1st Impact Investment Summit Bangladesh

1st Impact Investment Summit Bangladesh

December 14, 2016

By Taposh Ghosh

Investing in the 21st century is changing rapidly. The modern investor is agile, well informed, and opportunistic and demands more than just financial returns from the investment being made. With technology being the foremost disruptor of this era, more funds are being diverted towards projects of innovation and creativity, but the growing concern for stakeholders, the society and the environment has also given rise to various alternative forms of investment, some of which have goals of inclusive growth with the capability to change how we look at this age old art of investment forever.

WHAT IS IMPACT INVESTMENT?

Impact Investment is a term created not so long ago, back in 2007 by an initiative coordinated by the Rockefeller Foundation.

The Global Impact Investing Network (GIIN) has defined impact investment as investments made into companies, organizations and funds with intention to generate social and environmental impact alongside a financial return. This inclusion of a financial return differentiates it from grant funding and the deliberate strategy for positive benefit to society separates it from traditional investments.

IMPACT INVESTMENT IN BANGLADESH

Impact Investment is Bangladesh has crossed the idea phase and investors are seeking more sophisticated ways of measuring their impact but there  is a lack of good examples or tools to do so. Bangladesh currently has the third most active impact investing market in South Asia after India and Pakistan. Around 15 impact investors are currently active in Bangladesh with a total investment of around US$ 955 million. Most of the impact investment in Bangladesh have been deployed in growing sectors such as ICT Energy, Financial Services, Agriculture/ Food Processing, Infrastructure, Microfinance and Manufacturing.

IMPACT INVESTMENT SUMMIT BANGLADESH

The concern for the maturity and expansion of this investment form in Bangladesh triggered the need to host the first international summit on Impact Investment in Bangladesh. The Summit – Bangladesh is Ready, Driving the Sustainable Agenda, has been initiated by Build Bangladesh. Build Bangladesh is an initiative working on social entrepreneurship, economic empowerment and environmental sustainability in Bangladesh while promoting the positive portrayal of Bangladesh in the global forum.

The objective of this international conference on Impact Investment was to develop an understanding of the status of the global impact investing market, as a critical input to future investments and engagement to build and grow this market in Bangladesh. The key themes explored the current status and trends in terms of the types of active investors, capital deployment, opportunities for all challenges to investing, the demand for impact capital, challenges to accessing capital and opportunities for enterprise growth, and the vibrancy and scale of the supportive ecosystem in Bangladesh for the industry while complementing the Sustainable Development Goals (SDGs).

The day long summit was designed with 5 keynote session by global Impact Investment experts, 1 general panel discussion and 3 industry specific panel discussions. The summit also marked the formal launch of Build Bangladesh.

The summit was held at The Westin Dhaka and attended by 200 industry professionals of the country.

PATRONS AND PARTNERS

The 1st Impact Investment Summit Bangladesh was conceptualized and initiated by Build Bangladesh and was organized by Bangladesh Brand Forum, in association with Channel I. The summit had Impact Investing Australia as Strategic Partner, The Daily Star as Media Partner, and WebAble as Social Media Partner.

OPENING NOTES AND CONTEXT ADDRESS

Ms. Rumana Malik Munmun, the master of ceremony for the day commenced the summit welcoming all the distinguished guests and thanking all the partners of the event.

Architect Farhadur Reza, Founding Member and President, Build Bangladesh, presented his welcome address for the day and talked about the initiative Build Bangladesh and its goals towards harnessing knowledge remittance, alternative investments and empowering social enterprises.

Dr. M. Khairul Hossain, Chairman, Bangladesh Securities and Exchange Commission delivered his note next, stating that Impact Investment should be a class in the asset market in order to diversify risks for investors and the need to outline the challenges that exist for impact investors in Bangladesh.

In his note, Kazi M. Aminul Islam, Executive Chairman, Bangladesh Investment Development Authority, highlighted the need to take this act of inclusive investment vigorously forward. Social investment is no longer a concern for the government only and the private sector need to play its role in generating welfare across the economy.

