Roundtable Discussion Report
Challenges and Opportunities of Private Sector
Organizations Working in Chittagong Hill Tracts
Volume 1 Issue 2 February 2015
Katalyst
Funded by the UK Government, SDC and Danida
Implemented by Swisscontact| Swiss Foundation for Technical Cooperation
Disclaimer
This report is an output of the workshop/ discussion event/ seminar organised by Katalyst. The views and opinions
expressed in this report are those of the author(s) and do not necessarily reflect the official policy or position of
Katalyst
Katalyst. Assumptions made within the analysis are also not reflective of the position of Katalyst or its
Funded by the UK Government, SDC and Danida
implementing
and
fundingCooperation
organisations.
Implemented by Swisscontact| Swiss
Foundation for
Technical
Authored by
Quazi M. Ahmed
Katalyst
Funded by the UK Government, SDC and Danida
Implemented by Swisscontact| Swiss Foundation for Technical Cooperation
This report is one of a series of
discussion events that seeks to
understand inclusive business in
practice. The series explores the
prospects and challenges of Inclusive
Business
in
Bangladesh
and
facilitates the promotion of Inclusive
Business through relevant public and
private organisations.
About Katalyst
Agri-business for Trade Competitiveness-Project (ATC-P), branded as Katalyst is a market
development project that aims to contribute to increasing the income of poor men and women
in rural areas. It does this by facilitating changes in services, inputs and product markets, which
in turn increases the competitiveness of farmers and small enterprises. Katalyst is co-funded by
the Swiss Agency for Development and Cooperation (SDC), the UK Government, and the Danish
International Development Agency (Danida). It is implemented by Swisscontact under the
umbrella of the Ministry of Commerce, Bangladesh.
About Market Development Forum-Bangladesh
Market Development Forum (MDF) is a knowledge sharing and coordination network of
development practitioners working on market development approaches in Bangladesh. It was
formed as a joint effort of CARE Bangladesh, GTZ-Progress, Swisscontact-Katalyst and IFC-SEDF
in 2005. Since then, MDF has evolved into a paid membership network from 2013. Currently,
the network has 25 members from INGOs and local NGOs, consultancy firms and projects.
The platform intends promoting quality knowledge management and networking, creating
more inclusive platform and enhancing the portfolio of MDF. It creates opportunities for
organizations and development practitioners to:


Explore different dimensions of working area through effective knowledge and
experience sharing around different market development approaches
Promote thematic discussions on national as well as small scale and improve overall
understanding of how to influence market systems
Katalyst
Funded by the UK Government, SDC and Danida
Implemented by Swisscontact| Swiss Foundation for Technical Cooperation
About the Author
Educated and trained in Bangladesh, USA, Japan and Norway,
Quazi M. Ahmed takes pride in being one of the top workshop
facilitators and management consultants in Bangladesh. Over
the last 19 years, he has been conducting countless workshops
for leading MNCs to national conglomerates to even SMEs in
many industries including banking, telecom, Agribusiness,
RMG, pharmaceuticals and the like. Unlike others, his eclectic
background helped him to serve as consultant in various
organizations such as in the A2I Programme at Prime
Minister’s Office (PMO), Swiscontact-Katalyst, UNDP, ILO, Oxfam, Save the Children and in
many other government agencies and social sector organizations. Quazi M. Ahmed is the Lead
Consultant and CEO of FutureLeaders™ and recently has been elected as the President of
Bangladesh Organization for Learning & Development (BOLD)- a nonprofit platform for trainers,
facilitators, speakers, consultants and L&D professionals. Once a fulltime faculty member of
North South University, he currently teaches as an adjunct faculty in the EMBA Program there.
Katalyst
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Contents
Background ................................................................................................................................................... 1
Major Issues faced by the Private Sector...................................................................................................... 2
Lack of awareness on Better Agricultural Practices ................................................................................ 2
Forward Market Linkages ........................................................................................................................ 3
Access to Finance ...................................................................................... Error! Bookmark not defined.
Safety and Security................................................................................................................................... 4
Communication and Infrastructure ......................................................................................................... 5
Culture, Language and other Challenges ................................................................................................. 5
Finding Ways to Overcome the Challenges .................................................................................................. 7
Adoption of Modern Agricultural Practices ............................................................................................ 7
Creating Forward Market Linkages.......................................................................................................... 8
Having Access to Finance ......................................................................................................................... 9
Safety and Security................................................................................................................................. 10
Stronger mobile network ....................................................................................................................... 11
Other Long-term Solutions .................................................................................................................... 11
Opportunities for the Private Sector in the Region .................................................................................... 12
Conclusion ...................................................................................................... Error! Bookmark not defined.
