Bangladesh’s microenterprises embraced green growth and thrived–then COVID-19 hit

“It used to take me two hours to set pearls on a shoe,” says Khaled, a 33-year old microentrepreneur in the administrative region—or Upazila—of Bhairab, near Dhaka. “Now, thanks to the new machine, I can set more than two dozen at the same time!”

Home to 7,000 factories, the region is known as the shoe cluster of Bangladesh. About 40 percent are micro-enterprises that employ between two to seven workers. Like Khaled’s business, most microenterprises are family-run and produce shoes for the domestic market for as low as $1.25 a pair.

Bhairab is one of 42 microenterprise shoe clusters financed by the World Bank’s Sustainable Enterprise Project (SEP) and implemented by one of the world’s largest financiers of microenterprises, Palli Karma Sahayak Foundation  (PKSF).  

The project directly supports 40,000 micro-enterprises across Bangladesh. It has encouraged non-banking financial institutions to support green growth initiatives and shift their portfolio assets to include environmental protection, pollution and contamination reduction, and better workplace safety—considerations that are too often overlooked among Bangladesh’s microenterprises.

In Bhairab, greener practices and an improved working environment have helped boost local shoe business.

Bhairab is one of 42 microenterprise shoe clusters financed by the World Bank’s Sustainable Enterprise Project 

The shoe cluster used to be a squalid and dangerous place. Solid waste was everywhere, contaminated water sat on the surface, and there were no sanitation facilities. Obsolete factory equipment such as  leathers, plastics, or glue was hazardous to workers as they would squat by the machines and amid raw materials.

Now all workers are fitted with masks and gloves, and they sit in comfortable chairs by the production lines. Unsurprisingly, a safer and cleaner environment has boosted work productivity and morale. 

“I used to apply glue with bare hands, now we use brushes and personal protective equipment and  even have a separate toilet for female workers,” said Shirina, an employee at the Ruma Baby Sandal Factory. “Working conditions have improved a lot. We feel good to work here now.”

Other local microenterprises have followed suit. Safety signs, personal protective equipment, first-aid kits, energy-efficient lights, and separate toilets for women have become the norm. Recycling, reuse, and technological innovations have also reduced overall wastage.

Bangladesh’s economy is dependent on its 7 million microenterprises, which provide 56 percent of all jobs

Investing in a green recovery after COVID-19

In the last 18 months, better environmental practices have helped entrepreneurs like Khaled increase their cash flows, which they reinvested into their businesses. 

But the COVID-19 pandemic got in the way, and nationwide general holidays have lowered production and driven down profits, triggering job cuts for factory workers. 

As cash reserves dry up, small businesses will find it hard to rehire employees and repay loans, jeopardizing their access to future credit and their very survival. Factory owners have already decided against purchasing new and improved machines, striking concerns for the quality of their products.  

Bangladesh’s economy is dependent on its 7 million microenterprises, which provide 56 percent of all jobs. 

In past crises, microenterprises did not get the support they deserved from policymakers. Now is the time to invest in environmentally sustainable enterprises that provide better and quality jobs and contribute to Bangladesh’s economy without harming its natural resources.  

This is the first in our series of blogs on microenterprises in Bangladesh. Our next blog will discuss the impacts of COVID-19 on microenterprises.