Photo: Wasfia Nazreen, the youngest Bangladeshi Everest summiteer, reached the peak of mount Vinson, the highest summit in Antarctica. BRAC, bKash and BRAC Bank supported her expedition.
Financial Inclusion: Hybrid Models for a Complex World
Fashion, fish and financial inclusion.
What connects all three? In Bangladesh these are all part of an evolved structure put in place by BRAC that combines community empowerment with sustainability and shared values. BRAC is synonymous with business and market-based solutions in Bangladesh, where the breadth and scope of our work is felt at a local, national, and now international level.
Launched in a post-independent Bangladesh 42 years ago, business has long been in the heart of our psyche. Initially created as a relief and rehabilitation organisation, the founder, Sir Fazle Hasan Abed wanted to empower the women in his home community through financial inclusion, and soon started BRAC’s microfinance operations with all-female clients. Fast-forward four decades and BRAC’s operations now disburse USD 1 billion a year in Bangladesh alone, and USD 70 million worldwide still focusing on women. More recently BRAC is piloting initiatives to extend microfinance services to young people.
Bringing business in-house
Although BRAC addresses problems of financial inclusion for the bottom of the pyramid, we still noticed a gap in the system. As we scaled up our presence it became clear that there was a demographic addressed neither by microfinance nor by commercial banks – those with small and medium enterprises (SMEs). So what was the obvious solution? Create a bank, of course. Launched in 2001 BRAC Bank is today a fully commercial operation that disburses average loans of USD 7,000. The advent of cheap mobile phones catalysed an era of mobile money solutions for the poor, so three years ago BRAC created a mobile financial service provider which currently has 15 million subscribers, reaching a client base of 11 million accounts 30 months after launch. bKash joined the already robust group of BRAC social enterprises with minority shareholders such as Bill and Melinda Gates and the International Finance Committee. Instead of providing adjacent revenue streams to mobile network providers or banks bKash is a purpose built stand-alone business.
Market linkages, strengthening value chain
Aarong was launched in the 1970’s providing an alternative means to productive livelihoods for women outside of agriculture. The commercialisation of arts and crafts such as silk embroidery and block printing was a viable option and 35 years later Aarong is a platform for rural artisan women to sell their products in urban markets. Continuously developing the skills of artisans through training programmes and providing social support, Aarong also conducts quality control of the completed items before they are bought at a fair price and then sold across retail outlets. With a decentralised model in place the business now supports 320,000 direct and indirect beneficiaries.
From fisheries and dairy to poultry and feed mills, today BRAC in Bangladesh is able to derive over 70% of its development funding from the profits of over 16 diverse social enterprises, resulting in a largely self-sustaining mechanism. BRAC has an ability to understand gaps in the market and create businesses that don’t just provide employment, but where the profits go back to beneficiaries. This has brought new meaning to the expression ‘creating shared value’, and checks the 3P’s (People, Planet, Profits) for triple bottom line approaches.
But the question remains: was this development serendipity that could really only happen in Bangladesh or is this a model that has the ability to be adapted and replicated elsewhere?
Beyond the horizon – business as usual?
BRAC now works with 135 million people across 11 countries and is adapting many of our successful programmes including agriculture, livelihood creation, adolescent empowerment, health and education to new country contexts. But can the business-like approach be replicated further afield? BRAC Bangladesh had a conducive ecosystem with a flexible regulatory environment and both population density and a homogeneity that lent itself to sustainability and scalability.
Our global work on the other hand will need to take into account fragile infrastructures and population disparities. Funding pools are restricted,however with a new focus on leveraging private sector capital through innovative financing mechanisms like Impact Bonds we look forward to seeing new players at the table. There are successes, no doubt; in Uganda BRAC has been in partnership with Living Goods, leveraging a cohort of Community Health Workers to create a successful social enterprise that has resulted in large scale impact in health indicators while supporting the micro-entrepreneur model.
In Tanzania BRAC is running the Livelihood Enhancement through Agricultural Development (LEAD) programme targeting 48,000 farmers in 168 districts. The aim is to increase rural income, build capacity of smallholder farmers, and improve agriculture productivity and food security in order to assist farmers to access high quality farming inputs, and market their produce. Our Targeting the Ultra Poor (TUP) [Cash Vs Cows] model provides intense time bound support to the very poor in order to create livelihoods and achieve financial inclusion and has been successful in complex environments in Pakistan and South Sudan.
The key emerging theme is that in a world where businesses are encouraged to absorb CSR into their corporate agenda and align their balance sheets with social objectives, it is just as vital for NGOs to think outside their comfort zone, and look beyond their scope, towards innovative solutions. As BRAC has shown, one can blur the lines and still hold true to a mandate to uplift the people at the bottom of the pyramid. It’s not just about thinking outside the box, but not having a box at all.