Annexure: List of Participants ..................................................................................................................... 14
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Background
The Chittagong Hill Tracts (CHT) region
comprising of Bandarban, Khagrachari and
Rangamati districts is one of the most
disadvantaged and isolated areas of
Bangladesh. With an estimated population
of 1.3 million of which 90% live in rural
areas, the region contains the largest
concentration of indigenous population in
Bangladesh and is home to at least 11
ethnic groups. A baseline study by HDRC in
2008 found that 63% of the households,
irrespective of the ethnicity live below the
absolute poverty line.
Despite the various challenges facing the
region, several private sector organizations
are now venturing into the region with
different types of business models to avail
the unique business opportunities that the
region offers. These businesses, particularly
agribusinesses have great potential to
positively impact the lives of the poor rural
population of the region. More assistance is
required for them to operate profitability as
well as to involve them in poverty
alleviation.
In order to capture and understand the
experiences of these private sector
organizations, the Market Development
Forum with the support of Katalyst,
organized a discussion event at Hotel
Peninsula in Chittagong on January 26,
2015.
Ten participants representing private sector
and three other participants belonging to
non-profit sector discussed on their
experiences about working in that region
and recommended courses of action to
developing a roadmap for more conducive
business environment for the private sector
working in the Chittagong Hill Tracts.
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Major Issues faced by
The Private Sector
Lack of awareness on Better
Agricultural Practices
For generations, the indigenous people
have been accustomed to traditional
farming methods such as the ‘slash and
burn’ technique and it seems that it is not
an easy task to switch from their ancestral
ways of doing things. After all, old habits
tend to stick for a long time.
The discussants observed that agriculture is
the main source of income for the
indigenous population and thus motivating
farmers towards modern and improved
ways doing farming is essentially the first
challenge. Many reasons can be identified
as to why they don’t accept the modern
way of cultivating lands and here are some
reasons:
“Tradition-bound farmers
don’t pay much attention
to new ideas from the
private sector service
providers”
Lack of openness to new ideas: Traditionbound farmers usually don’t pay much
attention to new ideas from the private
sector service providers. For example, one
hybrid seed seller had emphatically
requested a farmer to sow the seeds over a
distance measuring 4-feet by 8-feet but to
no avail. When the seed seller went to see
the field, he discovered that the farmer in
question still sowed the seeds in the old
way.
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Lack of timely cultivation: Private sector
companies, especially the seed companies
say that farmers do not follow the
guidelines on timely sowing of seeds and
thus they don’t get the expected results,
resulting in poor harvest.
No crop diversification: Private sector
operatives have regularly tried explaining to
farmers the benefits and need for crop
diversification, yet experience has shown
that farmers have rarely paid any attention
to such new and better ideas of cultivation.
Forward Market Linkages
It’s common knowledge that forward
market linkages are the best ways to ensure
income for the farmers and yet we don’t
see much happening along these lines. Here
are the challenges:
Lack of basic infrastructure: Chittagong Hill
Tracts (CHT) is not only one of the most
remote parts of the country but also is least
developed in terms of infrastructure
perhaps due to its inaccessible, hilly
terrains. As a result, transportation of goods
takes significant amount of time.
No presence of producer’ association:
Many believe that the small-scale producers
could attract buyers as well as better price
if they could get organized as an
association, even if that is an informal one.
Thus we see no voice on the part of the
producers and as a result they don’t have
much bargaining power over the buyers.
Existence of a buyers’ market: The
individual farmers at CHT often produce in
small amounts and they travel long
distances to sell products. But what they
encounter is a buyers’ market and they are
forced to sell their produce at a much
lower, unfair price.
Lack of cold storage facilities: It’s common
sense that if there were enough cold
storage facilities, then the poor farmers
could have an alternative to an unfair price;
at least some of the farmers could keep
their agro-products in the cold storage until
better prices were available.
Poor recovery history: Stories abound of
low recovery rate due to nomadic-style
farmers moving to new and unknown
locations or because there was poor
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production due to adverse weather
conditions or incorrect farming methods.