INAUGURATION OF SUMMIT AND FORMAL LAUNCH OF BUILD BANGLADESH

Following the welcome notes, Mr. Abul Maal Abdul Muhith, MP, Honorable Minister, Ministry of Finance, Government of The Peopls’s Republic of Bangladesh, along with the Founding Directors of Build Bangladesh took the stage to formally launch Build Bangladesh and the Honorable Minister declared the inauguration of the summit.

In his speech, the Honorable Minister shed light upon the country’s revolutionary feat of reducing poverty down from 70% to 22% in a time span of 45 years. But with goals to convert the country into a middle income nation, complete eradication of poverty needs to be achieved. Impact Investment and inclusive growth has the most important roles to play leading up to that scenario.

KEYNOTE ADDRESS BY ROSEMARY ADDIS

The first keynote session of the day was conducted by Rosemary Addis, Founding Chair, Impact Investing Australia & Chair, Australian Advisory Board on impact investing. The speaker shed light upon the limitless possibilities and opportunities that a thriving country such as Bangladesh possesses when it comes to Impact Investing. She emphasized that the focus should be on driving investment towards things we care about – education, health, environment and society. 

KEYNOTE ADDRESS BY DAVID CARRINGTON

David Carrington, Vice Chair, Supervisory Board, Triodos Bank NV and Founding Non-executive Director, Big Society Capital, joined in via video for the second session of the day. The speaker pointed out five key lessons that social investors need to keep in mind while investing:

  1. The need to leverage on talent and skills with innovation as the backbone is expected to act as the major driving force behind the success of social investments. The use of past and existing success stories as inspirations in harnessing such talents is crucial.
  2. There is no single type of social investment. The right mixture of alternative investment forms is important and risks and needs vary as per markets. The most successful forms are the ones which combine both philanthropic and government funds as a source of investment.
  3. Measurement of the impact created is an important tool while measuring returns upon investment. The measurement should be in terms of the welfare and how it has helped families and communities and how sustainable it is.
  4. Celebration of achievements and sharing of success stories to inspire other potential investors. However, these stories should be accurate and not hyped.
  5. Both investors and investees need to be patient when it comes to expecting returns from social investments as such investments often take longer periods to generate significant impact.

PANEL DISCUSSION

The first panel discussion was moderated by Faisal Ahmed, Senior Economic Advisor to the Governor, Bangladesh Bank. Panel members included Rosemary Addis, Arif Khan, CEO and Managing Director, IDLC Finance Limited, Abrar A. Anwar, CEO, Standard Chartered Bangladesh, Md Mahbub-ur Rahman, Deputy CEO & Country Head of Commercial Banking, HSBC Bangladesh, and Meer Sajed-Ul-Basher FCA, Managing Director & CEO, Impress Capital Limited and Founding Member, Build Bangladesh.

The discussions revolved heavily around the fact that in order to achieve middle income status, investment in Bangladesh as a portion of GDP needs to elevate from 20% to around 34%. This increased investment needs to be directed towards healthcare and education for multiplying the lasting impact.

The limited size of capital and equity markets in the country, with banks leading the investment market arose as a general concern in the discussion.  The panel members ended the discussion agreeing upon the government’s initial role in creating metrics to measure the impact of social investments and creating suitable conditions for young entrepreneurs to access funds.

KEYNOTE ADDRESS BY CORINNE PROSKE

Corinne Proske, General Manager, Good Shepherd Finance, and Board Member, The Difference Incubator, was the 3rd keynote speaker for the summit. Corinne sketched out the global scenario of how a lot of great investors are willing to make positive changes in the society but cannot find sufficient linkages to channel their money to create the final impact. This problem was solved in Australia by the creation of an impact investment fund which helped to distribute the investment among innovative businesses and young entrepreneurs.

When it comes to ensuring sustainability in businesses, equity creates a greater impact compared to debt as per the speaker. The concern should be about the amount of profit required and the respective return on investment, and also measure of the impact and welfare the business is generating.

