I have been quite nostalgic lately. My nostalgia stems from my recent 'temporary' retirement from the media world to focus more fully on promoting socially responsible businesses. As I look back at my career and try to give myself an honest 'report card' on how well I lived up to my goal of making a positive impact on society through my media work, I can't help but to also question and explore the media industry's role in the broader context of social change. Like me, do media companies take their responsibility toward society seriously? How much impact can media really have in advancing social change? Bringing it close to home, what does it all mean for the media scene in Bangladesh?
When I first joined the publishing industry in New York, my boss gave me a piece of paper which he felt held the key to success in publishing -- “The purpose of publishing is not to make money".
"The purpose of publishing is to be of remarkable, outstanding, extraordinary, superior, notable, exciting, wonderful, sensational, marvelous, unheard of, exceptional, unprecedented, astonishing, awesome, indescribable, fabulous, fantastic, incredible, prodigious, unspeakable, phenomenal and stupendous USE, BENEFIT and SERVICE to the reader. Then it will follow, as night the day, you cannot help but make money…”
Since then, I have tried to create exceptional publications, programmes and internet outlets that provided a distinct benefit to society. However, I always struggled with the definition of 'benefit'. Was I really benefiting the society?
Economic benefit is quantifiable, but how does one really measure the social benefit created by media? Do media outlets really change people's lives? (Well, Oprah certainly does and I did work on the 'O the Oprah Magazine' deal) Do readers/viewers really know what is good for them? Should I decide what is good for them? How will this also benefit the advertisers who are actually paying the bills? When I moved to Asia, I added a few more questions to the list: do I really want to help the government get its message across to my readers? Can I pass on this information, which is a benefit to the society but will cost me my publishing license? Should I really publish this even if it means I will lose some advertisers?
The answers to many of the questions were clear-cut for me, and sticking to my guns on these issues and the ethical dilemmas surrounding them was part of the contribution I made to social change and social benefit -- at least that is what I think.
As with a lot of my colleagues in the media industry, I joined the industry because of an idealistic desire to act as an agent of social change. Throughout my media career -- at the glamorous fashion magazines in New York (yes, I had the pleasure of managing editors like the one in The Devil Wears Prada), where I had to fight tooth and nail to get minority representation on the covers; or in the restricted media world of many Asian countries, where I had to explain to the higher authorities why a 'lifestyle' magazine needed to write about human rights -- I always told myself that, albeit in a small way, I am making my own social change. The question still gnaws at me though -- how much more could I or should I have done in my positions in media?
Fast forward to the present day in Bangladesh a month from now a history-making election will take place. Instead of a media change maker, I am now a media observer. As an observer, I am at the receiving end of whatever information my media colleagues are publishing and broadcasting. I am reading a lot about the preparations for the elections, the usual squabbles between the two begums, and the caretaker government's reassurance that it will be a 'fair and clean election'. However, I am still missing the most important information -- I know next to nothing about the candidates.
Of course I know about the comings and goings of the big party honchos, but I want to know about the potential parliamentarians from every corner of the country. I want to know (as do my fellow citizens and readers/viewers) everything about them their views on economic and social policies, their personal stance on important issues, and their character. These men and women will be shaping the future of the country, and the citizens have a right to unbiased information about them. However, such information is nowhere to be found.
Gathering and disseminating information about candidates may be tedious, boring and may not make business sense to publish. (Advertisers may not be interested in advertising next to such material). However, this information needs to get to the public, and in Bangladesh, newspaper and television are the best media to get this information out.
I have been thinking about what is the most cost-effective way to get this important but monetarily non-lucrative message across and came up with an interesting solution. I would like to propose a 'win-win' solution for all the parties involved: as part of fulfilling their corporate social responsibility (CSR) duties, Bangladeshi media companies should donate their remnant space (their unused advertising space) to an unbiased third party (such as Shujon) which is dedicated to getting information out to the public about the potential member of parliament candidates. This remnant space donation should qualify for a tax rebate as the current government has already promised for CSR activities for the private sector. In a system where there is no public financing for election campaigns, I feel an initiative such as this one will be a step towards a campaign finance/information dissemination system of some kind where the media companies can play a significant role in stimulating positive social change.
In my experience, Bangladesh media are one of the relatively freer ones in Asia (albeit with potential of danger on individual level). The media companies need to use that freedom and make more of an effort to embrace their responsibility to create social benefit and change. Some outlets are already embracing this, but more needs to be done. Perhaps my media colleagues in Bangladesh are asking the same questions I asked myself before -- do the readers/viewers know what is good for them? Should I decide what is good for them? It is indeed a slippery slope. However, the election information dissemination is a no-brainer. People need this information and you, the media company can give it them while enjoying tax benefit, a clear win-win situation one does not always get.
The writer is an adjunct associate professor at Lee Kuan Yew School of Public Policy at the National University of Singapore and a former media executive.
