Unleashing the power of the private sector

Over the next two to three decades, there are two major overarching trends that Bangladesh will have to deal with, and therefore have to plan for as well. The first trend is a positive one, which is our desire, and indeed commitment, to graduating out of Least Developed Country (LDC) status within less than a decade. The second, more negative trend, is to tackle the adverse impacts of climate change that will occur along the way.

In order to deal with both these trends, while the role of government is key in setting policies and goals, the private sector will have to become the major engine of delivering the twin goals of economic development that is also climate resilient. This column will discuss how the private sector can contribute towards meeting these two goals.

First let us define what we mean by the private sector which is a very large catch-all term that includes everything from multinational companies operating in Bangladesh to large Bangladeshi corporations to small and medium enterprises (SMEs) as well as individual farmers and road-side vendors.

For the purposes of this column, I will use the term to mean the larger corporations (counting both multinational as well as national ones) as well as SMEs.

In this domain again there are major sectors in which they can be disaggregated like finance and banking, industry, energy, transport, garments, textiles, tea growing, etc. Each sector is usually represented by trade and industry associations who are all members of the major chambers of commerce and industry such as the Dhaka Chamber of Commerce and Industry (DCCI) and Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).

For the overall economic development of the country, the key roles will have to start with finance and banking sectors which can leverage both national and international capital to invest in the other industries and commercial sectors at a much larger scale than we have done in the past while reducing our dependence on concessional loans and grants through Official Development Assistance (ODA) from the richer countries. This will enable the country become much more self-reliant economically.

On the climate change front, there are two separate aspects, like two sides of a coin that need to be considered, namely threats and opportunities.

With regard to threats of adverse impacts of climate change, as one of the world’s most vulnerable countries, Bangladesh has to prepare itself to face more frequent (and possibly more severe) floods, cyclones and droughts as well as sea level rise in coming decades.

However, Bangladesh has a long history of successfully tackling such challenges, such as the cyclone warning systems and shelter programmes, which have resulted in lives lost from cyclones to drop by nearly 100 percent over the last few decades. Cyclones still happen and cause damage to crops and infrastructure but human lives lost have been successfully prevented.

So for the private sector, the requirement is for all of them to become aware of the climate change risks that they will have to face over time and build their own capacity to prepare to face those risks without too much damage to their business. For the larger corporations, they can afford to pay for this advice and capacity building but for SMEs, there will need to be an investment from the government to initially provide information to raise awareness and then do training and capacity building to enable them to take necessary actions.

For the other side of the coin, namely opportunities to make profits, there are two domains of such opportunities available for the private companies in Bangladesh.

The first is to tackle the emissions of greenhouse gases through climate change mitigation actions, which include promoting renewable energy such as solar energy, where a number of Bangladeshi companies are already making good profits. The second is to find profit making business opportunities for adaptation to the adverse impacts of climate change through things like selling saline, flood and drought tolerant varieties of crops and other agricultural products, insurance schemes and other activities. This is a relatively unexplored area where Bangladeshi companies can indeed become pioneers and possibly even export their expertise to other companies over time.

It may be noticed that I did not mention the issue of Corporate Social Responsibility (CSR). This is not because I don’t recognise its role but because depending on CSR alone will not be enough. Unless we can unleash the power of profit-making from good development and tackling climate change, we will not be able to make the changes at the scale required to meet our aspirations and goals. However, with the right kind of policies, and incentives along with knowledge generation and sharing, it is well within our grasp.

Originally this article was published on Wednesday February 22, 2017 at Daily Star. The author Dr. Saleemul Huq is the director of the International Centre for Climate Change and Development (ICCCAD) at the Independent University, Bangladesh (IUB).
Email: saleemul.huq@iied.org