Roundtable

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We have like a global event, and I was planning to have it this year, but now they cancelled
it because they said we should rather do smaller regional workshops. And then I took the
opportunity also to come here to have a chat with you. Welcome to Bangladesh.

Yes, thank you. I arrived this morning at 3 o'clock. A very busy airport.

Hopefully, with the new airport coming online at the end of the year, things will get easier
for you. There's a new airport also? It's terminal. But did you use the expressway? Yeah, and
then it was empty.

At 3 o'clock in the morning, there was no problem. You haven't gotten hold of the famous
Dhaka traffic yet? Tomorrow, inshallah. We don't even have to go.

Because you're staying in Krakenplaza, right? Yes. At least lads can see the crucial
intersection to traffic. Which is something.

It's about 30-40 minutes. Okay. Is it? Easily.

And maybe also, in Latin America, we had quite a big social and entrepreneurship program.
Actually, for SDC, the whole thing started there. Because somehow, in Latin America, people
were more advanced.

We also had a very good office there. They really pushed for this concept. And then we
started to have other programs similar to that one.

Like the one that you have here. And the idea is also to really push this concept. Also more
on the regional level.

So there's a new program now coming up in Africa. Where we try to work not only in one
country. Multiple countries.

So it's not only one developed country. Because it's scaling up. And to have the critical
model.

It's easier to work in different countries. Africa is very interesting. Because I think financial
services goes across West Africa.

If you build one enterprise, at least in Nigeria, you can also work on other regional countries
easily. Here it's a bit more difficult. But in Kyrgyzstan, Bangladesh, Pakistan, India, it's very
similar.

Launching in South India and launching in Pakistan is more similar. But Africa, that part is
good. You can launch anywhere and get a skill acquisition.

The Latin American brand labels worked quite well. Because the program, somehow, the
different consulting companies working together. And then there were more like Mexico
and Guatemala and Panama.
They worked in Peru, Bolivia, Colombia. A lot in Colombia. We even tried in Haiti.

That was not really successful. But it's good that you could scale up. Yeah, exactly.

Here, I mean, it gets a bit tricky. Because the government is very protective of geographical
boundaries. Especially, I think, India and Pakistan don't really interact with each other.

So any product that you do, either of those countries. Bangladesh, it's a bit easier with India.
But even then, it gets complicated.

Okay. And with places like Singapore or Malaysia or, I don't know, Sri Lanka? I mean, Sri
Lanka market is a bit smaller. So, obviously, the target would be India.

And then Singapore is more of a hub, right? So a lot of the companies here have holding
companies there. And Singapore becomes the hub through which they try to do business in
other countries. But, technically, Singapore as a market is also small.

So the largest market in the base is, of course, India. And that's where a lot of people come.
But it's also a very competitive market to get into for a non-Indian company.

So for Bangladesh, for you, is it easy to work with India? It's a bit difficult. Because India is so
big, they also have a lot of funding and a lot of good Indian companies. Right.

So it's also very competitive. That means the price of entering the market is also high. But
we do see a lot of Indian companies operating in Bangladesh because that's easier.

Because they have work in India, work in the market, and then Bangladesh becomes a sub-
market. But the reverse is tricky. We have seen a few cases, but it's tricky.

Okay. Maybe P.J. can start off by telling a bit about his company? With regard to the
project? Can I just say one sentence? Thank you so much for having us today. We appreciate
it.

It's a public holiday in India. And we're embarrassed. When I scheduled it, I told you because
we don't get the day off.

I've done this many times. Profound apologies. Thank you very much.

Sorry. Thank you. So do you want to tell Lars a bit about how your company may be? And
then we can move on to the program.

Yeah, sure. So maybe we can talk a bit, and then I'll dive into the Bangladesh economy and
the discussion of the program itself. So my background is in investment banking.

I used to work for a company called Citi. And my business partners used to work for two
other corporate banks called Starter Terror and BTC. And we decided that maybe it's an
interesting idea for this data company that will provide private sector data.

All large international companies were trying to enter Bangladesh. So that's how we started
the company. While we did that, something very interesting happened.
We started getting a call from a lot of development partners. They would want to
understand what is the exact status quo of different industries from a private sector
perspective. And that was on a market that we should try to get, but all this World Bank,
USAID, FCDO, everyone reached out to us.

And when we gave the data, they would say, do you want to help us set the strategy for our
intervention programs as well? So that's how we started working on PST and private sector
engagement. So now we have these two verticals. One is the development sector
consulting, which again helps develop strategy and implement projects.