Published on November 25, 2008 in Daily Star, Bangladesh
Tuesday, November 25, 2008
Wednesday, October 29, 2008
Social Innovation
I wanted to share some writing I recently did on Social Innovation. While I was writing it, I was thinking of the enormous power social entpreneurs have now for social change -- we need to encourage and nuture them all over the world --
"Governments, corporations and civil society each have their own defined approach to governance which at times leaves a gap in effective governance in a society. There are an increasing number of instances where this gap is being filled by social enterprises both in the for-profit and not-for-profit sectors. Individuals who are leading the effort are known as Social Entrepreneurs. These enterprises and entrepreneurs are tackling issues ranging from the environment to social equality to the economy. Social innovations such as micro-credit, alternative technology, fair trade, eco-tourism, rural education, health care reform are examples of areas where much inroad has already been made. Additional areas where social enterprises can provide innovative solutions are emerging as a response to global crises such as the affects of climate change, political conflicts or economic crisis."
"Governments, corporations and civil society each have their own defined approach to governance which at times leaves a gap in effective governance in a society. There are an increasing number of instances where this gap is being filled by social enterprises both in the for-profit and not-for-profit sectors. Individuals who are leading the effort are known as Social Entrepreneurs. These enterprises and entrepreneurs are tackling issues ranging from the environment to social equality to the economy. Social innovations such as micro-credit, alternative technology, fair trade, eco-tourism, rural education, health care reform are examples of areas where much inroad has already been made. Additional areas where social enterprises can provide innovative solutions are emerging as a response to global crises such as the affects of climate change, political conflicts or economic crisis."
Thursday, October 23, 2008
Time for an Asian social stock exchange
As I write this article, the storm in the financial markets continues -- stock markets in Asia, Europe and the US all are going through roller coaster rides, people fear bank runs and governments are pulling together trillion dollars worth of rescue packages. In this sadly crazy historic moment, when every current option is looking bleak and governments are busy cleaning up the private sector mess, perhaps it is a good time to look some distance into the future toward a gleam of hope for a kinder and gentler form of capitalism. My suggestion for that is to put together effective regional 'social stock exchanges' in each continent that can spearhead social good through capital markets. I believe Asia is ripe to take the lead in meeting this challenge.
What is a social stock exchange? It is a stock market where investors who care about social and economic returns buy stocks and bonds of companies that have strong economic and social returns. Interestingly, in a social stock exchange both not-for-profit and for-profit companies can participate. For-profit entities can either issue shares representing ownership in their companies or issue bonds. Meanwhile not-for-profit companies can utilise the stock exchange to issue bonds an action in itself that can bring operational accountability to the not-for-profit sector (as opposed to carte blanch donations from foundations).
Although Professor Muhammad Yunus discusses the idea of a social stock exchange in his latest book, Creating a World Without Poverty, and has been promoting it in lecture circles, the concept is not a new one. There are already several Social Stock Exchanges in operation or in the works, albeit each uniquely different from one another.
BOVESPA in Brazil was the first social stock exchange in the world. It was launched in 2003 with the objective of bringing together non-profit organisations and the social investors who are willing to support their programmes and projects. For BOVESPA investors, the return is solely in 'social profit,' where the investment brings about a more just society with opportunities for the poor and neglected. By providing capital for the non-profit organisations that list on this exchange and the providing social value for the investors who participate in this exchange, BOVESPA aims to change the labeling of non-profit organisations to 'Social Profit Organisations'. So far about 43 Social Profit Organisations have raised capital through this exchange. However, trading of stock in this exchange is still a distant goal.
Europe's answer to social investing is the FTSE4Good. Set up by FT Stock Exchange in London, FTSE4Good is an index for socially responsible investment. The definition of 'socially responsible' for this index is very broad and covers topics such as: working towards environmental sustainability, developing positive relationships with stakeholders, and upholding and supporting universal human rights. There are about 25 companies in this index. Given FTSE financial requirements, these companies are large for-profit entities which in many cases have very tangential effects on positive social change. Their 'social mission' often springs from the defensive posture of CSR rather than from a genuine effort to make positive social impact.
In North America, Green Stock Exchange (GREENSX) is attempting to become the Social Stock Exchange for that continent (and Europe). This Canada-based social stock exchange is aiming to launch by end of the year to trade shares in social businesses. GREENSX's definition of social business is a business that makes a profit but benefits society as well delivering a triple bottom line return (economic, social and environmental return). GREENSX's goal is to provide small green issuers access to public equity capital efficiently while ensuring liquidity for the investors. The success of GREENSX remains to be seen.
There is obviously a budding global interest in the notion of social stock exchange. Recently, Rockefeller Foundation donated $500,000 to the UK government to pay for a feasibility study for a social stock exchange. The Foundation picked UK as the site for the feasibility study because of the UK government's support for social enterprises. Existing UK government initiatives include legal reforms for separate incorporation for social businesses and plans for a social investment bank funded with unclaimed assets held by financial institutions.
