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Bangladesh has achieved consistent economic growth and improved wellbeing for its people, against all odds
In the early 1970s, Bangladesh might have been considered a failed country – a devastating war followed a terrible cyclone, the economy deteriorated, poverty was endemic and political tension was high.
In the 40 years since then, there has been a transformation. Food security is within reach, maternal deaths and early childhood deaths are falling, and the country has achieved gender parity in attendance of primary schools.
Since the early 1990s this country of 155 million has been the most successful in Asia in pulling its people out of poverty. And for the whole of the past decade, Bangladesh’s economic growth has averaged more than 6% a year. Alongside a vibrant apparel sector, new industries are growing – Bangladesh is becoming a booming rural solar giant for example, with up to 50,000 home solar installations per month.
Despite the progress, there is also plenty that is troubling. A third of Bangladeshis continue to live below the official poverty line. The recent 2014 elections were internationally considered a sham, bringing the re-election of the only party and its leader Sheikh Hasina.
Low-lying Bangladesh has always been at the mercy of bad weather, and now analysis from Maplecroft rates it as the most sensitive to climate disruptions, with vast swaths of the country’s lands at threat of being swallowed by rising seas.
Taking the good and the bad together, it would seem that Bangladesh is a country with challenges, and yet a surprising capacity to turn tragedy around and continue social advancement. Some possible reasons for this include the improved status of women in the country, the positive results of its embrace of microcredit, and the secret weapons that are the giant NGO Brac and the social business proponent Mohammad Yunus.
In the wake of the horrifying building collapse at Rana Plaza in April 2013 in Dhaka that killed more than 1,000, suddenly the plight of Bangladesh garment workers was in the world’s spotlight.
Though the nearly four million workers (mostly women) that toil in the ready-made garment industry are still working long and hard hours in less-than-ideal conditions, reforms are proceeding. Since April 2013, 130 trade unions have registered in the country; minimum wages have increased by a third; and hundreds of factories have been inspected for fire and other safety hazards via the two worker safety groups that sprang up in the wake of the tragedy.
Swedish fashion brand H&M, though it had no garments being manufactured at Rana Plaza, has been one of the manufacturers spurred into increased action around wages since the accident in Dhaka. H&M set out what it believes is a clear goal towards getting garment workers in Bangladesh (and its other supplier nations) a living wage.
H&M has three pilot factories, one in Cambodia and two in Bangladesh, where it has three-year contracts to take all that the factories produce, and it is using these factories as labs for figuring out how to deliver fair wages.
“We use the ‘fair wage method’ in [these] role model factories,” says Malin Bjorne, product manager for sustainability communications at H&M. “This supports management and workers to have fair and regular wage negotiations; it involves interviews with the workers directly to find out if they think their wage is progressing. Textile workers’ own perceptions of what a fair living wage is serves as our definition – this approach is the heart of our road map.”
Bjorne says H&M expects its biggest suppliers and their 700 factories to have improved pay structures in place by 2018 at the latest.
Critics have pointed out that “fair” wages decided by workers is not quite the same as a “living” wage calculated by others. Bangladeshi garment workers currently make the national legal minimum monthly wage of US$68, which they started receiving just months ago, which is one fifth of the Clean Clothes Campaign’s calculated living wage for Bangladesh.
Bangladesh’s giant non-profit group, Brac, is involved in all aspects of Bangladesh development, including the garment industry, which currently produces 77% of Bangladesh’s exports. As part of its work, Brac supports Aarong, a network of local small-scale fair trade clothing producers that manufacture for Bangladesh retailers.
David Chesney, formerly an employee of the UN World Food Programme, is now crowdfunding a $29 T-shirt to be manufactured through this fair trade network – as soon as he has 1,000 orders.
The workers who produce Chesney’s Fairwear T-shirt will receive a 30% addition to their salaries. Fairwear’s hope is that consumers will begin to understand the reasons to pay more for their clothing.
Rachel Meiers, director of the Her Project run by the multinational group Business for Social Responsibility, says garment companies will also need in future to “address what is happening beyond the factory walls”.
