Impact investment, the term was created in 2007 by an initiative coordinated by the Rockefeller Foundation. The Global Impact Investing Network (GIIN) has defined impact investment as investments made into companies, organisation and funds with intention to generate social and environmental impact alongside a financial return. This financial return differentiates impact investing from grant funding. The deliberate strategy for positive benefit to society separates it from traditional investments. According to the GIIN, impact investing has attracted increasing interest among investors who are allocating more capital to impact investments year-over-year. It has identified the overall global investment is worth U$212 trillion and projecting the prospects for capturing at least one percent of this investments, which is U$2.0 trillion, for global Impact Investment. Impact investment are now being used to finance initiatives such as aged care, health, housing, education, infrastructure, water and sanitation, financial inclusion, sustainable agriculture and development of the service sector. Impact Investment is already having optimistic effect globally in catalyzing new markets and inspiring entrepreneurship and innovation for the benefit of society.
The Board of Investment (BOI) summit on investment in Bangladesh last year highlighted that one of the key drivers of investment for this century is 'alternative investments' including private equity, venture capital and impact investment. The recent recognition triggered through enactment of Alternative Investment Act 2015 and the BOI Summit created an enabling environment and readiness of Bangladesh to enhance impact investment. Impact Investment in Bangladesh has crossed the idea phase and investors are seeking more sophisticated ways of measuring their impact but there is a lack of good examples or tools to do so. Bangladesh has the third most active impact investing market in South Asia after India and Pakistan. Around 15 impact investors are currently active in Bangladesh with a total investment of around US$955 million. The Development Finance Institutions (DFI) have deployed over US$834 million to date, while other impact investors have deployed US$121 million in Bangladesh.
Recent Investors' optimism has led to sharp increase in Foreign Direct Investment (FDI) inflow in Bangladesh by 17% since 2009.4 Most of the impact investment in Bangladesh has been deployed in growing sectors such as ICT, Energy, Financial Services, Agriculture/Food Processing, Infrastructure, Microfinance and Manufacturing, mainly through debt. Around 70% of the total impact capital is being deployed through debt and the preference for debt is driven by risk aversion, regulatory barriers for using other instruments, and greater familiarity with debt. As part of this maturing process of the impact investment ecosystem in Bangladesh, there is now an opportunity created to move beyond output measurement to outcome and impact measurements, and also to explore the potential role of expatriate Bangladeshis' contribution to the growth of the impact investment landscape in several ways. The opportunity for impact investment through the deployment of capital into organisations and enterprises that increase incomes, employment, provide access to essential services and affordable consumer goods is significant. Hence, the status of the impact investing industries in Bangladesh is worthy of attention.
This scenario triggered the need to host the first international conference on Impact Investment in Bangladesh. The Conference - Bangladesh is Ready - driving the sustainable agenda; has been initiated by Build Bangladesh (www.buildbangladesh.org.bd). Build Bangladesh is an initiative working on social entrepreneurship, economic empowerment and environmental sustainability in Bangladesh while promoting the positive portrayal of Bangladesh in the global forum.