By 2030, Bangladesh will be the 24th largest economy. Here's how ICT is driving that growth
By 2021, Bangladesh expects its ICT exports to be worth $5 billion
Image: Beyond Access/Flickr
In Bangladesh, more than 120 companies export information and communications technology (ICT) products worth nearly $1 billion to 35 countries. By 2021, it’s expected that this will increase to $5 billion. Indeed, the growing strength of the ICT Industry underpins the four vital pillars that will support Bangladesh’s transformation to a digital economy by 2021, and a knowledge economy by 2041.
Announced in 2008 and officially launched by Prime Minister Sheikh Hasina in 2009, the
Digital Bangladesh Vision identifies human resource development, connecting citizens, digital government and the aforementioned promotion of the ICT industry as critical to meeting these transformation targets. Here’s why they are so important:
Human resource development
The government wants Bangladesh to be a gateway for the digital world and has started multiple initiatives to develop a skilled, equipped and digital-ready pool of talent. Our education system produces more than 500,000 university graduates every year and, thanks to the introduction of several dedicated training programmes to get the talent pool ready to deliver value on a global scale, we have trained more than 65,000 Information Technology Enabled Services (IT/ITeS) professionals in the past year.
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According to the Oxford Internet Institute, Bangladesh has the second largest pool of online workers in the world. To further enhance skills, we have established specialized labs in all of the country’s 130 universities. We are investing in frontier tech centers of excellence with global technology partners such as IBM, and we have a strong focus on training professionals in emerging technologies – the Internet of Things, blockchain, Artificial Intelligence, Big Data and analytics.
Connecting citizens
The next pillar is about connecting citizens - and Bangladesh is committed to ensuring 100% internet connectivity by 2021. We have already made good progress with currently more than 93 million internet subscribers and 160 million mobile subscriptions throughout the nation, making
Bangladesh the fifth largest mobile market in Asia Pacific and the ninth largest in the world.
We have ensured seamless connectivity through two submarine cable connections with 1,700 gigabits per second (Gbps) and seven ITC connections with 400 Gbps. We plan to further enhance this by becoming an early adopter of 5G. By the end of 2019, we will provide high-speed internet connectivity to even remote villages.
In order to ensure a cost-effective space for companies interested in investing in Bangladesh, we are building 28 high-tech parks around the country and plan to increase this to 64. There is a focus on developing a thriving environment for partners and investors who are keen to take advantage of the opportunity that Bangladesh presents.
Digital governance
E-governance is the next step in driving the Digital Bangladesh engine forward. The government is proactively pursuing the digitalization of all government portals, such as passport applications and visa applications, by the year 2023. In 2014, we developed the National Portal which now houses more than 45,000 websites and services of different government offices. We have developed more than 5,000 digital centres across the country to help provide various digital services to citizens, while addressing the issue of a digital divide.
Our Bangladesh National Digital Architecture (BNDA), which ensures interoperability, won a World Summit on the Information Society (WSIS) award this year and WSIS has recognized Bangladesh for different e-government or digital government initiatives for the past six years in a row.
We have established a Digital Service Accelerator to expedite and facilitate the e-services of all ministries and have issued more than 100 million digital IDs to our citizens – one of the highest volumes in the world. Services are very carefully designed to ensure they are relevant to all three groups of Bangladeshi citizens: younger, tech-savvy generations growing up with technology; “digital adapters,” who are middle-aged individuals who have adopted technology; and the minority who stay away from technology. The scale of digital governance in Bangladesh has a tremendous impact on the transformation of the nation.
Promotion of the ICT industry
The vibrant and rapidly growing ICT industry in Bangladesh is the fourth area supporting digital transformation. We serve clients in an array of domains, including financial services, telecoms and healthcare, and drive the IT/ITES engine behind some of the world’s most global companies.
The four pillars behind Digital Bangladesh are strengthened by strong government commitment and support.
Bangladesh is one of the fastest-growing economies in the world.
We are 34th in the World Economic Forum’s Inclusive Development Index, ahead of many established nations, and
by 2030, we will be the 24th largest economy in the world. The essential ingredient behind this growth has been the smart use of ICT to spur progress in all sectors.
