Helping the little guy.

Byline: Nasir Jamal

THE ongoing lockdown enforced to contain the coronavirus pandemic from spreading and overwhelming the country's inadequate healthcare facilities has taken a very heavy toll on businesses, particularly micro, small and medium enterprises (MSMEs).

Such businesses have suffered enormously because of the shuttered economy owing to the contagion and a significant number of enterprises with low cash reserves fear insolvency over the next several weeks as they are already facing difficulty in maintaining their payroll, and paying their rent and utility bills. Most of them are laying off their temporary employees and furloughing others to cut their losses because of the closure.

The government last week launched a Rs50.7 billion support programme - Chota Karobar-o-Sanat Imdadi Package - to inject cash into the micro to small commercial and industrial enterprises through the prepaid electricity bills for three months. The government says the programme should benefit about 3.5 million businesses when they restart after the lockdown restrictions are lifted. The facility will remain available for six months and support 95 per cent or 3.2 million of the entire commercial consumers with the connected load of up to 5kW and 72pc or around 400,000 of the total industrial enterprises with the connected load of up to 70kW. The commercial consumers will be given the support of up to Rs100,000 and industrial consumers up to Rs450,000 for three months under the scheme. In addition, the government has also launched a Rs75bn 'Mazdoor ka Ehsas' programme to transfer Rs12,000 a month to workers who have lost jobs due to the virus pandemic.

'The first thing you notice about the SBP schemes is that these do not distinguish between the industries that are exempt from the lockdown and the ones that are not'

However, it is yet not clear if the government will be in a position to successfully help the businesses because approximately 75pc of MSMEs are part of the country' informal economy that is estimated to contribute 75pc cent of the total economic output. Similarly, a vast majority of workers or daily wage-earners who have lost their jobs are not registered anywhere.

Federal industries minister Hammad Azhar says the government is also working on an interest-free loan package for the MSME sector.

In addition to the support programmes launched by the government, the State Bank of Pakistan (SBP) has announced measures to support the small and medium...