All this is encouraging in a global perspective; now, how about Asia and, in particular, Bangladesh? Bangladesh is a country that continues to produce remarkable social enterprises, and given the state of the country and the world, it can be expected to keep the pipeline of social innovation flowing. The limiting factor is, of course, capital. Let us move a few degrees east in longitude, and there is a country, which -- though a small dot on the map -- is wealthy, is a player in the financial markets and is itching to make a mark in social business. This country is, of course, Singapore. Singapore is ready, able and perfectly positioned to be the home of Asia's first Social Stock Exchange. Bangladesh is ready, able and perfectly positioned to pepper that exchange with very effective social businesses. This is a match made in financial heaven.
Now, what's the next step? It is very simply for the Bangladesh government to have the vision and desire to initiate a ground-breaking discussion with the Singapore government. Bangladesh is well positioned to make its mark in the next economic revolution of conscious capitalism. It can take its rock star social entrepreneurs Yunus and Abed -- and get them to perform the ground-breaking concert for the social stock exchange for its potential partner Singapore.
Thus, my request to the Bangladesh finance ministry use this opportune moment -- initiate the courtship and get Bangladesh on the global financial map. We are all waiting.
The writer is the regional managing director of Asia City Publishing Group and adjunct associate professor at Lee Kuan Yew School of Public Policy at National University of Singapore.
This article was published in Daily Star on Oct 23, 2008
What is a social stock exchange? It is a stock market where investors who care about social and economic returns buy stocks and bonds of companies that have strong economic and social returns. Interestingly, in a social stock exchange both not-for-profit and for-profit companies can participate. For-profit entities can either issue shares representing ownership in their companies or issue bonds. Meanwhile not-for-profit companies can utilise the stock exchange to issue bonds an action in itself that can bring operational accountability to the not-for-profit sector (as opposed to carte blanch donations from foundations).
Although Professor Muhammad Yunus discusses the idea of a social stock exchange in his latest book, Creating a World Without Poverty, and has been promoting it in lecture circles, the concept is not a new one. There are already several Social Stock Exchanges in operation or in the works, albeit each uniquely different from one another.
BOVESPA in Brazil was the first social stock exchange in the world. It was launched in 2003 with the objective of bringing together non-profit organisations and the social investors who are willing to support their programmes and projects. For BOVESPA investors, the return is solely in 'social profit,' where the investment brings about a more just society with opportunities for the poor and neglected. By providing capital for the non-profit organisations that list on this exchange and the providing social value for the investors who participate in this exchange, BOVESPA aims to change the labeling of non-profit organisations to 'Social Profit Organisations'. So far about 43 Social Profit Organisations have raised capital through this exchange. However, trading of stock in this exchange is still a distant goal.
Europe's answer to social investing is the FTSE4Good. Set up by FT Stock Exchange in London, FTSE4Good is an index for socially responsible investment. The definition of 'socially responsible' for this index is very broad and covers topics such as: working towards environmental sustainability, developing positive relationships with stakeholders, and upholding and supporting universal human rights. There are about 25 companies in this index. Given FTSE financial requirements, these companies are large for-profit entities which in many cases have very tangential effects on positive social change. Their 'social mission' often springs from the defensive posture of CSR rather than from a genuine effort to make positive social impact.
In North America, Green Stock Exchange (GREENSX) is attempting to become the Social Stock Exchange for that continent (and Europe). This Canada-based social stock exchange is aiming to launch by end of the year to trade shares in social businesses. GREENSX's definition of social business is a business that makes a profit but benefits society as well delivering a triple bottom line return (economic, social and environmental return). GREENSX's goal is to provide small green issuers access to public equity capital efficiently while ensuring liquidity for the investors. The success of GREENSX remains to be seen.
There is obviously a budding global interest in the notion of social stock exchange. Recently, Rockefeller Foundation donated $500,000 to the UK government to pay for a feasibility study for a social stock exchange. The Foundation picked UK as the site for the feasibility study because of the UK government's support for social enterprises. Existing UK government initiatives include legal reforms for separate incorporation for social businesses and plans for a social investment bank funded with unclaimed assets held by financial institutions.
All this is encouraging in a global perspective; now, how about Asia and, in particular, Bangladesh? Bangladesh is a country that continues to produce remarkable social enterprises, and given the state of the country and the world, it can be expected to keep the pipeline of social innovation flowing. The limiting factor is, of course, capital. Let us move a few degrees east in longitude, and there is a country, which -- though a small dot on the map -- is wealthy, is a player in the financial markets and is itching to make a mark in social business. This country is, of course, Singapore. Singapore is ready, able and perfectly positioned to be the home of Asia's first Social Stock Exchange. Bangladesh is ready, able and perfectly positioned to pepper that exchange with very effective social businesses. This is a match made in financial heaven.
