Nepalese SMEs suffer hard from 2nd wave of COVID-19 pandemic

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“The restaurant industry in Thamel has gone through many ups and downs over the past five decades, but never before have we faced such a crisis,” complained restaurant owner Shrestha.

KATMANDU, June 18 (Xinhua) – Tejendra Nath Shrestha’s family has been running their catering business for 51 years in Thamel, a tourism hotspot in the Nepalese capital of Kathmandu that particularly attracts foreigners.

Never before in the past five decades has Shrestha found the hustle and bustle of everyday life in Thamel so deserted now after a deadly second wave of the COVID-19 pandemic hit the Himalayan country in early April.

Shrestha’s older brother opened his Ying Yang restaurant in 1970 targeting Thai tourists, while he himself opened “Third Eye” in 1989 serving Indian visitors.

“The restaurant industry in Thamel has gone through many ups and downs over the past five decades, but never before have we faced such a crisis,” complained Shrestha. “In the past, the restaurant industry suffered when the country was in the throes of civil war, earthquake and subsequent trade blockade imposed by India in 2015, but never on the scale we currently see. .

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After closing her restaurant for about five months during last year’s lockdown, Shrestha restarted her business. Even though business was not as usual due to a lack of foreign tourists, he was prepared to wait for the situation to improve.

Unexpectedly, the second wave of the epidemic is shaking his hopes, as the Kathmandu Valley has again been placed under lockdown since April 29 to deal with more coronavirus infections, forcing him and his brother to shut down their operations. restaurants.

“I don’t know if I will be able to support the restoration activity if the current situation continues,” he said.

Until the return of foreign tourists, the restaurant owner does not expect business to run smoothly because he relied on foreigners for 80% of the companies.

In the first months of 2020, Nepal took in 230,085 foreigners before a lockdown was imposed at the end of March. In 2019, the country received 1.19 million foreign tourists, according to data from the Immigration Department.

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Although he is unwilling to shut down the business, Shrestha is not sure he can continue as many other restaurants in Thamel have already closed.

“Now there is little hope that tourism will rebound anytime soon, which is worrying for us,” Shrestha said.

What has kept him in business is an understanding landlord who has shown patience despite the late payment of rent and himself with no loans to pay at the moment.

Shrestha is not the only businessman suffering from the COVID-19 pandemic.

Shova Laxmi Rajbahak, who ran a poultry farm in Kathmandu’s Goldhunga region for three years, abandoned his business last year after suffering losses during the lockdown.

“Since I was unable to sell chickens to the market on time due to last year’s foreclosure, I had to incur losses,” she said. “As I was forced to sell the oversized chickens, I was only able to recover the cost of the chicken feed.”

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Rajbahak raised 2,000 chickens in one batch. She still plans to reopen her poultry farm once the pandemic situation is normalized and for that she has paid the rent for five years.

Hira Jargha Magar, a craft manufacturer, is also suffering from the decline in sales of its products. His Kathmandu-based company, Maitri Craft Nepal, manufactures handmade paper products.

“I was unable to produce the handicrafts due to a shortage of raw materials amid the lockdown,” he said. “Since there is no cash, I have to pay my staff and the owner for the rental of the space.”

Small and medium-sized enterprises (SMEs) have been hit hard by the pandemic compared to large enterprises, according to surveys by the central bank of Nepal.

Even among SMEs, those linked to the tourism and hospitality sector have suffered more as they have to depend on foreign tourists while international travel has been largely suspended for now.

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In June of last year, 91% of hotels and restaurants were completely closed while 7.21% of them were partially operational during the lockdown. The situation had improved in April this year before the second wave of coronavirus infections hit the country, according to an investigation by Nepal Rastra Bank, the central bank.

As shown in a follow-up survey carried out by the bank in April this year, 57.3% of hotels and restaurants were fully operational while 34.4% of them were partially operational before the country was plunged into a crisis. new wave of pandemic.

As for SMEs, the central bank survey found that 81.7% of small and 74% of medium-sized enterprises were fully operational as of April this year. For large companies, 90.5% were fully operational during the period.

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“SMEs have little resistance to the unfavorable situation. They also have to pay more interest for bank loans because banks see a greater risk in financing such enterprises,” Dr Govinda Nepal told Xinhua, senior economist. “It is therefore very important that the government needs to support SMEs for their survival.

The Nepalese government and the central bank have offered two types of credit support to businesses affected by COVID-19.

The government launched a business credit program to provide loans at subsidized interest rates to micro, small and medium enterprises and the tourism sector, while the central bank provided a refinancing facility to businesses by reducing fees. interest rates for the loans they received before the pandemic hit.

According to a study conducted by the central bank in 2016, SMEs created a total of 2.2 million jobs in the country with an estimated population of some 30 million.

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