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Social enterprises and how they work in Bangladesh

  • Published at 06:15 pm October 10th, 2016
Social enterprises and how they work in Bangladesh
To British Council launched two new survey reports titled ‘The State of Social Enterprise in Bangladesh’ and ‘Social Enterprise Policy Landscape in Bangladesh’ yesterday at Hotel Ascott Palace Ltd. in Baridhara. Produced by the British Council, the study on Bangladesh was led by Overseas Development Institute (www.odi.org) with support from BetterStories, UnLtd and Social Enterprises UK. The first report, ‘The State of Social Enterprise in Bangladesh’, attempts for the first time to understand the scale of social enterprise activity in Bangladesh as well as the sectors in which social enterprises are focused and the beneficiaries that they support. It provides quantitative information about the operations, turnover, beneficiaries, staff and impact of the social enterprise sector in this country. It also provides similar information about social enterprises in India, Pakistan and Ghana. The second report, ‘Social Enterprise Policy Landscape in Bangladesh’, surveys the existing enabling environment for social enterprises in the country. It looks at government activity that influences social enterprise. It also compiles suggestions from government and sector stakeholders about potential policy changes that would encourage social enterprise development. The report identifies and focuses on three main areas – finance, skills development, and awareness raising – for targeted policy support. Social enterprises are businesses which trade for a social purpose, re-invest surpluses into their social objective, and make themselves accountable for their actions, rather than simply maximising profits for owners and shareholders. Social enterprise is a growing and dynamic sector of the Bangladesh economy. It is creating jobs for disadvantaged groups, empowering women, and addressing social exclusion across the country. Bangladeshi social enterprises are young and so are their leaders. The survey indicates that 77% of the social enterprises in Bangladesh were registered between 2009 and most leaders are aged under 35.

Supporting the most vulnerable

The research revealed that social enterprise is growing in Bangladesh, with nearly half of all social enterprises six years old or younger. 90% of social enterprises are working with individuals from socially and economically disadvantaged communities, creating employment opportunities especially for disadvantaged groups. Social enterprises have made impacts in a number of fields. A third of respondents work in the education sector, while other commonly selected sectors included services, business development services and entrepreneurship support, livelihoods and employment creations and health and social care.

Promoting women’s empowerment

The survey findings revealed that a fifth of Bangladeshi social enterprises are led by women – significantly higher than in mainstream business (5%). Women in social enterprises make up 41% of the full-time equivalent workforce, more than double the participation rate than women in the general workforce in Bangladesh.

Turnover, income, business confidence

Bangladeshi social enterprises are generating an average annual turnover of Tk2.1 million and nearly three-quarters of the enterprises expect a substantial increase in turnover in the next financial year. Most Bangladeshi social enterprises expect their venture to grow and they have wide-ranging growth plans – particularly expanding into new geographic areas (76%) and developing new products and services (61%), through investment in their teams (85%) and by attracting capital to expand (74%). Two-thirds of Bangladeshi social enterprises hope to replicate or franchise their business models.

Challenges and growth constraints

The report shows that lack of technical skills is seen as the biggest barrier to growth, followed by access to debt finance, lack of social enterprise awareness and cash flow constraints. Lack of understanding of social enterprise is seen as a significant barrier to growth. Donations and grants are the most common sources of funding, with few social enterprises securing concessional loans or equity. Limited capital supply is seen as the primary funding constraint.

Methodology, numbers and caveats

The survey was based on a range of sources including existing datasets as well as a specific survey that was developed and conducted for the research In Bangladesh. A total of 149 organisations completed the survey. Using these calculations, the survey makes an initial estimate that there could be around 150,000 social enterprises currently operating in Bangladesh and they have already reached approximately 207,397 beneficiaries. This is a first attempt to capture the size, scale and impact of the social enterprise sector in Bangladesh. The British Council acknowledges that the survey did not generate a sufficiently large dataset to allow for the results to be fully representative, but it offers an important sample pool to facilitate more scientific and robust research in future. It is hoped that others will build upon it and that the British Council will be able to conduct a follow up survey in three years’ time. Mairi Mackay, Global Head Social Enterprise, British Council, said, ‘By supporting an enhanced understanding of social enterprise activity in Bangladesh, India, Pakistan and Ghana, the survey will raise awareness of the tremendous social value that social enterprises are creating and will help us track how the sector grows. Such research, we hope, will also help policy makers, social investors, development agencies and other key actors provide more targeted and enhanced support to the social enterprise sector.” Barbara Wickham Director Bangladesh, British Council, said: “Bangladesh has been a global pioneer in social enterprise and I believe that this survey comes at a pivotal moment for the country. Today there is a small but vibrant social enterprise movement in Dhaka and a relatively large amount of on-going social enterprise activity across the country. However, to date there has been little quantitative evidence about the operations and impact of social enterprises in Bangladesh. This survey is an important step in remedying that knowledge gap that will inform the delivery of our social enterprise programme in Bangladesh, disseminate sector knowledge and best practice between the UK and Bangladesh and support our shared goal of building safer, more inclusive and prosperous societies.”