Bangladesh needs to create a congenial environment to attract more external and local private funds for impact investment in social sectors, analysts said yesterday.

"You have a foundation in Bangladesh for impact investment to grow," said Rosemary Addis, chair of Impact Investing Australia, at the first Impact Investment Summit at Westin Dhaka.

Build Bangladesh, a new initiative that aims to promote social entrepreneurship, economic empowerment and environmental sustainability, and Bangladesh Brand Forum jointly organised the summit with the theme Driving the Sustainable Agenda.

"The Building Bangladesh initiative is for promoting social investment, economic empowerment and environmental sustainability," said Finance Minister AMA Muhith, after launching the platform.

New York-based Global Impact Investing Network (GUN) has defined impact investment as investments made into companies, organisations and funds with an intention to generate social and environmental impact alongside a financial return.

The GUN has targeted to capture at least one percent of total global investment worth $212 trillion as impact investment. Impact investments are now being used to finance initiatives, such as elderly care, health, housing, education, infrastructure, water and sanitation, sustainable agriculture and development of the services sector.

Bangladesh has the third most active impact investing market in South Asia after India and Pakistan. Fifteen investors are currently active in Bangladesh with a total investment of about $955 million, according to Build Bangladesh.

"But most of the impact investors in Bangladesh are international development institutions. There is very minimum private sector participation," said M Khairul Islam, chairman of the Bangladesh Securities and Exchange Commission.

He said the commission is taking steps so impact investment can become a thriving industry in Bangladesh.

Kazi M Aminul Islam, executive chairman of Bangladesh Investment Development Authority, said Bangladesh is looking for investment that makes sense, and is inclusive and aligned with Sustainable Development Goals.

“We have to break the link between the creation of wealth and the destruction of nature." Islam also said the private sector, which leads Bangladesh's economy, has to come forward to make investment that creates social goods. Islam requested the finance minister to see whether the country's regulatory regime is in favour of the growth of impact investment.

Muhith said every investment has an impact, but the question is how widespread the impact is. Bangladesh has done well when it comes to impact investment, he added. For example, the country has cut the poverty rate in the last forty years, bringing it down to 22 percent from 70 percent.

Addis of Impact Investing Australia said more resources could be mobilised for impact investment. "We have huge opportunities to harness the power of entrepreneurship and transform the ways we tackle issues."

David Carrington, vice chair of Triodos Bank NV, a Netherlands-based social bank, put emphasis on measurement of impacts.

Farhadur Reza, president of Build Bangladesh, said it is time to change the traditional mindset of investors.

In the first panel discussion, Meer Sajed-Ul-Basher, managing director of Impress Capital Ltd, said Bangladesh needs to increase its investment to GDP ratio to 34 percent from 28 percent to cut poverty, reduce unemployment and absorb about two million people joining the workforce every year. He said health, education and environment are major areas where impact investment can play an important role.

Abrar A Anwar, chief executive officer of Standard Chartered Bangladesh, said whatever the banks do, it has to be sustainable at the end of the day. "I think banks can play an important role in social investment and impact investment."

There are some regulatory challenges that need to be addressed to take the impact

investment agenda forward, he added.

Arif Khan, CEO of IDLC Finance Ltd, said Bangladesh has done well in social investment - be it creating jobs for 8 million women in the manufacturing sector or extending finances for small and medium enterprises. "Bangladesh is a ground where more and more impact investment can come"

Banks should lend more to entrepreneurs as they are the ones who will drive the impact investment agenda, said Khan.

Faisal Ahmed, senior economic adviser to the governor of Bangladesh Bank, said, "At the end of the day, impact investment is all about social cohesion."

Md Mahbub-ur Rahman, deputy CEO of HSBC Bangladesh, thanked Bangladesh Bank for creating an environment for foreign banks to engage in lending operations in areas such as SMEs, women entrepreneurship and agriculture through nongovernmental organisations.

Rahman suggested an index could be created to monitor implementation of the projects and their progress.

Luke Branagan, director of philanthropic services, JBWere, Australia, said the landscape for impact investment in Bangladesh is broad thanks to a large number of entrepreneurs. "As a result, the opportunities are huge." Abhijit Ray, CEO of Unitus Capital in India, said social enterprises would go up in India and Bangladesh.

At another panel discussion on readymade garments, Rubana Huq, managing director of Mohammadi Group, said the garment industry has a huge social impact, as it touches 20 million lives through four million workers.

"Still, more needs to be done. People who are contributing to our growth need to be protected, as without them, we can't move forward."

Faruque Hassan, senior vice president of Bangladesh Garment Manufacturers and Exporters Association, also spoke.