JAGARAN CHAKMA

When the Bangladesh Bank raises interest rates on bank borrowing in its battle against stubbornly high inflation, the ripple effects reach small and medium businesses run by Faridpur’s Paritosh Kumar Malo or Chuadanga’s Md Oli Ullah.

Already squeezed by slumping sales in response to an upward inflationary curve over the past three years, Malo and Ullah promptly shelved their business expansion plans that depend on bank loans.

If that is not enough to survive, they now go for cutting their workforce just to keep their businesses afloat.

But even desperation has its limits.

If the macroeconomic stress does not ease soon, these small ventures, which contribute 32 percent of the country’s GDP and employ 85 percent of the industrial workforce, face closure.

According to the Small and Medium Enterprise (SME) Foundation, there are around 79 lakh SMEs in the country. These ventures are considered as the economic backbone of the country. But most of the businesses are struggling due to inflation and macroeconomic headwinds.

Amid the economic turmoil, the political changeover through a mass uprising last year has led to slower spending on development projects, adding another layer to the SME crisis.

Take the case of Paritosh Kumar Malo, who runs RK Metal in Faridpur. His workshop, which once employed 25 workers, produces farming machinery.

Malo said government projects were his steady clients, but as work has been halted in the past six months, he has not received any new orders.

To make matters worse, he supplied equipment worth Tk 20 lakh to a USAID-funded project. The payment is now uncertain after the new US administration announced cuts in foreign aid.

Just six to eight months ago, Malo said, his factory generated Tk 30 lakh in revenue, but that has now fallen to Tk 3 lakh.

Of that, he must repay around Tk 80,000 per month in bank loans.

Demand for small agricultural machines, once the backbone of his sales, has dropped by nearly 70 percent.

Dealers hesitate to place orders, while farmers struggle to afford new equipment. “If they don’t have money, how will they buy it?” he asked.

Unable to sustain his full workforce, Malo had to lay off 15 employees. “Letting them go was painful. They have families to feed.”

DEPLETING CAPITAL, LOOMING LAYOFFS

Md Oli Ullah, owner of Janata Engineering in Chuadanga, manufactures agricultural machinery such as corn threshers and mustard oil extraction machines.

Like Malo, he said demand has plummeted as farmers and small entrepreneurs are delaying purchases.

He employs more than 100 workers but fears layoffs.

“I took a Tk 5 crore loan from Agrani Bank in 2020, when the interest rate was 9 percent. Now it has risen to 17 percent, significantly increasing my quarterly repayments.”

Ullah said his capital is depleting, and after Eid, he may have to lay-off some workers just to keep the business running.

Despite efforts to sustain operations, he fears that businesses like his will be forced to shut down if conditions do not improve.