KEYNOTE ADDRESS BY LUKE BRANAGAN

Luke Branagan, Director, Philanthropic Services, JBWere, Australia led the 4th session. He acknowledged the role that Dr. Md. Yunus and his microcredit investments played in forcing the global investment markets to think about alternative investment platforms. Luke pointed out in his presentation that philanthropic capital accounts for a mere 2% of world capital, which by no ways is sufficient to create any major changes when it comes to creating environmental sustainability. 

The mindset for organizations need to shift from philanthropic capital to venture investments across the investment spectrum. He expressed great confidence in the large pool of diverse investors willing to invest in Bangladesh and hopes that Bangladesh can become a major example for other developing nations as a platform for impact investing.

KEYNOTE ADDRESS BY ABHIJIT RAY

The final keynote session was conducted by Abhijit Ray, Co-founder and Managing Director, Unitus Capital, India. The speaker pointed out that investment will only come if there are enough impactful businesses operating on the ground. He presented an example of an Indian software firm whose business model included employing skillful personnel with disabilities. The firm managed to raise capital equivalent to US$ 1 million and after 7 years is now valued at over US$ 8 million.

Countries such as Bangladesh with its population should not be concerned about finding markets, rather the concern should be for enabling innovation and the environment and people with networks working to channel investments to impactful sectors

PANEL DISCUSSION: AGRICULTURE AND FOOD SECURITY

The session started with a video note by Harvard Professor Shawn Cole highlighting a few major examples in India relating to the agriculture sector, where investors have managed to find a balance between financial and social impacts.

The main discussion of the panel centered mostly on how innovation can help the country’s agriculture industry to thrive, increasing its contribution to the GDP. However, the lack of major players paves way for the investment to be directed at SMEs dedicated to the betterment of the sector. Opportunities also lie in the export sector for organic products and expansion of the fishery industry. The experts believed that with proper guidance, Bangladesh can become a major agriculture exporting player in South Asia.

PANEL DISCUSSION: READY MADE GARMENTS

89% of the total Bangladeshi export is still RMG, which solidifies the significance of the industry to the country’s GDP. But financial, environmental and social sustainability are concerns which are, to some extent, limiting further growth in this sector. The panel members emphasized the role of the Rana Plaza incident which forced safety regulations to be put into place. The tragedy has, in fact, turned Bangladesh to be one of the safest RMG working environments in Asia.

The focus in investment needs to be directed towards developing human resources and increasing productivity and efficiency. The ability to be spontaneous and meet the overnight changes of the fashion world is another key factor that investors need to be concerned about.

PANEL DISCUSSION: HEALTH AND WELL BEING

Lack of sufficient investment in the healthcare industry is one of the major hindrances the country is facing. But technology and social investment, together in concert, can be the rescuer. Telemedicine has already proven to be effective in Bangladesh, but from here on the investment should be directed at delivering diagnosis mediums to the mass. The idea should be to prevent chronic diseases at grassroots levels.

The government, NGOs and private investors need to operate in co-existence in solving this major issue. Rural healthcare should be a national concern, provision of which is only possible through social investment and innovative business models.

CLOSING NOTES

Mr. Fazle Kabir, Governor, Bangladesh Bank delivered the final speech of the day, congratulating Build Bangladesh and Bangladesh Brand Forum for successfully conducting of the summit. The Governor shed light upon the importance of educating local companies about the concept and the resulting impacts that social investment can create. He expressed his expectations that investors will take advantage of Bangladesh’s geo political location and its young demographic to create fruitful social returns.

Mr. Arastoo Khan, Chair, Advisory Board, Build Bangladesh, delivered the closing note thanking all the keynote speakers, moderators, panel members and distinguished guests for making the summit a success. He ended his note expressing gratitude towards the partners and Bangladesh Brand Forum for seamlessly organizing the event, and hoped that this concept will bring forth a revolution as to how investment in the future within Bangladesh will help the country strive towards growth.

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