The hurdles overcome and to be overcome by Bangladeshi startups
Bangladesh has made remarkable progress in terms of economic growth and fostering businesses, with special attention being given to fostering an entrepreneurial environment in recent years. Driven by increased digital connectivity and technological advancements that are coupled with innovation by the youth, Bangladeshi startups have shown promising results.
A PROMISING START
Ranking 83rd in the ‘Global Startup Ecosystem Index 2024’ report, Bangladesh’s startup ecosystem’s progress has been nothing short of impressive. The report by StartupBlink noted Bangladesh’s potential as a “digital treasure in Asia,” highlighting that the nation’s key strengths lie in its large population and a tech-smart demographic. Bangladesh is home to over 8800 startups, including bKash and Pathao, of which, bKash has achieved unicorn status, a term used to describe a startup that is valued at over USD 1 billion. This growth was partly nurtured by the previous government’s vision of aiding at least 5 startups to achieve billion-dollar valuations by 2025. Reflections on such reports and undertakings compel one to see the vast potential Bangladeshi startups have, so much so that it has successfully commanded international recognition for their development.
DEAD WEIGHTS
However, with a complex regulatory framework and a lack of an enabling environment, the already risky venture that is a startup is made even more disincentive to potential entrepreneurs. This is an issue that has been long plaguing Bangladeshi startups even before the recent political turmoil – the country’s tough investment procedures and even tougher exit routes for foreign investors make Bangladeshi startups an unappealing venture to invest in. This is especially harmful as foreign investments are key to a startup’s growth. This is coupled with the fact that Bangladesh is still perceived as the source of cheap labour and goods by many, and not as a space for tech-enabled growth worth investing in. To make matters worse, corruption runs rampant in the country, with the Centre for Policy Dialogue finding it to be the biggest problem in conducting trade in Bangladesh.
Bangladesh’s economic circumstances and unfavourable banking practices also create operational challenges for startups. Depleting foreign reserves, the ever-depreciating taka, and decreasing foreign remittance earnings are some of the main economic struggles that threaten startups’ operations and imports. In addition, traditional banks’ perception of startups as high-risk ventures often translates to conservative and stringent loan conditions, thus further disincentivising startups.
With the country now grappling with one of its biggest political turning points, the Bangladeshi startup landscape is left with an uncertain future that requires careful navigation.
HOPE ON THE HORIZON
These hurdles have only been exacerbated by the recent ousting of former Prime Minister Sheikh Hasina and her government, creating greater political and economic instability for these startups. In a system that is already grappling with difficult governmental and economic conditions, Bangladeshi startups have an uncertain future ahead of them. However, with Nobel Laureate Muhammad Yunus as head of the interim government, alongside a widely recognised public demand for systemic change and ethical leadership, one can be optimistic.
Once the more immediate crises affecting the country are resolved, the interim government would be wise to dedicate more attention to its startups. Some of the bigger undertakings should include reinstating political stability, addressing inflation, and replenishing foreign reserves. Fostering international relations and rebranding Bangladesh as more than just the top spot for cheap goods and labour, the interim government has an immense role to play in encouraging foreign investments. Furthermore, redirecting a higher percentage of the GDP to startups and reconstructing national frameworks that allow licensing of startups are two other solutions to consider. From a more academic standpoint, university curriculums can be altered to include courses that equip graduates with a more entrepreneurship-focused skill set that is fit for the industry. Lastly, to unleash Bangladesh’s potential as a tech-enabled startup hub, digital connectivity needs massive reconstruction to ensure more Bangladeshis are connected within the startup network.
Bangladeshi startups have withstood numerous economic and regulatory hurdles in a display of immense resilience and dedication. While the recent political turmoil may have justifiably shaken the confidence of many and created uncertainty, it is important to recognise that the country is now at a crucial point in its history. With the public’s demand for ethical leadership and a complete reform of the country, Bangladeshi startups should remain hopeful of a brighter future ahead.