Now, what's the next step? It is very simply for the Bangladesh government to have the vision and desire to initiate a ground-breaking discussion with the Singapore government. Bangladesh is well positioned to make its mark in the next economic revolution of conscious capitalism. It can take its rock star social entrepreneurs Yunus and Abed -- and get them to perform the ground-breaking concert for the social stock exchange for its potential partner Singapore.
Thus, my request to the Bangladesh finance ministry use this opportune moment -- initiate the courtship and get Bangladesh on the global financial map. We are all waiting.
The writer is the regional managing director of Asia City Publishing Group and adjunct associate professor at Lee Kuan Yew School of Public Policy at National University of Singapore.
This article was published in Daily Star on Oct 23, 2008
Thursday, August 21, 2008
Beyond the buzz of CSR
Corporate Social Responsibility (CSR) is currently the 'buzz' of Dhaka's business sector. Thus, it was no surprise during my recent trip to Dhaka to hear various interesting uses (and abuses) of the term. It was also interesting to hear that the government is taking an active interest in CSR, embracing the concept by considering a tax exemption for corporate spending on CSR. The fact that Bangladeshi business and government are even talking about doing things to assist the society is a good thing. However, the question I found myself asking each time CSR was mentioned, is whether the initiatives being discussed can really be considered CSR, or if what is passing as CSR is just a public relations gimmick that will ultimately tarnish the whole concept of CSR in Bangladesh.
The subject of CSR is still a nascent one. As a concept, CSR is being defined and debated in business and academic circles around the globe. One definition that seems to be gaining credence is that CSR is the practice of a corporation internalising the externalities it creates through its business practices. In layman terms, CSR means corporations taking responsibilities for their actions and doing something about improving them.
With that in mind, it is important to differentiate CSR from corporate philanthropy or charitable work that is unrelated to the corporation's business. CSR is not the same as the work done by a corporation's foundation arm. CSR involves a conscious effort by the corporation to essentially operate differently to change its practices to improve their impact on society, or to actively seek to ameliorate any negative impacts they may have.
In Bangladesh I noticed that the philanthropic work of corporations was being labeled as CSR. Mislabeling philanthropic work as CSR does little to improve unsavoury business practices of a corporation. As a matter of fact, such mislabeling may give corporations a green light to behave as they wish without regard to their impact on society and then try to whitewash their bad behaviour by merely making a donation to an unrelated cause.
Don't get me wrong, I am not against corporate philanthropy; the more the better! What I am asking for is clear labeling; which leads to clear thinking. While corporate philanthropy is not CSR, it is still a good thing. Philanthropy can be (and is) used as a form of public relations or advertising. As Michael Porter and Mark Kramer argue in their Harvard Business Review article, a company can and should think of philanthropic acts in a strategic way. Such acts can improve the corporation's image and thus their standing in the competitive landscape. The key here is transparency.
Companies can make best use of their philanthropic contributions if they come out clear about what they are doing and how they are doing it and make clear that these contributions have nothing to do with their business practices.
Two examples from Bangladesh may help to illustrate the difference between corporate philanthropy and true CSR. British American Tobacco Bangladesh (BATB) has an extensive “CSR” programme; however, its CSR efforts seem to be out of sync with its business practices. British American Tobacco Bangladesh's website highlights its responsible business practices, which include supporting IT education and afforestation programs. While these may be laudable charitable programs, they have little to do with BATB's business. Sadly, nowhere on its website does BATB mention the ill effects (social, economic and health-related) of smoking or what BATB is doing about them.
By contrast, recently a Danish TV documentary showed that child workers were employed by a subcontractor for Grameenphone (another company touting its CSR programs in Bangladesh) and were handling dangerous heavy metals and chemicals with practically no protection. Following this disclosure, Grameenphone took steps to rectify the problems (related to this case). This is an example of modifying the corporation's business practices to improve its impact on society (albeit in a reactive manner).
It is a shame that Grameenphone took action to change its business practice only in response to pressure from the foreign media. How much better it would have been if Grameenphone had taken the initiative based on its own ethical principals; or even if the pressure had come from within Bangladesh. In the west, CSR is being driven by demands from consumers, employees, shareholders and other stakeholders for better business practices. Why shouldn't Bangladeshi consumers and citizens stand up and press our corporations to live up to standards that we dictate?
Rather than giving tax breaks to corporations for practicing CSR in Bangladesh, the government should set policies in place or empower entities to monitor and publish CSR practices of corporations. If a corporation embraces true CSR practices, if there is true transparency in the system, and if consumers have a say in the matter, then the corporation will be rewarded by the market system. These corporations then should have no qualms about publicising their good deeds and reaping the rewards of greater market share.
We as consumers in Bangladesh need to exercise more of a voice and we need to take responsibility in encouraging companies to embrace CSR and ethical practices. We have to demand that businesses 'embed' CSR in the core of their operations, making it part of their corporate DNA so that it influences decisions across the corporation.
