Retail Supply Chains Supporting Indirect Jobs

By CDC

Mr Basher is a farmer who supplies fresh vegetables to Agora Supermarkets

“I’ve now learnt to think on a broader level. Before Agora, I used to think very traditionally. Now there is a lot of opportunity to expand my business which will help me invest in my children’s education.”

BUILDING BUSINESSES

It is early in the morning and Mr. Basher, a farmer near Dhaka, capital city of Bangladesh, is getting ready to pick his vegetables which will be taken to Agora Supermarkets. Agora Supermarkets is one of Bangladesh’s first supermarket chains. Mr. Basher earns a steady income through selling his vegetables to Agora, which has immensely improved his standard of living in the last few years.

Before doing business with Agora, he used to buy vegetables from the wholesale market and sell them. Today his life looks very different; he now owns 45 acres of farmland where he can grow his own vegetables – cabbages, broccoli and cauliflower – which he sells to Agora Supermarkets and other large retailers.

“Now I’m happy, I’m buying more land and my business is expanding. With Agora’s help, I can do training in packaging, chemicals, and minimising post-harvest losses as well as how to do business with the retail sector. I have big dreams. I’m not thinking about myself but my family and community.”

Mr. Basher’s children both attend the international school in Dhaka and are having an education that Mr. Basher could never have dreamed of. He would like his daughter to become a lawyer while his son will take over and further expand his business.

CDC’S INVESTMENT IN AGORA SUPERMARKETS

In 2001, Rahimafrooz Superstores launched Agora, the first supermarket chain in Bangladesh. Demand has increased rapidly and there are now 12 outlets with 2 more due to open shortly.

Although Agora Supermarkets has been successful many businesses in developing countries struggle to find the investment they need to grow. Working with local fund manager, Brummer and Partners, CDC invested nearly US $700,000 between 2010 and 2012 through the Frontier Fund. Frontier was the first private equity fund set up in Bangladesh.

Khalid Quadir, CEO, Brummer and Partners Asset Management (Bangladesh)

“By investing in the first private equity fund in Bangladesh, CDC sets a precedent. The belief is thatthere is opportunity in Bangladesh and this will bring in other investors. This is a new marketand we invest equity in growing companies. CDC not only brings in capital but it also has a long-termapproach. It’s a frontier market that has inherent risk but it’s coupled with high rewards.”

Khalid Quadir, CEO, Brummer and Partners Asset Management (Bangladesh)

“Foreign investors are good for Agora and also good for the country. Bangladesh has potential but needs to attract more investors.”

Andre Cailleux, CEO, Agora Supermarkets.

BUSINESS SUCCESS CREATES MORE JOBS

Agora Supermarkets has 750 employees and around 3,500 in the supply chain.

Bringing in foreign expertise and know-how is crucial to expand the business and develop local talent. Training and skills is often cited as a key challenge for larger businessesin many developing countries. Andre Cailleux, CEO, Agora Supermarkets and a French expat, brings his knowledge and experience of working in large supermarket chains in Europe and South-East Asia to Agora Supermarkets in Bangladesh.

“Private equity can play a big role in Bangladesh through adding value in strategy, networks and professionalising management teams. This helps expand the business and create more jobs.”

Craig Gifford, Asia Funds, CDC.

Although organised retail in Bangladesh is still small, Agora Supermarkets is leading the way. It has plans to build 50 new outlets in the next few years in other towns and cities in Bangladesh. The number of employees has increased to 750 with around 3,500 in the supply chain, including farmers like Mr. Basher. In Bangladesh, retail is a sector in which people can get jobs and school leavers and graduates often find working in retail a good training ground and an opportunity to further their careers.

Jobs offer a way out of poverty and, according to a recent World Bank report, nearly 90 per cent of jobs are created in the private sector. Successful businesses such as Agora Supermarkets are crucial for creating jobs.

DEVELOPMENT IMPACT AND FINANCIAL RETURN

“Financial return is important – but that has to go together with development impact andcreating jobs.”

Nayan Akhter has been working at Agora Supermarkets for 8 years and currently is a Customer Relations Officer

Hiti Singh, Portfolio Director, Asia Funds, CDC

Businesses such as Agora Supermarkets reflect this. Not only does it provide a good financial return for investors, but it also creates employment and an income to hundreds of farmers like Mr. Basher which has a significant impact on individuals, their families and communities, improving theirstandard of living.

Thanks, in part, to the continued support of CDC and Brummer and Partners, Agora Supermarkets is now expanding significantly to become a brand nationwide. There are plans are to build 50 new outlets. Additionally, the aim is to buy directly from farmers like Mr. Basher to improve the quality of fresh foods.

“This job has helped me. I help support my family – mother, father, sister and two brothers.”

INVESTMENT DATA

Editor’s Note:

This blog was previously published on CDC and is reproduced with permission.