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How the digital economy is shaping a new Bangladesh
Freelancing is a good option for highly educated women in Bangladesh.
Image: REUTERS/Andrew Biraj
With the advent of rapid digitalization, many developing countries like Bangladesh are focusing on the
digital economy: a global market for digital outsourcing.
The digitalization of a country’s economy not only drives innovation in its service industry, it also fuels domestic job opportunities, enabling faster economic growth. In the quest to lower costs and risks, many large corporations in developed nations like the US, UK and Australia are turning to IT
outsourcing from countries including Bangladesh, leading to a recent boom in freelancing.
Freelancing jobs
include everything from computer programming to web design, tax preparation, and search engine optimization. This has generated a wide range of new opportunities for people in emerging markets that did not previously exist.
Asia has become the number-one region for providing outsourcing services to the rest of the world.
The Online Labour Index, by region
Image: Oxford Internet Institute
Freelancing offers many
advantages, including the freedom to choose clients and projects, access to the global market, and flexibility over location. Most importantly, freelancers can avoid the long, frustrating hours commuting in
traffic in the Bangladeshi capital of Dhaka.
Consequently, freelancing has become a popular career option for many Bangladeshi people, offering a new and flexible source of income that suits their lifestyles.
The rapid digitalization of Bangladesh - including easy internet access in urban areas and government and non-government initiatives to promote freelancing - has contributed to the recent growth of this way of working.
As a result, Bangladesh has already become the
second-largest supplier of online labour, according to the Oxford Internet Institute (OII). About 500,000 active freelancers are working regularly, out of 650,000 registered freelancers in the country; between them they are generating
$100 million annually, according to the ICT Division of Bangladesh.
The Online Labour Index, by country
Image: Oxford Internet Institute
India is the largest supplier of online labour, with close to 24% of total global freelance workers, followed by Bangladesh (16%) and the US (12%). Different countries focus on different sectors of freelancing services. For instance, technology and software development is dominated by Indian freelancers, while Bangladesh is the top supplier of sales and marketing support services.
Freelancing: a solution to the unemployment problem
One in every 10 of Bangladesh's 44 million young people is unemployed, according to
research by World Vision Bangladesh. Moreover, thousands of graduates who are finishing their studies at different public and private universities in Bangladesh are failing to find suitable positions in the job market each year.
As a result, the rate of
educated unemployment in the country is increasing exponentially. However, these young unemployed people can easily start their career by taking some IT training and freelancing online. By doing so, they not only make a living but also contribute to the economy by earning a salary in a valuable foreign currency.
Opportunities for women
A lot of women in Bangladesh, including highly educated women, often sacrifice their careers in order to take care of their families. Freelancing is becoming a preferred career option for many Bangladeshi women, as it provides them with an opportunity to work from home.
Bangladeshi women who are looking to take a step out of their traditional domestic roles are finding freelance jobs to be a great solution. Research shows that in terms of the quality of the work, Bangladesh's female freelancers have started gaining more
credibility than their male counterparts. Increasing women's participation in freelancing is therefore boosting trust in the sector.
Challenges
Government initiatives to develop the ICT service sector, such as creating a
high-tech park in every district, coupled with the low-cost workforce, have made Bangladesh a key player in the global outsourcing market.
Nevertheless, several challenges hinder the growth of this industry in Bangladesh. The absence of an uninterrupted power supply is still a major problem for the country. Freelancing work, like complex coding for software development, requires a high level of concentration, which is often shattered by the frequent power cuts.
A lack of quality internet services, along with higher broadband prices, is a major problem for freelancers in rural areas. In spite of having broadband connections in some areas, freelancers often find it too slow to suit their work.
The lack of an easy payment system – especially for receiving payments from foreign clients – is another problem for this fast-growing industry.
And women's participation in freelancing, although increasing gradually, is still not high enough.
The way forward
Bangladesh is one of the few countries in Asia that has a huge youth population. Of its 163 million people,
almost 65% are under the age of 25. This vast, young and strong human resource, however, is still lacking in the knowledge necessary to thrive in the competitive global market.