We want our companies to succeed and do good deeds at the same time, and why shouldn't we? After all, we possess the ultimate purchasing power to make the company a success. It is about time we Bangladeshi consumers exercised our rights.
The writer is the regional managing director of Asia City Publishing Group and adjunct associate professor at Lee Kuan Yew School of Public Policy at National University of Singapore.
This article was published in Daily Star on Aug 21, 2008
The subject of CSR is still a nascent one. As a concept, CSR is being defined and debated in business and academic circles around the globe. One definition that seems to be gaining credence is that CSR is the practice of a corporation internalising the externalities it creates through its business practices. In layman terms, CSR means corporations taking responsibilities for their actions and doing something about improving them.
With that in mind, it is important to differentiate CSR from corporate philanthropy or charitable work that is unrelated to the corporation's business. CSR is not the same as the work done by a corporation's foundation arm. CSR involves a conscious effort by the corporation to essentially operate differently to change its practices to improve their impact on society, or to actively seek to ameliorate any negative impacts they may have.
In Bangladesh I noticed that the philanthropic work of corporations was being labeled as CSR. Mislabeling philanthropic work as CSR does little to improve unsavoury business practices of a corporation. As a matter of fact, such mislabeling may give corporations a green light to behave as they wish without regard to their impact on society and then try to whitewash their bad behaviour by merely making a donation to an unrelated cause.
Don't get me wrong, I am not against corporate philanthropy; the more the better! What I am asking for is clear labeling; which leads to clear thinking. While corporate philanthropy is not CSR, it is still a good thing. Philanthropy can be (and is) used as a form of public relations or advertising. As Michael Porter and Mark Kramer argue in their Harvard Business Review article, a company can and should think of philanthropic acts in a strategic way. Such acts can improve the corporation's image and thus their standing in the competitive landscape. The key here is transparency.
Companies can make best use of their philanthropic contributions if they come out clear about what they are doing and how they are doing it and make clear that these contributions have nothing to do with their business practices.
Two examples from Bangladesh may help to illustrate the difference between corporate philanthropy and true CSR. British American Tobacco Bangladesh (BATB) has an extensive “CSR” programme; however, its CSR efforts seem to be out of sync with its business practices. British American Tobacco Bangladesh's website highlights its responsible business practices, which include supporting IT education and afforestation programs. While these may be laudable charitable programs, they have little to do with BATB's business. Sadly, nowhere on its website does BATB mention the ill effects (social, economic and health-related) of smoking or what BATB is doing about them.
By contrast, recently a Danish TV documentary showed that child workers were employed by a subcontractor for Grameenphone (another company touting its CSR programs in Bangladesh) and were handling dangerous heavy metals and chemicals with practically no protection. Following this disclosure, Grameenphone took steps to rectify the problems (related to this case). This is an example of modifying the corporation's business practices to improve its impact on society (albeit in a reactive manner).
It is a shame that Grameenphone took action to change its business practice only in response to pressure from the foreign media. How much better it would have been if Grameenphone had taken the initiative based on its own ethical principals; or even if the pressure had come from within Bangladesh. In the west, CSR is being driven by demands from consumers, employees, shareholders and other stakeholders for better business practices. Why shouldn't Bangladeshi consumers and citizens stand up and press our corporations to live up to standards that we dictate?
Rather than giving tax breaks to corporations for practicing CSR in Bangladesh, the government should set policies in place or empower entities to monitor and publish CSR practices of corporations. If a corporation embraces true CSR practices, if there is true transparency in the system, and if consumers have a say in the matter, then the corporation will be rewarded by the market system. These corporations then should have no qualms about publicising their good deeds and reaping the rewards of greater market share.
We as consumers in Bangladesh need to exercise more of a voice and we need to take responsibility in encouraging companies to embrace CSR and ethical practices. We have to demand that businesses 'embed' CSR in the core of their operations, making it part of their corporate DNA so that it influences decisions across the corporation.
We want our companies to succeed and do good deeds at the same time, and why shouldn't we? After all, we possess the ultimate purchasing power to make the company a success. It is about time we Bangladeshi consumers exercised our rights.
The writer is the regional managing director of Asia City Publishing Group and adjunct associate professor at Lee Kuan Yew School of Public Policy at National University of Singapore.
This article was published in Daily Star on Aug 21, 2008
Thursday, July 10, 2008
Reaching out to the missing middle
Deshantori, a heart-wrenching documentary which follows a group of young Bangladeshis through a harrowing journey in search of employment opportunities outside the country, has sparked soul searching questions for Bangladeshis wherever it has been shown. For me, the most poignant moment of the documentary was when one of the survivors of the journey sadly relates that nobody would lend him money to start a business, but they lent him money to pay for a dangerous and illegal passage overseas. Why are we unwilling to support our young people? Why is entrepreneurship such a bad word in our culture?
