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Many hands: Bangladesh’s garment manufacturing industry has survived a period of orders being held up


their families during the pandemic, were bring- ing back their savings with them. They put the increase in money in the for-


mal banking channels down to a couple of fac- tors: the normal flowof peoplewhoalso ferried cash between expatriates and their families backhome had been interrupted because of the lockdown, forcing workers abroad to use the formal system instead; and the success of a gov- ernment scheme to encourage the use of the banking channels in the form of cashback. Whatever be the case, the inflow, for now, is


good news for the local economy; however, it may not be enough to cushion the blow from other problems that are currently hidden. For instance,companies have received a deferral on their loans until December; as a result of which, banks will start booking any losses on the loans they have given only in January or February, the analyst cited above warned. “The crash has been artificially delayed and


some of the businesses are operating in a zom- biemode,” says the analyst. “The government is hoping that, by then, other sectors will come up and help cushion the blow, but we don’t knowas yet if that will happen or not.” Then there is the problem of unemploy-


ment. At least 85% of Bangladesh’sworkforce is in the informal sector — people who are rick- shaw pullers or working on construction sites, salons or roadside food stalls, among others — says Fahmida Khatun, executive director of the


Centre for Policy Dialogue, a nonprofit think tank in the country. With the start of the spread of Covid-19 and the subsequent lock- down, most of them lost their jobs and went back to their villages. “Those who came to the cities for their bet-


terment are going back to their villages to sur- vive,” says Ms Khatun. “There is a new set of poor people,” she warns. Although there are no official estimates on how many people, some best guesses have put that number at at least 15 million, she says. And since neither the informal workers,


nor the small businesses that employ them — the segment worst hit financially — are tracked by government statisticians, it could be years before the impact of the losses incurred by those businesses and workers is seen in the economy, says Riverstone Capital’s MrAhmed. All of this comes at a “very crucial period”


for Bangladesh,MrAhmedcontinues. The coun- try had been clocking economic growth of, on average, close to 7% each year for the past dec- ade, helping it push its way from the status of a less developed country into lower middle- income country, and had beenworking on erad- icating the level of extreme poverty to under 5% in the next five years (from 7.57% now.) “Unless we can create a lot more jobs, that


target will remain very challenging,” says Mr Ahmed. “Any erosion of capital in the smallest segment puts a dent in that.”■


December 2020/January 2021 www.fDiIntelligence.com 69


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