Revolutionizing Bangladesh’s Impact Story Through Impact Investments

LightCastle Analytics Wing
October 2, 2022
Revolutionizing Bangladesh’s Impact Story Through Impact Investments

Bangladesh’s Rising Financial Gaps for Fulfilling the SDGs by 2030

The Government of Bangladesh is committed to achieving the 17 SDGs by 2030, which demands USD 928Bn, in addition to the current allocation of public expenditure. On the other hand, Bangladesh needs impact entrepreneurs who will solve critical problems in priority sectors like energy, healthcare, food security, education, financial inclusion, and climate change – and shift their conventional mindsets of only prioritizing financial returns towards thinking more deeply about building impactful businesses. Bangladesh impact investment is on the rise of revolution.

As Bangladesh emerges as a middle-income country, (i) Overseas Development Assistance (ODAs) will continue to decline, (ii) debt may not be available at preferential rates, and (iii) the government will likely need to build up forex reserves to guard against currency devaluation. In addition, the COVID-19 global pandemic has manifested additional pressures on development funding, as a substantial amount of progress has been eroded. At the same time, a portion of funds is being directed toward assisting the hard-hit economies.

Growing Enthusiasm for the Potential of Impact Investment

The government’s growing interest in impact investing and the economy’s readiness to foster an impact revolution have opened a unique policy window for Bangladesh. Nevertheless, it is instrumental to thrust this momentum by building widespread awareness, hosting advocacy sessions with investors and policymakers, increasing the capacity development of intermediaries, and promoting innovative financial instruments to private sector investors and development sectors, to catalyze the mobilization of private capital.

The Government of Bangladesh (GoB) has been proactively promoting the impact agenda to advance the growth of this sector through favorable investment guidelines, incentives, and circulars. Across the ecosystem, there is growing acknowledgment of impact investment’s role in targeting social and ecological pain points. Stakeholders are motivated to collaborate and work towards the impact agenda by developing innovative and scalable solutions. There is boundless potential to be realized, and with the right policy tools, Bangladesh’s impact sector will be ready to take flight.

The Role of The National Advisory Board (NAB) for Impact Investment in Bangladesh and Bangladesh Impact Investment Strategy & Action Plan (BIISAP)

The National Advisory Board (NAB) for Impact Investment in Bangladesh, under the Global Steering Group (GSG) for Impact Investment, developed the Bangladesh Impact Investment Strategy and Action Plan (BIISAP) to outline an action plan for the growth of the impact investment ecosystem in Bangladesh.

The key focus of the Bangladesh Impact Investment Strategy & Action Plan (BIISAP) is to promote increased understanding and advocacy while providing more structured pathways for scaling up the impact investing ecosystem in Bangladesh. The goal is to support increased social and environmental development by further supporting the creation of an inclusive impact investing ecosystem in Bangladesh.

Key Recommendations for Propelling Impact Investment in Bangladesh

To unlock the full potential of impact investing in Bangladesh, the BIISAP identified nine strategic recommendations and mapped the potential roles of key ecosystem players and stakeholders. The most notable recommendations include:

  1. Sharpen and amplify Bangladesh’s impact story to the world through impact seminars and conferences, discourse sessions, and advocacy through digital media platforms.
  2. Develop frameworks for standardized impact due diligence processes and impact measurement and management frameworks.
  3. Host ecosystem-building events and workshops to foster collaboration among key ecosystem players relevant to the local impact investment landscape.
  4. Coordinate targeted capacity-building programs on impact investing to disseminate knowledge and raise awareness among local enterprises.
  5. Host annual networking summits with investors, intermediaries, and impact enterprises to facilitate the growth of catalytic funding and blended finance through increased advocacy and policy incentives

Theory of Change

The ensuing key intervention areas have been mapped out below with implementation guidelines, which are paramount, to reach the desired outcomes.

[ninja_tables id=”20529″]

Way Forward for Bangladesh’s Impact Investing Sector

Bangladesh has made remarkable strides over the last decade but the high economic growth has not always translated to equitable growth for the country’s citizens. Without a change in the status quo, the gap between the socio-economic groups will only widen.  The growth of impact investment in Bangladesh can address some of the country’s most pressing social and environmental challenges. As countries worldwide lean towards a values-oriented approach, Bangladesh has been shaping its own trajectory with deep intentionality and contextualization. However, to transform the country’s impact sector, from nascency to maturity, strides have to be made to realize the vision for impact investment.

Firstly, a stronger branding and positioning strategy is needed to craft a positive global narrative for Bangladesh. Secondly, standardized impact due diligence processes and impact management and measurement frameworks need to be developed to diminish ambiguity regarding the definition and measurement of impact. Thirdly, stronger collaboration has to be established among stakeholders to orchestrate impact investing interventions that generate inclusive outcomes. Fourth, targeted capacity-building programs should be made more available and accessible to impact enterprises across Bangladesh to accelerate capacity development and scalability of enterprises. Finally, alternative financing instruments and tools should be explored to increase the flow of impact capital to the market.

This article is co-authored by Mr. Mehad ul Haque and Ms. Fariha Kabir.

About Authors: 

Mehad serves as a Project Manager @ LightCastle Partners as well as the Country Coordinator @ Biniyog Briddhi. He looks upon business development, projects, and research related to startups, entrepreneurship, and investment advisory. During leisure, he enjoys occasional traveling and unraveling startup financials and business models. 

Fariha serves as a Business Consultant @ LightCastle Partners. She supports the investment wing of the company and leads projects in policy advocacy, market assessment, capacity building, and investment advisory. She conducts research in blended finance, impact investing, and sustainable development. 

WRITTEN BY: LightCastle Analytics Wing

At LightCastle, we take a data-driven approach to create opportunities for growth and impact. We consult and collaborate with development partners, the public sector, and private organizations to promote inclusive economic growth that positively changes the lives of people at scale. Being a data-driven and transparent organization, we believe in democratizing knowledge and information among the stakeholders of the economy to drive inclusive growth.

For further clarifications, contact here: [email protected]

Want to collaborate with us?

Our experts can help you solve your unique challenges

Join Our Newsletter

Stay up-to-date with our Thought Leadership and Insights