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POST TIME: 15 April, 2021 05:31:29 PM
Covid-19’s impact on some selected informal sector in Bangladesh
Professor Abul Barkat has calculated that the livelihood of 78 million people is directly dependent with the running of a total of 86 lakh 53 thousand 894 micro-small-medium business enterprises. Most of them will never be able to stand on their own feet without state-government support in the current state of these businesses due to Covid-19.
Dr. Matiur Rahman

Covid-19’s impact on some selected informal sector in Bangladesh

What types of informal sector business are in Bangladesh? How many are these? How many people are involved in this sector? What are the impacts of Covid-19 on this sector? Who are the victims of this sector due to Covid-19? What is needed to revive this sector for building up a decent society? Answer to all these questions are analysed very deeply by eminent economist Prof. Dr. Abul Barkat in his recently published book namely “Boro Prodaye Somaj-Orthoniti-Rastro: Vairuser Mohabiporjoye Thekey Shovon Bangladehser Sondhane (On the Larger Canvas of Society-Economy-State: In Search of a Transition from the Virus-Driven Great Disaster to a Decent Bangladesh).
Professor Barkat mentioned in his book that 80-85 percent of the total active labour force in Bangladesh is working in the informal sector or in the informal market. He also mentioned that there is no exact number available of these types of businesses and persons involved in this sector in government statistics.
Dr. Barkat has classified the major types of informal sector as micro-business: peddlers, hawkers, seller of goods in the van, permanent tea-betel leaf stalls; small retail: grocery shop and similar; medium wholesale: micro-small hotel-restaurant; small to medium wholesaler, construction industry workers; transport workers; rickshaw-van driver; agricultural laborers; etc.


Eminent Researcher Dr. Barkat estimates that as of (May 2020), the total number of micro business (mobile and permanent), small business-grocery shops, medium wholesale business and micro-small hotel-restaurant traders in Bangladesh was approximately 86 lakh 53 thousand 894, of which at the village level there were 34 lakh 88 thousand 920 (40.3 percent); and in the urban area 51 lakh 74 thousand 974 (59.7 percent). According to the type of business, the way in which these businesses are spread in rural and urban areas is as follows:


    Mobile micro-business (peddlers, hawkers, seller of goods in van): Total 27 lakh 53 thousand 719, of which 6 lakh 10 thousand 561 (22.2 per cent) in rural areas and 21 lakh 43 thousand 158 (77.8 per cent) in urban areas). They account for 58.6 percent of the total micro business and 31.8 percent of the total five types of businesses (if the two types of micro-business are separated from five types).


    Permanent micro-business (tea-betel leaf sellers): Total estimated 19 lakh 45 thousand 685, of which 9 lakh 59 thousand 453 (49.3 per cent) in rural areas and 9 lakh 86 thousand 232 in urban areas (50.7 per cent). ). They account for 41.4 per cent of the total micro-business, and 22.4 per cent of the total five types of businesses.


    Total micro-business (mobile and permanent): Total approximately 46 lakh 99 thousand 404, of which 15 lakh 70 thousand 14 in rural areas (33.4 percent of total micro-business) and 31 lakh 29 thousand 390 in urban areas (66.6 percent of total micro-business). The total number of micro-businesses will be 54.3 percent of the total 4 types of businesses in the country (the businesses we are talking about here).


The information is important because the number of micro-businesses in the country is relatively high and people do something on their own initiative with little capital. These types of self-employment are important for the economy and for people's livelihood. If such self-employment is damaged, it is important to give them incentives on priority basis.


    Small retail (grocery shop and similar): Total 31 lakh 15 thousand 52, of which 13 lakh 95 thousand 568 in rural areas (44.8 per cent of total small retail business) and 17 lakh 19 thousand 484 in urban areas (55.2 percent total small retail business). They are the single highest group of five types of business in the country, 36 percent.


    Medium wholesale: Total 3 lakh 19 thousand 852, of which 1 lakh 74 thousand 446 in rural areas (54.5 percent of the total medium wholesalers) and 1 lakh 45 thousand 406 in urban areas (45.4 per cent of the total medium wholesalers).


    Micro-small hotel-restaurant: Total 5 lakh 19 thousand 586, of which 3 lakh 48 thousand 892 in rural areas (67.1 percent of this group) and 1 lakh 70 thousand 694 in urban areas (32.9 percent of the total group). They account for 6 percent of the country's four types of businesses.


Professor Barkat mentioned that these micro-small businesses have been severely affected by the lockdown due to Covid-19. As the total number of these type of businesses in the country is 865,3894 so the average number of employees (including owners) in each business is 1.83. Thus, a total of 1 crore 58 lakh 36 thousand 626 people were employed in those businesses before the lockdown due to Covid-19. Again, an average of 1.23 people was found in each business enterprise, whose income covers the basic expenses of their household (where the average household members are 4.07).


A renowned researcher Dr. Abul Barkat estimates that the livelihood of a total number of 43,322,259 people (which is 25.48 percent of the total population of 170 million) depends on the income of those 8,653,894 business enterprises. In other words, they are 1 in 4 people in the country.


Of these, almost all of the first two categories (i.e. micro and small businessman: mobile businessman and tea-betel leaf sellers) have become pauperised due to Covid-19. In other words, considering the business and commerce, out of the total 86 lakh 53 thousand 894 business organization mentioned in the country, 46 lakhs 99 thousand 404 (54.2 percent of the total business enterprises) have become completely pauperised due to the lockdown in Covid-19.


The total number of members of their household will be 1 crore 91 lakh 26 thousand 574. And small businessman and micro-small hotel-restaurant owners, that is, 36 lakh 34 thousand 638 enterprises - at least 50 percent of them (18, 17,319) have become ‘new-poor’ because of Covid-19. The total number of households of the “new-poor” group will be approximately 73 lakhs 96 thousand 649.


Dr. Barkat has also calculated that due to the lockdown in Covid-19, a total of 65 lakh 16 thousand 723 micro businesses and micro and small  hotels-restaurants have become completely pauperised. They have become 'new-poor' and the total number of members in their households will be 26.5 million. They are 16 percent of the country's total population. These "new-poor" must be rescued.


He also mentioned that due to the stagnation of business operation in the lockdown of Covid-19, almost all of the micro-business (mobile and permanent) have become pauperised, at least half of the micro-small hotel-restaurant business is pauperised; small businesses (grocery shops and similar businesses), small and medium wholesalers are extremely affected. And livelihoods of the owners and their family members, and an average of 1.3 employees per business (their family's livelihood depends on their income) depend directly on their income when these businesses are running.

Professor Abul Barkat has calculated that the livelihood of 78 million people (who are 45.9 percent of the total population of the country) is directly dependent with the running of a total of 86 lakh 53 thousand 894 micro-small-medium business enterprises. Most of them will never be able to stand on their own feet without state-government support in the current state of these businesses due to Covid-19. They have all the qualifications-skills-experience, but the financial foundation has broken. Considering the situation, he has made some specific proposal in his book as: to allocate a one-time grant (not loan) to micro-business enterprise. The grant will be managed by the bank in collaboration with the local government. He has also suggested providing loan and working capital at low rate of interest to small business enterprises and medium wholesale business to start their business and run their business smoothly.

The writer is Research Consultant, Human Development Research Centre (HDRC), Dhaka, Bangladesh