We are asking some of the world’s leading social entrepreneurs about the role that social enterprise can play in international development and in helping vulnerable populations share in the benefits of economic growth. Our aim is to showcase a range of perspectives ahead of a debate the British Council is hosting on this topic in Brussels on 3 June as part of the European Development Days (see below).
In this essay, Muhammad A (Rumee) Ali, considers these questions by drawing on some of his experiences at BRAC. Founded as a relief organisation in Bangladesh in 1972, BRAC has become the largest development organisation in the world, focusing on poverty alleviation and reaching 135 million people from Haiti to the Philippines. It is also 70-80% self-funded and has been called “the most astounding social enterprise in the world.”
![Ali Rumee, BRAC](http://web.archive.org./web/20160529090852im_/https://i.guim.co.uk/img/static/sys-images/Guardian/Pix/pictures/2015/5/20/1432119814858/00e71d99-c985-42af-9684-20e6003879f5-657x720.jpeg?w=300&q=55&auto=format&usm=12&fit=max&s=1f299be88337dc7768e0fba1f7575e51)
I joined BRAC nine years ago after more than 30 years in banking and commerce. My first few months involved a strategic review of BRAC’s network of social enterprises and I found that almost all of them had one thing in common: they were not set up as businesses but rather evolved over time to support and sustain BRAC’s core interventions in microfinance, health services and education. Indeed, they were in line with BRAC founder Fazle Hasan Abed’s vision of “multifaceted development interventions.”
Intervention as the mother of invention
By way of example, let me tell you the life transforming story of Bazlur Rashid from Durgapur, Bangladesh. Bazlur today is a happy man who is respected in his community and earns a decent wage. But his life fell into disarray in the early 1990s when he lost his job as an “ameen” (land surveyor) due to illness. BRAC provided him with training and equipment to become an artificial insemination worker as well as a loan to buy a motorcycle so he could counsel farmers in his community and provide emergency veterinary assistance.
What made this possible? BRAC’s artificial insemination social enterprise was born of the recognition that Bangladesh’s enormous shortfall in milk could never be covered by indigenous cow breeds, which produce 25% or less of the milk a Friesian cow does. The enterprise started as an intervention in 1999 with 200 workers like Bazlur helping to propagate breeds generating high milk yields. Today there are 1800 trained workers who provide this service all over Bangladesh, providing an average of over 1.1m inseminations a year, or the equivalent of 20% of the country’s breedable cow population, with an enviably high 65% success rate. What started as an intervention for social change has become a successful social enterprise and public-private partnership.
Doing good is good business
Another BRAC success story is Aarong. It was set up to provide sustainable livelihoods for thousands of craftsmen and artisans in Bangladeshi villages who were facing impoverishment due to competition from mass produced factory goods.
In 1978 BRAC began exploring ways to engage poor, unskilled rural women in productive activities. After training these women and helping them set up production facilities, BRAC provided access to urban markets by establishing the Aarong retail chain to ensure they received a fair return for their labour.
Aarong currently employs over 65,000 women in its 16 production and 650+ sub-centres nationwide. As part of BRAC’s support package, they get access to micro credit, support in livestock and agriculture, free schooling for their children, subsidised tube wells or latrines, health check-ups, health education, skills development training, access to a welfare fund, and retirement benefits.
I do not know of any commercial business that has developed such a well-rounded worker support program. In fact, the present trend globally is for employers to outsource such support services rather than take on the responsibility themselves.
Today, Aarong symbolises the revival of traditional handicrafts in Bangladesh and has been a pioneering model for combining fair trade production with long-term social impact while not compromising on business sustainability.
Stepping up where markets fail
So how are these social enterprises different from purely commercial businesses? And how do they really empower the poor? Let me share another example.
