Social Enterprises to mitigate poverty : the BRAC model

Roopen Roy

(Roopen Roy is the Managing Director of Deloitte Consulting, India. Views expressed are personal)

In the early 1990s, Dr. Josef Stadlbauer of Kreditanstalt fur Wiederaufbau (KfW) , the German Development Bank and I went to meet the founder of BRAC Fazle Hasan Abed . We wanted to discuss BRAC’s ambitious program of expanding their project for non-formal primary education which KfW and other international funding agencies were financing.

It was a mild winter morning in Dhaka. I was expecting to meet a scruffy fighter and a revolutionary who had set up BRAC to mitigate poverty in Bangladesh. Instead, I found a suave and dapper gentleman in a dark suit who could easily be mistaken for an occupier of a corner-office in a multinational corporation. Only later did I learn that he was indeed a former Finance Director of the Anglo-Dutch MNC-Shell in Bangladesh. He was educated in the UK where he trained and qualified as a management accountant.

BRAC was founded in 1972 by Fazle Hasan Abed in Sylhet as a small-scale relief and rehabilitation project to help returning war refugees after the Bangladesh Liberation War in 1971. The acronym BRAC came from its original name: Bangladesh Rural Advancement Committee.

From its humble beginnings it is today one of the largest and fastest-growing non-governmental organizations (NGO) in the world. On the 16th February this year, Abed received a knighthood from the Queen in recognition of his contribution to his war against poverty.

The mission statement of BRAC is: “to empower people and communities in situations of poverty, illiteracy, disease and social injustice. Our interventions aim to achieve large scale, positive changes through economic and social programmes that enable men and women to realize their potential".

The temptation to compare Yunus’s Grameen with Abed’s BRAC is difficult to avoid. Both sprouted in Bangladesh. Both have charismatic founders at the helm. Both have been successful in their fight against rural and urban poverty. Yet, there are differences in approach, scale and strategies.

Very roughly, if Grameen is the Infosys of social business in Bangladesh, BRAC is its TCS. BRAC is a much larger and more diversified organization but maintains a lower profile in the international media. Most of its social enterprises are home grown although some are internationally funded.

Although Grameen Bank is better known outside Bangladesh for its micro-finance program, BRAC has a robust program that operates and disburses nearly $1 billion a year in micro-finance. While Grameen is into mobile telephony the internet service provider is BRAC.

From the inception, BRAC has wielded well the weapon of education against poverty. It is heavily invested in primary education. While it does have a university, BRAC’s primary schools educate more than 10% of Bangladesh’s children. BRAC also manages several social enterprises that generate both employment and surpluses. It runs poultries, feed factories, tea gardens and packaging units. It also runs a handicraft retail chain called Aarong which sells a wide range of local products from the famed Dhakai jamdani sarees to a variety of Bangladeshi handicrafts--- thus linking the artisans and crafts persons to the global market. The retail outlets are fully computerized and run with the quiet and smooth efficiency of any international retail chain.

BRAC believes in scale. It uses the business models of industrial strength and high quality. You buy its products because they are good not because you want to lend a helping hand to the poor. It employs 120,000 people, touches the lives of 110 million people, spends around $550 million every year and keeps expanding its web of social enterprises.

Today, BRAC generates 80% of the money it disburses to the poor from its businesses (the remainder is aid, mostly from Western donors). It reviews and terminates projects that require endless subsidies. While there are many NGOs which teach the poor how to fish –there are many others which consider government subsidies their birth right and some others that cover their operating costs from the munificence of international donors. Not BRAC.

Initially, development was the focus of BRAC and the development of women was one of the key strategies. More than 70% of the children in BRAC schools are girls. Dr Stadlbauer and I visited several of these non-formal primary education institutions in remote locations in Bangladesh. We witnessed firsthand what kind of resistances these schools faced from elements in the villages which wanted to keep the womenfolk illiterate and how the village women rose to overcome them.

After 30 years in Bangladesh, BRAC has refined its model and is replicating them in the poor developing world. Its costs are lower and its approach tempered in the fire of Bangladesh’s poverty. It does not buy large SUVs nor does it employ expensive expatriates. Apart from Bangladesh, BRAC works in Afghanistan, Sri Lanka, Pakistan, Uganda, Tanzania, Sudan, Liberia, Sierra Leone, UK and the US. Will the geographic dispersion dilute its focus? Or are we witnessing the rise of the first multi-national social enterprise with a focus on fighting poverty across the developing world with proven and replicable models of development ?