Although freelancing as a career has gained in
popularity over the last few years, thousands of Bangladesh's young people are in need of proper training and government support to help them take advantage of this opportunity.
The government should focus on turning unemployed young people into tech-savvy workers and engage them in IT-based freelancing. In this way, the government of Bangladesh can attain its goal of translating the vision of
Digital Bangladesh into a reality by focusing on human capital development for the global digital economy.
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How Bangladesh can thrive in the Fourth Industrial Revolution
Bangladesh is one of the world's fastest-growing economies
I recently learnt the story of a fascinating Bangladeshi couple, Rini Ishan and Rakib Reza. The pair have quietly been manufacturing commercial robots in Bangladesh, including a 3D concrete-printing robot. So far in 2018, their company Planetary Limited has exported 11 robots to South Korea.
For some time, I have been telling friends around the world that Bangladesh has arrived at the nuclear age and space age, and that it’s a ‘shirt-to-ship’ story. I can now proudly say that Bangladesh is also in the age of robotics and 3D printing.
Rini and Rakib are not alone. Thousands of young Bangladeshi people have already put the country on the global IT freelancing map. Thanks to the passion, imagination and steady work of a few, ‘Digital Bangladesh’ is now a reality, contributing to the transformation of our social and economic landscape at the grassroots. For instance, 4,554 Union Digital Centres, more than 100 simplified public services, e-procurement and smart health cards are leading Bangladesh down the 4IR path.
I once asked Professor Schwab why he had labelled the fourth generation technological changes as a ‘revolution’. So many of us in Bangladesh grew up knowing revolution as something cataclysmic. Professor Schwab responded that these upcoming technologies are bringing transformative impacts to the thinking, values, life and work of every person, enterprise, industry and nation in ways that have been unfathomable until recently.
While revolutions in history have been loud, visible and often bloody, the Fourth Industrial Revolution (4IR) is rolling out so quietly, yet bringing effects infinitely more profound than earlier technological and political upheavals. We are seeing how a tsunami of science, technology and innovation, and the creative use of 4IR tools and applications, are changing the lives of individuals, companies and countries across the world, from entertainment to education to employment.
Drawing inspiration from Professor Schwab’s words, the Foreign Ministry of Bangladesh, in collaboration with the World Economic Forum, recently organized a national workshop on the 4IR and its impacts on the country. The event was designed to help stakeholders appreciate that the 4IR is real and present, even in Bangladesh.
Every one of us must get ready, whether we are in government, business or research. And we must move fast. We need to employ imagination, creativity and innovation, without hindrance or inhibition, in our schools, factories, companies and even in government. Indeed, as Prime Minister Sheikh Hasina said at the World Economic Forum meeting in Davos in 2017, Bangladesh is open and ready to move on the 4IR, to support start-ups, and to pilot innovative applications in our farms and factories.
Bangladesh has long been a story of the aspiration, resilience and innovation of millions of young women and men across villages and towns. In our brief, five-decade history, the country has constantly battled against natural and man-made disasters, and yet has sustained high economic growth. Today, we are one of the fastest-growing economies globally, expanding at over 7% annually. During the past decade, under the stewardship of Prime Minister Sheikh Hasina, we also significantly reduced poverty and inequality.
The Fourth Industrial Revolution coincides with the period when Bangladesh transitions towards a developed country. By 2030, around half of Bangladesh will be living in urban areas. These people will demand all kind of goods and services that we cannot predict today.
There is no point in debating whether the Fourth Industrial Revolution is good or bad, or whether it will benefit Bangladesh or not. It’s not something for us to accept, reject or regulate. It is time that we join hands with everyone to embrace the 4IR robustly. By hosting a first-ever national conversation and workshop on the 4IR, I believe we have made the first step towards achieving that objective.
What’s behind Bangladesh’s surging consumer market?
Zarif Munir
Writer, BCG
This article is published in collaboration with BCG Perspecitives.