While conducting a strategic review of BRAC’s dairy business, I identified 16 milk collection chilling stations, out of the 60 we had at the time, which were not generating sufficient volume to break even. In fact, they were not even marginal and unlikely to turn around in the next two to three years. My obvious recommendation to our chair was either to close them or move them to more viable localities. What would have been a “no-brainer” in the commercial world was not as simple in this case. I was told that these 16 stations would have to stay put because they are in “ultra-poor” areas and removing them would deprive many from their only chance of earning a fair price for their produce.
This demonstrates that BRAC’s enterprises are not run as truly commercial businesses but to implement our mission of “working with people whose lives are dominated by extreme poverty, illiteracy, disease and other handicaps and strive to bring about positive changes in their quality of life.”
Benefit before profit
The key feature of our social enterprises is our willingness to accept low profit margins and shoulder considerable risk. Because our social enterprises have evolved in direct response to an identified need, there is a demand for their products, ensuring that they are viable. However, the very nature of BRAC’s commercial activities and their concentration in sectors where most of the poor are involved acts to contain excessive profit making.
BRAC persists in running low-profit enterprises because they create transformative benefits for the poor in terms of increased employment, income and opportunities for exposure to improved technology and new methods for processing and marketing. Taken together with access to BRAC’s healthcare, education and social empowerment programmes, they form a value chain. This value chain empowers the poor to lift themselves out of poverty.
Stakeholders, not shareholders
Another distinguishing feature of our social enterprises is that we do not have any shareholders, who almost by definition would be focused on maximising return on investments. We have stakeholders who include the poor who are recipients of our services, the community, BRAC employees, the donors who support our programmes, and the country at large.
Does this mean we do not face the challenge of maximising efficiency? Far from it: the most compelling challenge we face is making our enterprises sustainable. The purely commercial sector competes with us in every area in which we operate and balancing the maximisation “credo” for efficiency and not violating the core values of BRAC is what occupies our minds.
Choose change
I did not set out to make a comprehensive case about social enterprise in development, but rather sought to open a door in your mind. You may think what I have written is “anecdotal” and that more formal research is needed but at BRAC we say:
“There are two primary choices in life: to accept conditions as they exist, or accept the responsibility for changing them.” And we have chosen the latter.
About the European Development Days
The flagship event of the European Year for Development, the European Development Days will bring together 5,000 people in the development arena in Brussels to address the challenges to achieving a more sustainable and peaceful world. As part of this event, the British Council will host an auditorium panel debate on 3 June entitled Stemming the tide on income inequality: social enterprise, which will explore the role of social enterprise in the new, post-2015 development agenda, and how to increase its impact in tackling income inequality. Click here for more information or to register.
About the author
Muhammad A (Rumee) Ali is the advisor to the interim executive director at BRAC. He is the chairman of BRAC EPL Investments Ltd, BRAC EPL Stock Brokerage Ltd, bKash Ltd, BRAC Sajaan Exchange Ltd, BRAC IT services Ltd and also the director of several organisations, including BRAC Bank, BRACNet and Alliance for Bangladesh Worker Safety.
Mr Ali is a member of the global steering committee of the performance-based grants initiatives of the International Finance Corporation, and the technical advisory committee of Bangladesh Investment Climate Fund, International Chamber of Commerce, Bangladesh and CEOs Forum for inclusivity.
Prior to joining BRAC, he served as the deputy governor of Bangladesh Bank. With his appointment as country head and general manager of ANZ Grindlays Bangladesh in March 1997, Mr Ali became the first Bangladeshi to head a major international bank in Bangladesh. In July 2000, following the takeover of ANZ Grindlays by Standard Chartered Bank, Mr Ali was appointed the CEO of the Standard Chartered Group in Bangladesh, heading both Standard Chartered Bank and Standard Chartered Grindlays Bank. His banking experience includes stints in India, United Kingdom and Australia. Mr Ali was elected a Fellow of the Bangladesh Institute of Bankers in 2001.
Content on this page is paid for and provided by the British Council, sponsor of the international social enterprise hub