And we have the private sector vertical. On the private sector vertical, we mostly use a
market-oriented strategy, where we mostly have large European companies, Japanese
companies, Korean companies, US companies, a few Chinese companies as well to enter the
market. In Bangladesh.

In Bangladesh. And B, we also help develop investment strategies, where we represent

different investors in the market. In the market, that means different products? No, so they
have a fund.

They would like to invest in Bangladesh, but they need a partner who has eyes and ears on
the ground, and will be religious and things like that. So, for example, we represent a fund
called Startup Balance Committee, which is a $65 million fund. But they would like to invest
in the country, but they would like better religion and better understanding of the industry
to do those investments.

So those are the two verticals that we have. And who are your development partners? Is it
just Switzerland, or who else do you have? Development partners, we work with the
Embassy of Switzerland, Embassy of Netherlands, FCDO. Not right now, because the
problems are, we work with USAID, we work with UN agencies, we work with the World
Bank Group, we work with ADB, we work with JICA.

So, I mean, bilateral, multilateral websites. Mostly on the data side, and some of the
program interventions, especially when a private sector is involved. This program is very
interesting, because this is kind of like a bridge between the two.

Because at one side, obviously, we have the development partners, but at the same time,
we have private sector investors as well. That is one reason I think this program is very
interesting, because it allows us to leverage both sides of the technology. That's in short.

And how big is your company? Right now, I think we have close to 55 members, for a very
big team. But yeah, around 55, been there for 10 years. Since 10 years already? Yeah, 10
years.

Started the company back in 2014. Okay, good. So, I'm not going to talk about Bangladesh.

It's one of my most favorite topics. When we started the company, this is what we initially
did. Selling Bangladesh is never easy.
So, I will try to say both sides of the coin, and also some of the things that we say when we
want to invest, right? So, the way we like to call it is, Bangladesh is long-term positive, and
short-term, I would say, short-term risk. So, why do we say long-term positive? If you see
over the last decade, the country has grown between 5 to 8% on average, right? And even
during COVID, Bangladesh is a great one. Bangladesh is one of the few countries who had
positive growth, right? Which was definitely good.

Even during COVID, Bangladesh actually grew something around 4%. So, the country hasn't
seen a negative growth in the last 15 years. So, which is positive, and again, now it's
bouncing back.

Even with inflation and everything, the growth is around 6%. The total GDP is almost at half
a trillion dollars. So, this is the formal estimate, but if you incorporate formal estimates that
are not being included in the GDP, it's close to half a trillion dollars, right? And expected to
become $1 trillion by 2014.

Interestingly, a lot of the population is below the age of 35. So, close to 50% of the
population. And that means they're very, very technology savvy.

So, in other markets in India, what we have seen is that people have skipped laptops and
gone into mobile devices. Bangladesh sees a similar trend, and people are actually skipping
banking services and going into digital financial solutions. So, you'll have 60% of the adult
population who doesn't have a bank account, but everyone will have a digital financial
services account.

How is that? Oh, that's just female. 20% is female. So, the total overall pay-per-visit of the
internet is 60%.

And close to, out of 165, 120 million people have digital financial services accounts. So, it's
mainly men? Yeah, it's mostly men. But if you do the gender disparity, females only have
20% ownership.

So, all of the accounts that we see are men. Same thing with the smartphone ownership as
well. There are 50% of the population owns a smartphone, but only 20% of females own
smartphones as well.

So, the rest of them will have smartphones and things like that. So, the household will often
have one smartphone, right? And then they will share it among themselves. And the other
issue is that when we think of mobile account ownership, you have to do biometric
registrations and everything.

So, usually the male members of the house will do the registration. For even in my house,
for example, I own all the account ownership on the SIMS and the Bigash accounts. The
reason being, my mother did not want to go into the field and do a biometric registration.

But that's my choice. But in a lot of the cases, the male members of the house is the one
who's going to own the account ownership. So, that's kind of like an interesting segue that
the growth is there.
There's a bit of disparity, but I think it's very technologically savvy. A lot of technology
penetration has happened over the last 10 years or so. But in terms of this growth, this
growth has not always been inclusive.

There have been cases, if you look at the Gini coefficient, it has been, I often say it has been
in poor. So, the rich has gotten richer and the poor has gotten poorer. And then if you look
at indicators like sanitation, which is good, I mean 60%, but if you look at food security,
close to one-fifth of the population still at risk of food insecurity.

