Covid-19 has taken centre stage in socio-economic policymaking across the globe. The pandemic captured the world in a cycle of feigning recovery and new variants, sending as many as 150 million people into extreme poverty – many of whom reside in some of the most vulnerable societies and regions. This has made achieving the United Nations’ Sustainable Development Goals (SDGs) a greater challenge than before. Even prior to the pandemic, the world was off track to end poverty by 2030. Yet, as the world faces the worst economic recession since the Great Depression of the 1930s, some developing regions have held firm against the headwinds and kept pace with their past progress.

Over the past two decades, Bangladesh has been a leading example in economic development, tracking a stable growth that is predicted to lift the nation out from its ‘least developed country’ status. On the cusp of a new economic future, Bangladesh introduced Vision 2041 as an ambitious step towards furthering its socio-economic standing. Even with the effects of covid-19, Bangladesh’s GDP per capita grew by 9% and continues to make strong and consistent progress towards its 2041 goal. This has rivalled the neighbouring countries that once dominated the South Asian economy.

Despite the challenges, Bangladesh’s technology sector has been a key driving force in positioning the country as the 24th largest economy by the next decade.

Despite the challenges, Bangladesh’s technology sector has been a key driving force in positioning the country as the 24th largest economy by the next decade. With its rapidly expanding information and communications technology (ICT) industry and its policies for digital growth, Bangladesh has not shied away from technology and innovation. As the country looks to further its socio-economic standing, how will emerging technologies such as blockchain serve to keep Bangladesh on track towards its Vision 2041 goal?

Bangladesh’s landscape and progress

Listed as the 9th target in the SDGs, the development of industries, innovation and infrastructure plays a key role in facilitating growth and development. It is estimated that prioritising investment in high-quality infrastructural improvements raises global GDP by nearly 2% – a target that would require a unified global front in supporting more vulnerable economies to achieve parity. However, to achieve this goal, emerging markets have to invest over USD 2 trillion a year in infrastructure to keep pace with the projected GDP growth for the next 15 years – a costly sum for some of the poorest nations in the world. This amount is likely to have increased further as the pandemic’s toll continues to strain economies worldwide.

Over its 50 years of independence, Bangladesh has prioritised its socio-economic growth, improving its physical infrastructure considerably and taking strides to lift more than 163 million people – equivalent to 2% of the global population – out of poverty. As the eighth-most populous country, Bangladesh is an immense emerging economy. While its population size still sits below some of its larger neighbours, Bangladesh’s economy has withstood the tribulations of the covid-19 pandemic, standing out as an economic stronghold in providing financial aid to India and Sri Lanka.

With digital progress being a vital indicator of development, Bangladesh has displayed increasing digital momentum in recent years.[1] While the number of mobile connections in Bangladesh is equivalent to 100.2% of the population, only 28.8% of Bangladeshis are internet users due to limited internet speed and access to electricity.[2] As the development of digital infrastructure has the potential to not only narrow the digital divide but also foster greater accessibility, inclusivity and economic development, there is an opportunity to further fast-track Bangladesh’s growth through infrastructure development.

 Closing the global infrastructure gap

As the world nears a USD 15 trillion infrastructure gap by 2040, the call for investments into supporting adequate global infrastructure is becoming more urgent. Yet, such investments are unsurprisingly concentrated within developed nations. By transforming ESG investments – investment portfolios that champion environmental, social and governance factors to promote sustainability and societal impact – into infrastructure development within emerging economies, we can eventually bridge this existing gap.

Throughout the pandemic, ESG funds have been outperforming the global market, reaching USD 1 trillion for the first time on record in 2020, and now nearly USD 2 trillion globally. As one of the fastest-growing asset classes, ESG investments are expected to reach half of all investor portfolios by 2025, totaling USD 35 trillion. Considered as a versatile low-risk investment, impact investing goes beyond just a ‘do good’ mentality, helping more than half of ESG investors manage market volatility. This is especially important with the obvious longevity of the pandemic and oscillating markets.

