Brac, Sir Fazle Hasan Abed and micro-credit
Shafiqul Alam : After the successful interventions in health, education, micro-lending and ultra poor graduation, Bangladeshi charities and micro-credit lenders became increasingly worried about their future funding in the 1990’s. They experienced uneven attention by global aid agencies to issues still blighting the poor in the country. And for the first time people like Sir Fazle Hasan Abed seriously started looking into novel ways to fund themselves. One of the major decisions they took was to set up their own businesses. The idea was that if fund crunch were to hit them, they still had their own business operations to rely on. So, between 1995 and 2005, we saw almost all the major NGO’s and micro-pending embracing the idea of doing business themselves. Sir Abed’s Brac started with a printing press in the capital Dhaka. It set up what was then the largest printing press in the country.
Aarong, the slow fashion sister firm of Brac, took help from the Mennoite Church to market handicrafts and hand-sewn clothing products in the capital and eventually it rolled out one after another successful outlets.
Professor Yunus rolled out an array of social businesses including the Grameenphone and garment factorioes. TMSS set up medical college and nursing schools. Asha set up a top private university. The funny thing was that after their businesses became all-out success, turning all these charities and micro-lending into some of the nation’s most successful business groups, they mostly forgot the original goal behind their business foray. The original goal was to use these private businesses as a source for funding their charity and micro-lending operations should they face a fund crunch and shrinking interest from the top global charities. Instead they zealously expanded their businesses.
Brac is now a multi-billion dollar business group. It owns the country’s second largest private bank, a top housing finance company and a huge stake in Bkash, the country’s largest mobile transfer operator worth billions of dollars. It bought one of the country’s largest non-banking financial institutions from the Aga Khan Development Network, bought and then sold top tea estates and now also runs an array of slow fashion and farming ventures. One expert told me Brac’s total private asset won’t be less than 10 billion dollars if they are valued in stock markets. If that is the case, Brac is the richest business group in Bangladesh.
But the question is: does Brac divert its profit from profitable ventures to its charity operations to lift millions of ultra poor out of poverty? Isn’t it the original idea behind foraying into business? I don’t know the answer. But what I’ve heard is that it does not. Brac, like other charities and micro-lenders doing business here, plough back the profit to set up new business ventures.
Bigger charities such as Brac buy or set up big businesses. Smaller and regional ones such as RDRS foray into hospitality business and localised firms. Obviously, the plus point is these ventures do create a lot of new jobs. And many of these businesses are run efficiently, especially all Brac businesses are believed to be more efficient than their rivals in the private sectors.
But again the question is, if Brac’s flagship ultra poor graduation program gets no more foreign funding, will the charity use money from its businesses to bail out the vital poverty busting initiative? #DhakaDiary