And more about the same amount is also lives below the poverty line, which is below dollar
two a day. And then, of course, the gender inequality. I mean, if you look at, yes, our female
participation in the workforce is 42%.

But this participation comes mostly in gardens and textile at worker level and in agriculture.
But if you look at more senior and middle management, right, the participation is only 11%.
And then, of course, 10% inflation doesn't really happen.

I mean, you might be surprised to know, but possibly right now, one kg of beef is more
expensive here than in Switzerland. One kg of beef. So, inflation has really been at crazy
level.

It's an official estimate, it's like 10%, but actually it's like 15%. Is that just recently, or is it
always like... Especially the last two and a half years, it has been really bad. With increasing
fuel prices, with dollar devaluation, because Bangladesh has a negative balance of
payments, that when we always import more than we export, that means with dollar
devaluation and everything, inflation has just reached crazy levels and everything.

And our most important import is fuel and grains, right. So, both, you know, we have had to
pay high prices. With the war, everything going on, fuel prices are like down.

Same as grain prices as well. You don't have direct access to the Russian oil industry. So,
contrary to popular belief, we used to import oil mostly from OPEC countries.

And that has become a lot more pricey. Because the demand for OPEC country oil has gone
up. Unfortunately, contrary to popular belief, we do not have a direct line where we can get
fuel from Russia.

The nuclear power plant that is being built, in certain cases, the construction has been
delayed because it is not a direct supply chain. You're going to have a nuclear plant? Yes.
Supported by India or Russia? 1.2 billion dollars.

But I mean, as I said, the supply chain has been disrupted. I think, right now, the estimate is
possibly early next year. It was supposed to be by February.

Currently, the energy you have from diesel generators? I know. So, a lot of these are,
unfortunately, heavy oil based. Part of it is, of course, diesel controlled.

But part of it, unfortunately, is also coal. So, they give the majority of the energy. Renewable
is very, very less.
Renewable, actually, the official estimate is 1.5%. If you go into the field, because a lot of
renewable energy is not working or not live, it's below 1%. And you have no coal? No. So,
we have a bit of reserve on gas that has dried up.

They are doing explorations and everything. But, I mean, it's not that easy because we don't
have the equipment to do explorations. Usually, we give this to companies like Chevron,
who comes outside and does this.

So, the price actually increases. And second, they haven't necessarily found any good
natural gas centers or wells. So, we are mostly importing LNGs and LPGs and heavy oil from
around the world to do this.

So, the electricity right now is very, very important. We do have one coal mine. That's the
only coal mine.

Yeah, that's almost… Mostly, the coal is imported from India and Indonesia. But, we don't
mention hydrocarbon-based fuels. So, energy is definitely, yeah.

But, I mean, right now, we are, in terms of capacity, power plants, we are producing excess.
But, we often don't have the fuel. So, that's why you will see electricity cuts.

As we go more out, we are going to see that more. But, the government's plan is to increase
renewables, right? Yes. So, the government has a very, very ambitious plan.

They call it Power Sector Master Plan. The study was funded by JICA. So, the original goal is
to do 20% by 2030, which I am not thinking is possible.

And do close to 40% by 2050, which I don't think is possible at all, right? To reach the 20%
by 2040, right, they have to invest in renewables. But, the problem is you can't invest in
solar. Because, to do solar, you need land.

And we don't have that, because it's only a very small country, very dense country. So, you
need agricultural productivity to go up, right? But, then the next best is solar rooftop. But,
that's not sufficient, right? Solar rooftop can get you net neutrality.

But, it cannot get you industrial energy, right? So, solar will do some part of it, right? And we
can build solar parks like India. Because, India has large land where you can put in solar
parks, like in Rajasthan. We don't have that here.

So, the next best option is, after solar, is wind, right? It's a delta. So, you can do many things
with wind. Yes, there are some in the southern delta, in Cox's Bazar, they are trying.

But, if you really want to do wind, you have to do offshore, right? Build it within the sea.
And that's a very expensive technology, and the investment is also very, very high. And you
have wind? Yes, very small quantity, in the southern part of the country, beside the sea.

But, because it's a delta, you don't get a lot of consistent wind, right? Because, I mean, it's at
the end of India, right? So, wind is also tricky, and offshore building will go there, but it's
tricky. Then, you have things like tidal waves, right? Which is fine, but you know, not the
easiest technology to build and manage, right? So, typically, our analysis was, and we have
done this multiple times, solar is going to be a part of it. Maybe a very small amount of
wind, but the country will have to invest in nuclear.