Despite the appeal of ESG funds, the majority of sustainable assets are invested in Europe and North America – far surpassing the 22% invested in Asia and 10% across Africa, the Middle East and South America combined. Two in three investors consider investing in emerging markets as a risky choice due to factors such as market constraints, fragile governance and a lack of liquidity. Such limited investments into vital infrastructure are a challenge that developing regions can ill-afford.

Leveraging blockchain

To make sustainable funding more equitable across the globe the barriers to entry need to be lowered and more capital investment into infrastructure projects should be encouraged. By leveraging blockchain technology, large and costly infrastructure projects such as cell towers for transmitting internet connection or solar panels to harness energy can be digitised and fractionalised into more liquid, accessible and tradable digital ‘tokens.’ By representing a share of the underlying asset, these digital tokens enhance the liquidity of large infrastructure projects while driving capital for their building and maintenance from a larger pool of investors. Through blockchain and tokenisation, investing in high-yielding infrastructure is more accessible and provides a functional gateway to support the infrastructure needed for economic development.

Turning back to Bangladesh, blockchain has been singled out as a necessary disruptor as the country steps into the information-driven Fourth Industrial Revolution (4IR). As part of the National Blockchain Strategy, a roadmap towards becoming a blockchain-enabled nation, Bangladesh sees this emerging technology as an enabler for change and a driver towards reaching Vision 2041 and the SDGs. As the strategy outlines, a resilient infrastructure is necessary to support Bangladesh’s foray into blockchain technology. With the challenge of integrating the technology into existing systems and factors such as costs and efficiency, investing in infrastructure is needed to support blockchain’s network performance and scalability in the long run.

With growing government support for blockchain, Bangladesh celebrated its first blockchain letter-of-credit transaction in 2020.

Embracing the potential of blockchain, Bangladesh has committed USD 208 million to educate and upskill graduates in fields of distributed ledger technology, artificial intelligence, machine learning and cyber security. In the Blockchain Olympiad Bangladesh 2021, the country’s high-level policymakers, including the state minister for ICT and the prime minister’s private sector advisor, further rallied for blockchain. They even alluded to it as the most effective technology to ensure accountability. With growing government support for blockchain, Bangladesh celebrated its first blockchain letter-of-credit transaction in 2020. The country has also introduced the technology into the aquaculture sector to improve traceability and benefit seafood stakeholders, and blockchain is anticipated to play a prominent role in reinvigorating the economy after covid-19.

Ultimately, as the acceptance and integration of blockchain across Bangladesh continues, the future is bright for the emerging technology and the country’s socio-economic progress.

From emerging economy to a rising tech hub

As Bangladesh braces itself for the uncertainties to come, a look back on the recent past is a good reminder of how far the country has come. Just 30 years ago, nearly half of Bangladesh’s population was in poverty; now the country outpaces some of the biggest nations in the region. Indeed, Bangladesh closely rivals India’s GDP per capita to become one of the world’s fastest growing economies.

As Bangladesh’s grows through strong innovation and increasingly accepts emerging technologies, reaching Vision 2041 is a much closer target. Bangladesh’s remarkable growth story and opportunities for further development will no doubt chart an exciting and vibrant future. With commendable progress already achieved in the first two decades of the century, what more can Bangladesh do in the next 20 years to take it from an emerging economy to a rising tech hub?

 

[1] Bhaskar Chakravorti, Ajay Bhalla, and Ravi Shankar Chaturvedi (2020) ‘Which Economies Showed the Most Digital Progress in 2020?’ Harvard Business Review.

[2] Kevin Hernandez (2019) ‘Barriers to Digital Services Adoption in Bangladesh’ K4D Helpdesk Report.

 

Photo ©️ Mahmud Hossain Opu

Mohammad Raafi Hossain
Mohammad Raafi Hossain is the co-founder and CEO of Fasset, a digital asset gateway. He is an entrepreneur and a strategist. He was an advisor for policy and innovation to the Prime Minister’s Office of the UAE. He is the founder of the think-and-do tank Finocracy and worked for the UN in several countries, focusing on agriculture, climate change and sustainable development. He led Fasset’s solutions in the tokenisation of Bahrain’s FinTech Regulatory Sandbox (authorised by the Central Bank of Bahrain) and completed the first proof of concept tokenisation of a Tesla charging unit. He pursued his graduate studies at Harvard University.