In our country, the term for an entrepreneur is a 'businessman,' which carries with it a set of negative connotations. The assumption is that one goes into business if one cannot be a banker, doctor, engineer, lawyer, professor or a corporate worker. In movies, businessmen are portrayed as crude, immoral people. In day-to-day life, a businessman is only considered successful if he can achieve conspicuous display of wealth. The toxicity of the business sector has recently been magnified with the recent anti-corruption crack down which has put a high profile portion of the business community behind bars.
Despite our negative views of 'business', the private sector has a crucial role to play in growing the economy and providing employment opportunities. The private sector is the engine of innovation in all sectors of the economy. Entrepreneurship in Bangladesh currently thrives in two sectors of the economy -- among the poorest of the poor (14 million households) and among the well-off (about 2.5 million households). The reason for this is that both of these sectors have access to institutional financing.
Grameen Bank, BRAC, Proshika, Asa and others have created millions of micro-entrepreneurs among the poor through their microcredit programmes. At the other end of the spectrum, the government has encouraged entrepreneurship for the 'well-off' or 'well connected' by extending financing through institutions such as Bangladesh Shilpa Rin Shangstha, Bangladesh Shilpa Bank and Investment Corporation of Bangladesh. Most of our leading industrial entrepreneurs ('industrialists') are indebted (morally, if not still monetarily) to these financial entities.
Now, let us look at the missing middle -- the middle class. It is from this group, constituting over 12 million families, from which our young people are leaving the country in droves. These people are neither poor enough to qualify for micro-credit nor are they well connected or wealthy enough to access bank loans. Many of these young people receive a decent enough education but emerge from school to find zero employment opportunity in the public and private sector. If they then seek to establish a business for self-employment, they find the existing institutions of the financial sector have no mechanism to extend them credit.
While people will still leave the country to fill the need for unskilled labor overseas, we need to find ways to keep our skilled and educated youth in the country. As a first step toward this goal, we need to make 'business' into an acceptable word in our culture. The next step is to make businessmen out of these young people.
How can it be done? The government needs to recognise and promote the benefits of entrepreneurship, create programmes to encourage it and, most importantly, create the right incentives for the financial institutions to embrace this missing middle.
Maybe now is the time to get the microcredit NGOs or government banks to look into providing this 'more than micro' credit for the middle class youth. Just as microcredit organisations had to create new methods to mitigate the risk of lending to the poorest of the poor, so new standards will be needed for these loans.
These may include, for example, a minimum education level for the borrower and a requirement for a proven, easily replicable business plan. And, taking a page from the microcredit organisations, the loans would likely be capped. These institutions can even look into 'franchising' ready made business opportunites while extending credit as Mr Muzammel Hoque, former GM of Grameen Bank, is doing with his new business venture (a holistic and green business based on 4 cows and financed with a loan of Tk 160,000).
In order to provide incentives to the financial institutions, and mitigate any additional risk, the government, foundations or mulitnational banks such as World Bank or Asian Development Bank could provide credit support or subsidise interest rates for loans which meet certain criteria.
I can think of hundreds of reasons why what I am proposing will not work. (I am sure I will get many emails from readers debunking my ideas.) I can also think of one good reason why it may work we are giving our youth a chance a chance they would not be given otherwise.
According to management guru Peter Drucker, an entrepreneur is 'one who always searches for change, responds to it, and exploits it as an opportunity'. Can anyone be an entrepreneur? The answer is no. But with access to capital, can many of our intelligent, energetic youth be turned into a decent business people if not passionate entrepreneurs? The answer is yes. It is no news that what the country needs now is more decent business people and fewer passionate critiques.
The writer is an associate professor at Lee Kuan Yew School of Public Policy at National University of Singapore and managing director of a regional media company.
This article was published in Daily Star on July 10, 2008
In our country, the term for an entrepreneur is a 'businessman,' which carries with it a set of negative connotations. The assumption is that one goes into business if one cannot be a banker, doctor, engineer, lawyer, professor or a corporate worker. In movies, businessmen are portrayed as crude, immoral people. In day-to-day life, a businessman is only considered successful if he can achieve conspicuous display of wealth. The toxicity of the business sector has recently been magnified with the recent anti-corruption crack down which has put a high profile portion of the business community behind bars.
Despite our negative views of 'business', the private sector has a crucial role to play in growing the economy and providing employment opportunities. The private sector is the engine of innovation in all sectors of the economy. Entrepreneurship in Bangladesh currently thrives in two sectors of the economy -- among the poorest of the poor (14 million households) and among the well-off (about 2.5 million households). The reason for this is that both of these sectors have access to institutional financing.
Grameen Bank, BRAC, Proshika, Asa and others have created millions of micro-entrepreneurs among the poor through their microcredit programmes. At the other end of the spectrum, the government has encouraged entrepreneurship for the 'well-off' or 'well connected' by extending financing through institutions such as Bangladesh Shilpa Rin Shangstha, Bangladesh Shilpa Bank and Investment Corporation of Bangladesh. Most of our leading industrial entrepreneurs ('industrialists') are indebted (morally, if not still monetarily) to these financial entities.
