The COVID-19 pandemic presented businesses with an opportunity to revive and restructure, according to Nawaz Rajabdeen, the Founder and President of Confederation of Micro, Small and Medium Industries (COSMI).
“We viewed the pandemic as a challenge to develop and restructure industrial institutions, and the change can be seen in smaller businesses,” he said, noting that more than 300,000 business ventures commenced during the curfew – including those supplying groceries to homes.
However, Rajabdeen noted that the micro, small and medium enterprise (MSME) sector in the outskirts of districts would face difficulties in surviving due to the loss of productivity and distribution centres in the case of those lacking backward linkages.
Acknowledging that the government has taken steps to support the sector, he pointed out that questions remained in terms of how many people would be eligible or even know of this assistance.
Although the MSME sector has been recognised as the backbone of the economy by politicians and the business community over the years, there have been complaints about a lack of support, for which he blamed political authorities: “In my view, none of the political leaders from the districts are supportive of this because they’re more interested in retaining their positions in the party of the government.” Noting that the administration has come forward to offer support, he stated that these businesses cannot be revived and restructured by the public sector alone, highlighting the importance of public-private partnerships.
As for COSMI’s role in helping the sector, he said it was holding discussions with MSMEs regarding the distribution of their products as many would be unable to survive without marketing. Additionally, Rajabdeen called for the government to exert controls over imported items flooding the market to ensure that MSMEs can manufacture such products locally and demand better prices.
With many companies learning that they lack contingency plans or funds to survive the pandemic, Rajabdeen believes that large corporates should also play a role in supporting the MSME sector to help mitigate the effects of the next disaster.
Citing the example of India where businesses have subcontracting partnerships, he elaborated: “The micro enterprise sector is used for the supply of products whereby it manufactures small units without having to market them because there is a larger industry providing support.”
“As people have been worried about commencing work with the COVID-19 crisis, many companies have closed because it is more feasible to work from home and distribute their savings,” he observed while calling for the government’s Disaster Management Centre to contact all regional chambers to present their plans.
Commenting on the business climate for the MSME sector over the next year or so, Rajabdeen remarked that he is positive these businesses would recover in a few months when supply and demand normalise: “If you consider any disaster that has affected any country, these businesses generally bounce back quicker than others.”
Highlighting the recovery of MSMEs following the tsunami in 2004 and Easter Sunday attacks last year, he expressed expectations that it would bounce back early next year given Sri Lanka’s efforts to mitigate the pandemic.
Rajabdeen concluded by offering advice to MSMEs, explaining that they must collaborate to assess the best way to revive the sector.
“COSMI will play a major role in terms of identifying products and how they can be marketed,” he elaborated, noting that more than 300 people in the handicraft sector are largely dependent on tourism, necessitating new means of showcasing their products as travellers are unlikely to visit these businesses.
And he declared: “The government must support such initiatives instead of spending substantial amounts of funds on unnecessary expenses to avoid unnecessary challenges in the future.”