‘Revival of SMEs vital for economic recovery’

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‘Revival of SMEs vital for economic recovery’

Stakeholders have stressed on the need to prioritise revival of the small and medium enterprises (SMEs) to kickstart the recovery of the Nepali economy ravaged by the COVID-19 pandemic and the lockdown imposed by the government to stop the possible spread of coronavirus. In a webinar organised by the Confederation of Nepalese Industries (CNI) on May 21, panelists said that the government should make arrangements to enable SMEs to avail bank loans at around 3 percent interest rate. The programme titled ‘Respond Economy’ is last in a series of four webinars that CNI started from May 18 to discuss on various aspects related to the country’s economic recovery. “Priority should be given not only to large industries but also to SMEs,” said Binod Chaudhary, Member of Parliament and President Emeritus of CNI, adding, “But there is a challenge to make their business competitive. Now a building a separate network of SMEs has become necessary to move ahead.” He urged banks to support the local people to uplift them as entrepreneurs. “As banks have reached in all local levels of the country, they need to invest capital to help spur entrepreneurship. After that we industrialists will train the aspiring people so that entrepreneurs are produced at the local levels,” he mentioned.

Chaudhary talked about the challenges for the industrial sector to survive and revive by overcoming the current crisis. “The situation is deteriorating every day.  As there are big challenges in front of us to get back into business activities there is an urgent need for the government to have plans for the survival and revival of the industrial sector,” he said.  Chaudhary suggested the government to come up with stimulus package by focusing on sectors that can be revived. He also urged the government to seriously assess the deepening unemployment problem.

Like Chaudhary, other participants of the webinar also warned about the worsening situation due to skyrocketing unemployment in the country. “60 percent of the 4.4 million workers in the informal sectors have become jobless. On this basis, 2 million people urgently need relief to survive,” said Dr Shankar Sharma, former vice chairman of National Planning Commission (NPC). According to him, Rs 6 billion is required on a monthly basis to provide food or cash relief to the 2 million jobless people. “50 percent of 2.5 million workers in the formal sectors have also become affected. They also need relief immediately. The government should provide subsidies to the employers to save their jobs,” said Sharma. According to him, the average monthly wage of workers in the formal sectors is Rs 20,000 and that the government will have to take additional burden of Rs 6 billion by contributing 25 percent to their salaries. “But this has become necessary to save the economy,” said Sharma. He suggested the government to use diplomatic means to arrange jobs to the jobless migrant workers in foreign lands. “It will be very difficult for us to manage all of them here. Those who have returned to Nepal can be provided self-employment opportunities in agriculture sector. The government needs to formulate law to allow leasing of land for agricultural purposes which will help to commercialise agriculture,” he mentioned.  

Former Prime Minister Dr Baburam Bhattarai said that taking economy forward has become a serious matter and that the government lack seriousness to take the economy out of the mess. “Other countries have come up with adequate stimulus packages for economic recovery. But our government’s plans are abstract in this regard,” he claimed.

Bhattarai said that the current difficult situation also poses opportunities for Nepal. According to him, property archiving should be allowed which would help to bring out money from the informal sector, thus adding momentum to the economic revival. “Also, migrant workers who will return to the country should be taken as important source. A financial package is necessary to enable them to start their own business,” he said. Besides, the government also needs to continue investing in some large infrastructure projects in energy, air and land connectivity, and irrigation while keeping some other projects on hold for the time being.

Satish Kumar Moore, president of CNI suggested the government to work in policy reform with a view to attract foreign direct investment (FDI) in the manufacturing sector.  Faris Hadad-Zervos, country manager of World Bank for Nepal said that the bank will help Nepal in its economic recovery. “We have already provided financial assistance to Nepal to help fight the coronavirus. We will continue our support in the coming days,” he mentioned. He suggested the stakeholders to work in public-private-partnership (PPP) modality to provide employment opportunities to Nepalis who have lost their job at home and abroad.

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