant Dr Sayema H Bidisha, Professor, Department of Economics, University of Dhaka, also shed light on issues like lack of information, lack of market availability, lack of connectivity with the support chain, among others.
H E Ms Alexandra BergVon Linde, Ambassador, Embassy of Sweden was present as the Guest of Honour. She said that the overarching objectives of the project include the increase of female participation in the labour force and overcoming policy-related challenges in light of COVID’s impacts on the marginalised group.
Kazi Nabil Ahmed, MP, Member, Standing Committee on Ministry of Foreign Affairs, Bangladesh Parliament was the Special Guest of the session. Emphasising and recognising the fact that women in Bangladesh do face a number impediments on their way towards progress and empowerment, he opined that lots of measures have taken so far even though many more things are yet to do.
Women-led enterprises are facing various difficulties including problems related to loans borrowing from banks, and he ensured that more effective policy actions will be made in view of this emerging situation.
The vote of thanks was delivered by Ms Saroja Thapa, Associate Director – Programs, iDE Bangladesh. She said that SMEs and CMSMEs are two of the hardest-hit sectors due to the pandemic. And as a way out, policy-making must be inclusive, broad-based and driven by data and evidence, she added.
The event was followed by an open-floor discussion. High-level policymakers, political leaders, researchers, development practitioners, academics, business leaders, civil society representatives, international development partners, and journalists attended the workshop.