You feel the energy soon after disembarking at Hazrat Shahjalal International Airport in Dhaka. All of Dhaka, the capital of Bangladesh, seems to throb with bustling masses of people. Bridges, expressway overpasses, and major new neighborhoods are continually under construction. Evidence of the country’s rising disposable income is on display at crowded shopping malls such as Jamuna Future Park, the largest in South Asia, and new billboards, which seem to cover every available space, advertise products as varied as packaged foods and smartphones.
To much of the outside world, Bangladesh remains synonymous with poverty. It is time to take a new look at this land of 160 million: this rapidly developing economy is one of the world’s next great growth markets for discretionary consumption.
Although the number of middle-class and affluent consumers in Bangladesh remains small compared with those of other big emerging markets in Asia, Bangladesh is one of the fastest-growing markets worldwide. We project that, each year for the next decade, the annual income of around 2 million additional Bangladeshis will reach $5,000 or more.
That means that they will be earning enough to afford goods that offer convenience and luxury, such as air conditioners, imported shampoos, and cosmetics. And although half of Bangladeshis still live at the so-called bottom of the pyramid, economists estimate that another 30 million to 40 million will make the leap from poverty to the entry rungs of the middle class by 2025.
To help companies gain a deeper understanding of the middle and affluent class (MAC) in this increasingly important—but often neglected—market, The Boston Consulting Group’s Center for Customer Insight surveyed around 2,000 households across the country. We asked consumers about their sense of financial well-being, their purchasing habits, and their consumption priorities for some 70 product categories. To help companies anticipate when consumption is likely to take off in these categories, we also analyzed changes in Bangladeshi household consumption of specific goods and services relative to rising incomes.
The following are among our key findings:
- Bangladesh’s consumer class is swelling and dispersing. Although only some 7 percent of the country’s current population can be classified as middle income or affluent, compared with 38 percent in Indonesia, MAC Bangladeshis will account for around 17 percent of the population by 2025. Consumer wealth is also dispersing regionally: projections indicate that within the next decade, 63 cities will have MAC populations of at least 100,000, compared with 36 now.
- Consumers intend to spend but are wary of debt. Sixty percent of consumers report that they expect their incomes to rise over the next 12 months, and 69 percent say that there are more things they want to buy. But they are restrained by concerns—due perhaps to social taboos or to a lack of familiarity with debt instruments—that they will run up debt that they won’t be able repay. Alleviating this concern could unlock great growth opportunities.
- Consumers are highly loyal to brands, but they are also budget and quality conscious. Most Bangladeshi consumers—more than 80 percent in the case of durables—cite brand as a top factor that influences their buying decisions. These consumers work within a budget, and price is often cited as a second priority over quality. Far fewer Bangladeshis than consumers in Southeast Asian emerging markets say that price discounts sway their decisions.
- Consumers increasingly use the mobile Internet. Forty-one percent of Bangladeshi consumers surveyed—and 68 percent of MAC consumers—own Internet-enabled smartphones. Currently, most transactions are in cash, but the popularity of smartphones suggests that more consumers will be making the leap to mobile payment, creating an opportunity for reaching households through wireless mobile services. Eighty-one percent of consumers said that they trust what they read online, and 66 percent search for product information online.
Although these findings suggest that tremendous growth opportunities will unfold over the coming decade, companies must approach this market with a sophisticated understanding of the Bangladeshi consumer. They should also address the constraints that prevent consumers from acting on their strong desire to purchase brands and should introduce products that meet household budgets. Companies can expand their reach through different retail channels and in more locations.
For the next few years, companies should focus on ramping up their operations to meet growing demand from MAC households in Dhaka, Chittagong, and a handful of other cities. But at the same time, they should begin laying the groundwork for a broader expansion as the MAC population continues to grow and as buying power spreads swiftly throughout the country.
The strong brand consciousness of Bangladeshi consumers suggests that the companies that can now establish themselves as trustworthy, build market share, and develop a reputation for delivering good quality will be those that reap the biggest rewards in what promises to be one of world’s next big growth markets.
Publication does not imply endorsement of views by the World Economic Forum.
Author: Zarif Munir, Olivier Muehlstein, and Vivek Nauhbar are writers at BCG Perspectives.
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