And that actually ended up happening, right? Because they invested in a nuclear power
plant. So, yeah, I think 20% just renewables would be difficult, but 20% with nuclear and
renewables may be a possibility. Yeah, other than that, I think the rest is going to be still the
imported electricity from the grid, and heavy fuel gas, HFOA.

You cannot build solar power plants in India? Yeah, that's what I was saying. Get grid
connectivity, right? So, tap into the regional grid. There are two possibilities.

One is hydro from Nepal, because Nepal is mountainous, so you can get hydroelectricity, but
with hydroelectricity, you need the potential energy, right? And you can buy from India, but
India is almost charging us three times the price from the regular power plant to buy this,
right? So, technically, yes, we are climate risk and everything, but the price of that energy is
like three times. You're going to end up using heavy oil. So, unless that gets cheaper, I mean,
it's going to be cheaper.

But Nepal is a good possibility. I mean, the government is in talks with Nepal. Hydro might
be an interesting opportunity.

So, purchase it from Nepal. So, there you would have to build extra land, because Nepal is
using a lot of land. Yeah, so they do that, but we don't build that.

We just get the electricity connection from the grid. But they have the capacity to provide
you with electricity, or they would have to? So, they are right now in the deficit, but the idea
is to build a regional grid where both India and Nepal are also connected. If they can build it,
and if the price is right, I mean, they would be interested to export electricity, right? Right
now, I mean, Nepal's main export is tourism, right? And with the devaluation and everything
that is going on, I'm sure if you give them a good price, they would be interested.

Let's see. A lot of moving parts. But the 20% that the government promised, I don't think it's
happening by 2030.

Sorry, I took a bit of time. So, you see that the summary of those two slides was, the
economy has grown to half a trillion, which is not bad. But the growth has not been
inclusive, right? And that means you will need to make this growth inclusive.

Otherwise, I mean, the disparities will exist, and sooner or later, unrest and everything will
happen, right? I mean, you need to make this inclusive. That is where we think impact
investing can play a role, because it taps into also, besides public money, into private sector
capital, and making impact one of the priorities, even if not impact first. So, we kind of did a
study where we talked with close to 100 plus different stakeholders in Bangladesh.

And we said that, why do you think impact investing is important for Bangladesh? And two
of the main reasons that they say is that they believe this will boost economic growth in an
inclusive way. And they also believe that they will have new innovative solutions that will
add value to both the society and the environment. And this is a study that we did with both
private sector and development partners and the government.
And if you look at the global impact investing market, it's close to a trillion dollars, right?
Unfortunately for Bangladesh, I mean, it's a very, very nascent stage, I'm going to show it.
But in Bangladesh, you have always seen good, mission-driven social enterprises and impact
enterprises, right? There are entrepreneurs who have worked to solve critical problems and
provide critical products and services. And if they have access to more patient and risk
capital, it might be an interesting solution to look at.

So, before I go more dive, I just wanted to also show you a comparison of the venture
investing that is happening. Sorry for the color, I think it looks better on my laptop, but in
case of the project there. So, if you look at Bangladesh, right? I mean, in terms of GDP, I
mean, it's almost 30% higher than Pakistan, right? Because India and China are on a
different level, right? Interestingly, if you look at the GDP per capita, it's almost double.

Bangladesh is higher than Pakistan. Yeah, in terms of GDP. It's also lower than Vietnam as
well.

So, GDP per capita. Yes, Vietnam. So, GDP per capita is actually higher than India.

Right? And it's almost, if you see, it's not double, but almost 40% higher than Pakistan.
Right? Interestingly, our startup investment, our startup investment per capita is very little,
or venture investment, right? It's only 0.02% of GDP, which in India is 0.3, Singapore is 0.87,
and China is 0.2, right? So, this is where enough investment is not happening in the venture
space, right? Globally, because in 2023, because of the funding winter, everyone is at
negative. Right? But interestingly, Bangladesh has been hit hard, right? Our investment
went down by 40%.

Right? So, yes, GDP per capita is good, but enough venture investment is not happening into
these businesses, mission-driven businesses, that will help provide more solutions to the
market. But everywhere it went down. Yeah, because as you know, after the funding winter
started, the Federal Reserve increased their interest rate to 5%.