Both H&M’s fair living wage work and the Fairwear T-shirt project want to improve workers’ pay, and Meiers says that more collaborations between companies and other groups – health workers and urban planners, for example – can truly lift the quality of life in places like Bangladesh.
The measure of microfinance
The concepts of microfinance and microcredit were brought to international attention by Bangladeshi academic Mohammad Yunus through his Grameen Bank.
Microfinance has had its proponents, and its detractors. Back in 2006 Yunus won the Nobel Peace Prize for reducing poverty. Five years later, Yunus was forced from Grameen Bank following a clash with the Bangladeshi government and a number of later disproved allegations. At the same time, some studies discredited the links between bringing people out of poverty and the microcredit industry.
Yet in early 2014, the largest study ever done by the World Bank on microfinance was released, and microfinance’s reputation seems to be once again on the rise. The World Bank study surveyed 3,000 households in 87 villages in Bangladesh.
The Bangladesh microfinance industry now has more than 500 providers, and many of the village households surveyed have multiple loans or lines of credit from several of these financial institutions. But contrary to some critics’ beliefs, the study found this multiple borrowing tends to increase personal spending, household assets, and children’s education – and benefits women more than men, as it was originally designed to do.
One problem that the authors of the study found is that microfinance may be starting to have diminishing returns for people in rural Bangladesh. That is because, as the authors of the study note, there has not been much “technological breakthrough in local economies”, and most of the economic activity that microcredit helped, ie small-scale trade, may be reaching saturation.
That’s where Yunus’s support of social business may lead in a next wave of sustainable development for Bangladesh. Through the Yunus Centre, more than 100 social businesses – designed not for shareholder profit but for solving social ills through business – have been helped with financing. In Bangladesh that has meant varied business concepts, from a mobile garden service that provides chemical-free produce to city dwellers, to the yoghurt business of Grameen Danone.
Yunus hopes that, by 2020, 5% of the global economy will be invested in social business. Because of his dedication to fostering social businesses in his homeland through the Yunus Design Lab competition (now in its 15th round), Bangladesh seems set to gain, perhaps more than most countries, from the proliferation of social business.
Bhitti, for example, is one of the most recent Bangladesh-based companies to enter the social business fray, with zero carbon footprint sugarcane-waste bricks for building materials in rural areas. Bhitti bricks are sun dried rather than kiln heated, and the company founders, all still students, won the runner-up prize in the 2014 Global Social Entrepreneur Competition.
In addition to the proliferation of social businesses, conventional business has a big role to play in Bangladesh’s quest to develop sustainably. The work of the Bangladesh-based CSR Centre in the past five years has been awareness-raising and, led by chief executive Shahamin Zaman, has worked at corporate responsibility research and advocacy at national, regional and global levels. According to Zaman, the centre has pulled stakeholders together to show best-practice examples of corporate sustainability that extend far beyond philanthropy.
The financial sector may help too. The Bangladesh government’s National Board of Revenue has said it will offer a tax rebate for sustainability programmes. Sustainability expenditures by banks increased by a factor of eight in 2013 compared with 2009 figures, according to government estimates. Bangladesh’s central bank has also devised a small financial incentive for commercial banks to invest more in sustainable sectors such as renewable energy.
Unfortunately, the area where Bangladesh is most vulnerable – climate change – is also an area where there has been limited success so far.
The Bangladesh government has embarked on building what it calls climate-resilient infrastructure in the most low-lying coastal areas of the country, in order to counter rising sea levels, investing $10bn in this and other projects to reduce risks.
It won’t be enough, experts say, warning that the great strides Bangladesh has made in the past with its Millennium Development Goals are also at risk as the effects of climate change grow more acute.
The UN puts a simple price tag on Bangladesh’s costs for adapting to climate change: $5bn each year for the next five years, and even more after that. The next chance the country has to try to negotiate that from the rest of world won’t come until 2015 at the Paris climate conference, and agreements reached there won’t receive funding until 2020.
In the meantime, resilient Bangladesh will continue as it always has, making the best of it despite the hard knocks.
Bangladesh labour practices living wage Rana Plaza social advancement South Asia briefing
May 2015, Singapore
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