The Landscape for Impact Investing in South Asia: Bangladesh

This paper develops an understanding of the impact investing market in Bangladesh. It covers key supply-side themes such as the current status and trends in terms of the types of active investors, capital deployment, and opportunities for and challenges to investing. The paper also evaluates the demand for impact capital, challenges to accessing capital and opportunities for enterprise growth, and the vibrancy and scale of the supportive ecosystem necessary for the industry. The paper finds that Bangladesh has the third most active impact investing market in South Asia after India and Pakistan. An estimated USD 955 million of impact fund is currently deployed in the country. Other key findings include:

• Bangladesh’s large population and shifting demographics make the country appealing to investors;
• Investor optimism has led to sharp increases in FDI inflows since 2009;
• There are at least 15 impact investors currently active in Bangladesh;
• DFIs are responsible for the largest portion of impact capital through investments directly in enterprises;
• Institutional investors largely operate on a commercial basis as lenders;
• 70% of the total impact capital currently deployed has been through debt;
• Sectors receiving most of the impact investing capital are high-growth sectors such as ICT, manufacturing, and energy.