Everyone thought, okay, if the central bank of the US is providing us 5%, why would we go in
risk investment? We keep the money. And big banks, like the Silicon Valley Bank, closed
down, where all the venture investors used to keep money. Yeah, I mean, if dollar gives you
high return, you would invest in dollar, right? Why invest in more risky stuff? And
Bangladesh's base was already so small.

So, for example, even after the 60% drop, I mean, Singapore got 4 billion, India got 11
billion, right? So, it's a drop, but yeah, Bangladesh is like, it was 122 drops, up to 70, right?
So, it's significant. This kind of a trend for a bank investment over the years, 2021 is an
anomaly because there's a large Japanese investor we all know called SoftBank, who has a
$100 billion fund. They invested in Bangladesh for the first time.

That had the country's first record in a company called Bikash, which provides financial
services to everyone. Everyone doesn't have a bank account, but they have a Bikash
account, right? And that is why we see a large jump. What is that? Bikash.

Bikash. Yeah. It's a mobile... So, you're talking about M-BASA? Yeah, M-BASA.
We're the second largest, I think. I think Bikash has now exceeded M-BASA. M-BASA is for a
mobile... Mobile, yeah.

And we all use it for everything. We can show it. I also have Bikash.

Because of, as I said, different laws and regulations, which M-BASA has an advantage. So,
they can expand across a lot of different markets. Or has it.

Send money, mobile recharge, checkouts, shopping. You don't need a bank. You can pay
your gas, electricity bill and everything.

So, your salaries also pay through that, or not? We don't take it. Otherwise? You can pay
your salaries. So, they started experimenting with garment workers, right? So, the UNCDF
teamed up with Bikash.

Also, with Gates Foundation, we also did that. And Gates Foundation to give, you know, the
textile workers, because most of them don't have a bank account. They used to get it
through Bikash.

And is the mobile provided? So, they have partnership with different telcos. But this is the
mobile financial services. So, it's a financial institution.

But it's not directly linked with any mobile operator. Because the government didn't allow
the mobile operator to come into this business. So, we had the largest mobile operator,
which is a European company called Telenor.

They were ready with the payment capital and everything. They had close to 50 million
dollars they had saved up to enter this business. But then the government said you can't do
this.

Because I think with the system in Africa, it's really the account, it's the account at the... At a
bank? No, not at the bank. At the telco. So, your mobile number is your account number.

Yeah. And you can receive remittances. You can receive remittances.

They have loans. So, there have been really diverse... Yes, you can save your money. You can
get loans from here.

Up to 10,000 taka. That's like 100 dollars. Based on your BKash transaction, they would do a
credit scoring and give you.

And now they have recently planned to make it to 200 dollars to 20,000 taka based on your
transaction balance. So, essentially the way I see it, banks don't exist. So, the whole cash
transfer thing is basically covered through that.

We're talking about Cardone. You have it here. BKash is one of the competitors, yeah.

So, they have like 60 million customers. And they have like 50% of the market. And it's true,
you know, because I... After I actually downloaded BKash, this is many years ago.
I rarely carry cash with me. It's hooked up to Foodpanda, my food delivery service. We pay
electricity bills.

We pay our utility bills. You can also send money. You could have BKashed me as well.

I could have BKashed you our transactions and work right. Yeah. So, essentially what
happens, credit competition is very low.

There are only 70 million, right, which is very low. But, there are 60 million people with
BKash account. So, you can even, you know, drive around here, put wallets and pay with
BKash.

And the coolest part, you can even pay your credit card bills, your visa bills. Yeah, yeah. You
can link your accounts and credit card, debit cards to BKash.

There's no commission on it because you have all the credit cards, you pay all the... But the
commission is flat. It's just the payment of the bills. But the credit card, you can get credit,
right? That part has just an experimental basis.

They have started it. And very soon, the way I see it, this will become proxy to also credit
cards as well. You'll have BKash, you take credit.

There's a very interesting product called BNPL, buy now, pay later, right? That is something
these people are experimenting with. You buy an asset now but you pay later. What do you
do transactions? Yes, they do.

But there's some more competition to the existing credit card companies in the back. And
then they accept that? Yes, they are doing a lot of flopping around BKash. BKash did not get
a digital bank license.

Exactly the same is happening in Switzerland because with these apps, financial apps,
suddenly the banks are losing plenty of money because they can't cash for each and every
account. And that is happening in Bangladesh as well. Already four banks will go through
MNL.

One bank is getting acquired as well. So, it's a bit tricky.

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