Now, let us look at the missing middle -- the middle class. It is from this group, constituting over 12 million families, from which our young people are leaving the country in droves. These people are neither poor enough to qualify for micro-credit nor are they well connected or wealthy enough to access bank loans. Many of these young people receive a decent enough education but emerge from school to find zero employment opportunity in the public and private sector. If they then seek to establish a business for self-employment, they find the existing institutions of the financial sector have no mechanism to extend them credit.
While people will still leave the country to fill the need for unskilled labor overseas, we need to find ways to keep our skilled and educated youth in the country. As a first step toward this goal, we need to make 'business' into an acceptable word in our culture. The next step is to make businessmen out of these young people.
How can it be done? The government needs to recognise and promote the benefits of entrepreneurship, create programmes to encourage it and, most importantly, create the right incentives for the financial institutions to embrace this missing middle.
Maybe now is the time to get the microcredit NGOs or government banks to look into providing this 'more than micro' credit for the middle class youth. Just as microcredit organisations had to create new methods to mitigate the risk of lending to the poorest of the poor, so new standards will be needed for these loans.
These may include, for example, a minimum education level for the borrower and a requirement for a proven, easily replicable business plan. And, taking a page from the microcredit organisations, the loans would likely be capped. These institutions can even look into 'franchising' ready made business opportunites while extending credit as Mr Muzammel Hoque, former GM of Grameen Bank, is doing with his new business venture (a holistic and green business based on 4 cows and financed with a loan of Tk 160,000).
In order to provide incentives to the financial institutions, and mitigate any additional risk, the government, foundations or mulitnational banks such as World Bank or Asian Development Bank could provide credit support or subsidise interest rates for loans which meet certain criteria.
I can think of hundreds of reasons why what I am proposing will not work. (I am sure I will get many emails from readers debunking my ideas.) I can also think of one good reason why it may work we are giving our youth a chance a chance they would not be given otherwise.
According to management guru Peter Drucker, an entrepreneur is 'one who always searches for change, responds to it, and exploits it as an opportunity'. Can anyone be an entrepreneur? The answer is no. But with access to capital, can many of our intelligent, energetic youth be turned into a decent business people if not passionate entrepreneurs? The answer is yes. It is no news that what the country needs now is more decent business people and fewer passionate critiques.
The writer is an associate professor at Lee Kuan Yew School of Public Policy at National University of Singapore and managing director of a regional media company.
This article was published in Daily Star on July 10, 2008
Thursday, June 26, 2008
The Land of Creative Capitalism
I wrote a piece for this newspaper several months ago, the general theme of which was that we as a nation need a tag line or a 'mantra' around which we can unite the country. Given that in the last few months I have not heard any compelling suggestions, I will be presumptuous enough to give our country a tag line/vision/theme, which is, 'In five years time, Bangladesh will be the world leader of creative capitalism'.
By 'Creative Capitalism' I do not mean that we have to be creative about our capitalistic ways (which, unfortunately, we have been with our rampant corrupt practices).
The term refers to a self-sustainable business, which has a social mission or a market-based solution to a social problem. Creative Capitalism was widely discussed at the Davos Economic Forum, which took place at the beginning of this year. Bill Gates coined the term in his speech and called for new 'creative capitalism' to help the poor.
The buzz now is about creating a system with twin missions, namely, making profits, and at the same time, improve the lives of those who do not fully benefit from the market forces. Gates is aiming to persuade companies to embrace his idea of socially beneficial ventures that make money.
Similar to Gates, our own Professor Yunus has also been talking about this in his speeches as he travels the world. His term for it is 'social business.' In his book, Creating a World Without Poverty, Professor Yunus goes into details about his ideas of social business. The essence of Professor Yunus's book is that 'for-purpose' organisations need to distinguish themselves from 'for-profit' and 'non-profit' enterprises.
Creative capitalism or social Business or socially conscious business or sustainable social enterprise - whatever the label one uses, the reality is that we have a few shining examples in Bangladesh. Aarong, Grameen Phone, Cell Bazaar, Drik, Prabartana are examples of such successful sustainable Bangladeshi businesses with strong social missions.
However, the number of these self-sufficient social businesses in our country is currently limited. The reason being, we are a nation of Non-Governmental Organisations (NGO). With over 20,000 registered NGOs, we have come to believe that every answer to social change will come from a NGO.
The truth of the matter is that the NGOs have played a big role in the growth and development of the nation. However, the world is changing fast and for us to effectively keep up with change and give our citizens the rights they deserve. We need to embrace capitalist practices, enhanced with a social mission.
Bangladesh needs the high returns of pure profit-driven businesses, tempered with good labor and operational practices. However, the business sector and the government are recognising the world over, that alongside businesses pursuing pure profit, it is desirable to encourage some businesses to focus on social returns as well. This means that Social Enterprises and Free enterprises (private sector good or bad) can complement one another and need not be mutually exclusive.
