THE EMERGING BANGLADESH: A STORY OF ENTERPRISE AND SYNERGY
BY SYED AKHTER MAHMOOD
There was a flurry of events in early December on investment prospects in Bangladesh. A high-profile event in Dhaka on Positioning Bangladesh called for exploiting the strengths of the private sector. That very week, in Singapore, dozens of potential foreign investors gathered with leaders of the financial and business sectors of Bangladesh to discuss the opportunities and pre-requisites for expanded foreign investment in the country. This was followed by an international conference in Dhaka on Bangladesh as an outsourcing destination.
All this is testimony to the fact that Bangladesh has become an arena for entrepreneurial action, a variety of actions, with more coming in the future. Having grown up with low per capita income figures being constantly thrown at us, we tend to forget that, in aggregate GDP terms, Bangladesh is actually a fairly large economy – one of the top 50 if you look at the GDP in purchasing power terms. Moreover, it has been growing steadily at a respectable rate for almost two decades. Of course it can do better, but still the annual average growth rate of 5-6% in the last two decades is something most developing countries will be envious of. The large domestic economy is something that should be of interest to investors.
The rich variety of entrepreneurial activities suggests a certain dynamism. Breakthroughs in the export market, not just by garments but slowly by other products too, is an indicator of competitive niches. Both entrepreneurs and workers have shown an ability to learn fast. This means that opportunities, including opportunities to make a breakthrough in world markets, will be grabbed as swiftly as they appear, provided entrepreneurs are not constrained by a stifling investment climate. Investors can thus think of serving not only the domestic market but also use Bangladesh as a base for exports. This is what branding Bangladesh should be about.
But will all this hold in the future? This is where the stability story comes in. Growth has been remarkably stable and the way macroeconomic policy has been conducted suggests that it is likely to remain so: our debts are small, our deficits low and we have shown good ability to adjust in the face of shocks. Equally important, there is evidence that the fruits of growth, and of entrepreneurial activity, which includes social entrepreneurship by NGOs, are being enjoyed more widely than in many countries. The story on poverty trends, remittances, social indicators all point to this. Such a growth pattern promotes social cohesion which helps make economic growth more robust.
In this connection, it is important to recognize that, in Bangladesh, entrepreneurship has blossomed in both the economic and social spheres. NGOs have not merely been good in creating effective delivery mechanisms for social services, many of them have become vehicles of entrepreneurial activity. People see problems, think creatively about a way to solve them, mobilize the resources needed to do so, deliver the solutions, reassess the solutions in light of impact and redesign approaches wherever needed. This pattern is widespread in the NGO world. But this is what entrepreneurship is all about. A strong culture of entrepreneurship and innovation has thus developed even in the social sectors of Bangladesh. Some of this is now spilling over into the space of economic entrepreneurship, a point I come back to later. This is something that should also attract investors to this country. They should know that Bangladesh is fast becoming a land of entrepreneurship, creativity and innovation.
A final point — and that is about synergies. Bangladesh has now reached a point of development where the synergies between different activities are being exploited. Let me give one example from the unlikely world of sanitation. Several years of NGO activism and awareness building are creating demand in rural areas for newer services, such as improved sanitation facilities, which is being transformed into effective demand due to inflow of money from remittances, financial inclusion activities and growth in general. This, in turn, is creating small business opportunities, such as supply of improved toilet facilities, and the aggregation of these small businesses is creating demand for products and services that large investors can provide, such as manufacturing of the base material needed for the improved toilet facilities. This is an example of synergy between entrepreneurship in the social and economic spheres. I think there are very few developing countries where we can see such synergies. I gave just one example; but I suspect such examples will multiply at a geometric rate in the next five years or so. The smart investors are those who will grab these opportunities.
Whether these trends continue and the trickles turn into vigorous streams will depend quite a bit on whether the government gets its act together and creates an enabling environment for entrepreneurship to flourish. Governments are notorious in capturing defeat from the jaws of victory, in killing the geese that lay the golden eggs! The entrepreneurs of Bangladesh, both in the economic and social spheres have shown remarkable dynamism and resilience in the face of many odds. It is time for Government to match them. It can do so by becoming a responsive institution, listening continuously to stakeholders, including investors, and showing both prudence and agility in responding to what it hears. Tall stories and vacuous promises will not do. Investors can see through propaganda quite easily. They don’t mind if the country has problems – they are not expecting nirvana here – but what they are really interested in whether there is a government that “gets it”, a government that is responsive. If the government can create that image about itself, then half the battle will be won. Investors are beginning to discover Bangladesh. They are getting excited about the opportunities and starting to believe that these are not ephemeral. They are beginning to realize that here is a strong social basis to the entrepreneurial spirit in Bangladesh. Now they need the extra comfort of knowing that there is a responsive government who would understand them.
All the above was about the good sides of entrepreneurship in Bangladesh. There is no denying the fact that there are darker sides too, as recent events, some of very tragic proportions, have alerted us too. That is a subject on which I shall write in the near future. But, for now, I would end on one point borrowing from a phrase that Bill Clinton had used in the context of America when he first became President. There is nothing wrong with the entrepreneurial sector in Bangladesh that can’t be corrected with what is right about it. Just as there are many garments factories which have cynically neglected worker safety, there are others who are maintaining state-of-the-art working conditions and yet remaining competitive. Just as there are many textile factories which have wrecked havoc on communities around them with their effluent discharges, there are others whose commitment to green growth is remarkable. Just as many default regularly on their taxes and their bank loans, there are others who have been diligent taxpayers for decades and whose bank loan repayment records have always been impeccable. If they can do business this way, why can’t others? Once again, the government has a role here. More on that later.
Syed Akhtar Mahmood works for an international development agency in Washington DC
January 14, 2013