Understanding the Economic Consequences of COVID-19 on Small and Medium Enterprises in Rajshahi City, Bangladesh

Abstract

The COVID-19 pandemic has brought unprecedented challenges to small and medium-sized enterprises (SMEs) worldwide, including those in Rajshahi City, Bangladesh. This study investigates the impact of the pandemic on SMEs in Rajshahi, focusing on various sectors such as restaurants, coffee shops, beauty parlours, and retail stores. Through a quantitative research methodology involving primary data collection from 100 SMEs, the study examines the challenges faced by these businesses during the pandemic, changes in input and output values, strategies adopted for survival, and the effectiveness of government policies in mitigating the impact. Results indicate significant disruptions in SME operations, with a notable percentage of employees unable to work and financial struggles arising from rent payments, loan repayments, and reduced revenues. The majority of SMEs have contemplated or implemented layoffs to cope with the economic downturn. To address financial challenges, SMEs are considering various measures, including seeking loans, negotiating with lenders, and reducing operating costs. Moreover, SMEs are exploring strategies such as increasing marketing efforts, developing online sales platforms, and making capital expenditures to adapt to the new normal. Government support, particularly in reducing rent and financing costs, is seen as crucial by SMEs for their survival and recovery. Overall, the study highlights the urgent need for comprehensive crisis strategies, accurate financial assessments, and support for online sales channels to ensure the resilience of SMEs in Rajshahi City. Government initiatives should be expanded to include all affected industries, thereby providing a more inclusive and effective response to the challenges posed by the pandemic.