For us to encourage sustainable social enterprises in Bangladesh, we not only need the spirit for it, but we also need the capital to back it and of course the correct government regulations to encourage it. This is where the money that is pouring into the country can make a difference.
I have recently seen a lot written about the various funds (some by non-resident Bangladeshis) talking about great investment opportunities in Bangladesh. In much of this, I have seen Bangladesh being referred to as the 'next Vietnam'. With Vietnam's soaring inflation rates and the economy near collapse, perhaps, it is not a good comparison right now.
However, Bangladesh can become better than India, China or Vietnam, if the investors, business sector and the government, full-heartedly embrace the need and value of an economy supported by sustainable social enterprises. I would put my money on it.
So my request to the potential investors and entrepreneurs is that, while we are building this country, let us try to build it in our own unique way.
While you look to invest in the next garment factory, why not invest in a garment factory that treats its labour fairly and uses environment friendly dyes? Or, while we look to improve tourism, why not use the revenue generated by tourism to save our mangrove forests or preserve the cultures of our indigenous peoples?
I am in the process of pulling together a fund to do just that. I will play my part in making Bangladesh, in five years time, 'the world leader of creative capitalism'. Will you?
The writer is an associate professor at the National University of Singapore's Lee Kuan Yew School of Public Policy and the managing director of a regional media company.
This article was published in Daily Star on June 26, 2008
By 'Creative Capitalism' I do not mean that we have to be creative about our capitalistic ways (which, unfortunately, we have been with our rampant corrupt practices).
The term refers to a self-sustainable business, which has a social mission or a market-based solution to a social problem. Creative Capitalism was widely discussed at the Davos Economic Forum, which took place at the beginning of this year. Bill Gates coined the term in his speech and called for new 'creative capitalism' to help the poor.
The buzz now is about creating a system with twin missions, namely, making profits, and at the same time, improve the lives of those who do not fully benefit from the market forces. Gates is aiming to persuade companies to embrace his idea of socially beneficial ventures that make money.
Similar to Gates, our own Professor Yunus has also been talking about this in his speeches as he travels the world. His term for it is 'social business.' In his book, Creating a World Without Poverty, Professor Yunus goes into details about his ideas of social business. The essence of Professor Yunus's book is that 'for-purpose' organisations need to distinguish themselves from 'for-profit' and 'non-profit' enterprises.
Creative capitalism or social Business or socially conscious business or sustainable social enterprise - whatever the label one uses, the reality is that we have a few shining examples in Bangladesh. Aarong, Grameen Phone, Cell Bazaar, Drik, Prabartana are examples of such successful sustainable Bangladeshi businesses with strong social missions.
However, the number of these self-sufficient social businesses in our country is currently limited. The reason being, we are a nation of Non-Governmental Organisations (NGO). With over 20,000 registered NGOs, we have come to believe that every answer to social change will come from a NGO.
The truth of the matter is that the NGOs have played a big role in the growth and development of the nation. However, the world is changing fast and for us to effectively keep up with change and give our citizens the rights they deserve. We need to embrace capitalist practices, enhanced with a social mission.
Bangladesh needs the high returns of pure profit-driven businesses, tempered with good labor and operational practices. However, the business sector and the government are recognising the world over, that alongside businesses pursuing pure profit, it is desirable to encourage some businesses to focus on social returns as well. This means that Social Enterprises and Free enterprises (private sector good or bad) can complement one another and need not be mutually exclusive.
For us to encourage sustainable social enterprises in Bangladesh, we not only need the spirit for it, but we also need the capital to back it and of course the correct government regulations to encourage it. This is where the money that is pouring into the country can make a difference.
I have recently seen a lot written about the various funds (some by non-resident Bangladeshis) talking about great investment opportunities in Bangladesh. In much of this, I have seen Bangladesh being referred to as the 'next Vietnam'. With Vietnam's soaring inflation rates and the economy near collapse, perhaps, it is not a good comparison right now.
However, Bangladesh can become better than India, China or Vietnam, if the investors, business sector and the government, full-heartedly embrace the need and value of an economy supported by sustainable social enterprises. I would put my money on it.
So my request to the potential investors and entrepreneurs is that, while we are building this country, let us try to build it in our own unique way.
While you look to invest in the next garment factory, why not invest in a garment factory that treats its labour fairly and uses environment friendly dyes? Or, while we look to improve tourism, why not use the revenue generated by tourism to save our mangrove forests or preserve the cultures of our indigenous peoples?
I am in the process of pulling together a fund to do just that. I will play my part in making Bangladesh, in five years time, 'the world leader of creative capitalism'. Will you?
The writer is an associate professor at the National University of Singapore's Lee Kuan Yew School of Public Policy and the managing director of a regional media company.
This article was published in Daily Star on June 26, 2008
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