Tuesday | 14 January 2025 | Reg No- 06
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Tuesday | 14 January 2025 | Epaper
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Political turmoil poses tough challenges for our business

Published : Tuesday, 14 January, 2025 at 12:00 AM  Count : 217
Arnab Ashraf
Since the political upheaval that led to the fall of Prime Minister Sheikh Hasina's government on August 5, 2024, businesses in Bangladesh have been grappling with a range of challenges, exacerbating the nation's already fragile economic conditions. The ongoing political instability has compounded an existing crisis, where rising commodity prices and supply chain disruptions have left businesses-especially small and medium-sized enterprises (SMEs)-struggling to stay afloat.

The challenges facing the business community are diverse. Political uncertainty has discouraged both local and foreign investments, with many investors adopting a cautious "wait-and-see" approach. Without a stable government to implement long-term economic reforms, businesses are left in a state of limbo, unsure of the future direction of the country's economy. This lack of confidence has trickled down to everyday consumers, with essential commodities such as rice, vegetables, fish, and edible oils experiencing severe price hikes, further exacerbating the economic strain.

One of the most pressing concerns is the drastic reduction in both production and the supply of essential goods. The agricultural sector, a major contributor to the nation's economy, is facing a significant decline in output, largely due to shrinking cropland caused by construction activities, such as brick kilns and pond digging. The scarcity of agricultural produce has led to increased competition among traders, many of whom are resorting to profiteering by selling smaller quantities of goods at inflated prices. This has hit rural communities especially hard, with many farmers unable to sell their crops directly to consumers and instead relying on wholesalers or brokers.
The situation is equally dire in the fisheries sector. The deaths of numerous freshwater and sea fish species, including hilsa and various types of catfish, have not only impacted local consumption but also contributed to widespread malnutrition. The scarcity of fish has had a devastating impact on children, leading to stunted growth and illnesses. This issue is compounded by environmental damage, including deforestation and unsustainable fishing practices.

In addition to these supply-side issues, rising labour costs, along with skyrocketing prices for fertilisers and fuel, have put immense pressure on growers, who are already struggling with dwindling profit margins. Against this backdrop, many farmers are discouraged from increasing crop yields, fearing they will not be able to cover the costs of production, let alone make a profit.

Amid these challenges, market associations have emerged as new power brokers, exerting influence over traders and shaping the market landscape. These associations, which gained prominence after the political upheaval in August 2024, are often led by unauthorized figures who have been accused of extorting traders, further driving up the cost of goods.

The agricultural and fishing sectors are not the only ones grappling with difficulties. Businesses across all sectors are suffering from a lack of access to affordable financing and an opaque financial system, which hinders growth and innovation. Entrepreneurs, particularly those in SMEs, are finding it difficult to secure credit from formal sources. Many are turning to informal lenders who impose higher interest rates, adding further risks to an already precarious financial situation.

The government's engagement with the private sector has also been criticized, with business leaders calling for more regular and constructive dialogue to address their concerns and ensure businesses receive the support they need to thrive. Moreover, the need for targeted policies that support the growth of SMEs and help them expand both domestically and internationally is becoming increasingly urgent.

The importance of diversifying Bangladesh's economy is also becoming clear. While the country has long been dependent on the Ready-Made Garment (RMG) sector, it must now look to other industries, such as technology, renewable energy, and agriculture, for future growth. Yet, without political stability, creating conducive conditions for emerging industries will remain a distant dream.

A key area of focus must be the improvement of financial transparency. Reforming the financial sector, ensuring greater access to affordable credit, and establishing better oversight mechanisms are critical steps in creating a more predictable and stable business environment. Efforts from organizations like the World Bank (WB) and the International Monetary Fund (IMF) to support SMEs and improve financial sector transparency are essential for reviving the country's business landscape.

Business leaders have expressed concern that Bangladesh's economy cannot thrive without a stable political environment. With ongoing disruptions-whether from political unrest or natural disasters like floods-many businesses are facing setbacks, and the path to economic recovery seems daunting. However, with coordinated efforts from local stakeholders, international bodies, and the private sector, there is still hope that Bangladesh can overcome its economic difficulties.

The key to overcoming these challenges lies in fostering an ecosystem that supports entrepreneurship, improves access to finance, and strengthens the country's international trade relations. By diversifying the economy and investing in emerging industries, Bangladesh can lay the foundation for long-term, sustainable growth. However, these aspirations can only be achieved through the restoration of political stability, the formulation of effective policies, and a commitment to economic reforms that prioritize the needs of the business community.

The writer is a journalist with The Daily Observer


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