Safety and Security
It appears that safety and security issue is
the mother of all issues when it comes to
challenges faced by private sector
organizations. The private sector wants an
active presence at the Chittagong Hill Tracts
(CHT). The first reaction of private sector to
this challenge is best captured in this oftenquoted statement in meetings and
discussions, “This is the government’s job,
not ours…we came here to do business and
not to get involved in maintaining law and
order aspects.”
Thus, private sector identifies the
following challenges that fall under
safety issues of doing business in the
CHT:
Presence of ‘chandabaji’: Most businesses
operating in the CHT would identify this as a
serious challenge of doing business. While
this practice is present in other regions of
the country in a limited way, it appears that
this rent seeking behavior by hoodlums in
the CHT is quite an issue.
Lack of employment opportunities for local
youth: One must admit that the tension
between Bengali and local people is always
present. Apart from that you add the fact
that majority of the youth in CHT are
unemployed, poor and have no or limited
opportunities for income generating
activities through small businesses
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Holding someone hostage: Unpleasant as it
may seem, occasional ransom seeking by
holding a Bengali employee of a company
as a hostage is not uncommon in the CHT.
Communication and
Infrastructure
By its very nature, Chittagong Hill Tracts
(CHT) is inaccessible and thus it is anybody’s
guess that this one of the biggest challenges
that is acting as a hindrance for the private
sector to flourish in that region of the
country. Needless to say private sector
players become silent when the issue of
creating appropriate infrastructure pops up
is discussions and meetings to ameliorate
the situation. As with safety and security
issues, private sector companies logically
look up to government and the PPP (publicPrivate
Partnerships)
initiatives
for
developing
communications
and
infrastructure.
“Private sector
companies generally
look to the government
and PPP (public-
Private Partnerships)
Culture, Language and other
Challenges
initiatives for developing
The discussants at the meeting were quite
candid about the issues related to culture
and language as a constraint for the private
sector to do business in the CHT. Here are
the reasons why:
infrastructure.”
communications and
Lack of trust: Historically, the tension
between
Bengali
and
indigenous
communities can be traced to unwelcome
Bengali settlements in the CHT. One must
not forget that the Bangladesh Government
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was in war with “Shanty Bahini” for close to
a decade and whether we like it or not,
Bengali people are seen as ‘unwanted’ and
thus it will take long time to build trust
between these two communities.
Misunderstanding
the
mindset
of
indigenous people: These are many cases
where we see that Bengali employees from
the private sector couldn’t read the mindset
of the local people and thus wasted money
and efforts on wrong initiatives. For
example, a sales person may have given an
excellent presentation on his products
without realizing that hilly people wouldn’t
give credibility to such messages unless his
or her headman endorses them.
Lack of local hiring: Most private sector
companies assume that well-trained Bengali
employees are good enough to develop
business leads. Nestle, for example, had
excellent learning experiences and are now
hiring local, indigenous people so that
Nestle’s value propositions are better
communicated through local language.
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Finding Ways to Overcome
the Challenges
Challenges mentioned in the above pages
may seem daunting and yet it is possible to
overcome them over a period of time with
involvement of all three sectors of the
economy: private, public and social. As one
can easily discern, pursuing large scale
infrastructure development or creating a
safe and secured place to do business at the
CHT are in the domain of the public sector.
On the other hand, challenges related to
adopting modern agricultural practices,
creating market linkages and having access
to finance are clearly within the reach of
the private sector, with relevant assistance
from social and public sector organizations.
It is against this backdrop that we discuss
various approaches which can be initiated
by the private sector.
“Creating employment for
indigenous people as fieldlevel employees will help
to reach the farmers
easily and communicate
with them in their own
Adoption of Modern
Agricultural Practices
language.”
Now that the main challenge of adopting
improved and better ways of farming has
been identified, we are in a better position
to come up with private sector led
solutions:
Employing
local
people:
Creating
employment for indigenous people as fieldlevel employees will help to reach the
farmers easily and communicate with them
in their own language on how they may
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benefit from the new and better ways of
cultivation.
Selecting ‘champion’ farmers: Identifying
champion farmers (who have adopted
modern farming techniques such as crop
diversification and thus are reaping the
benefits of a better crop) in the locality is a
good idea and of course the same
indigenous employee(s) of the private
sector company should invite other farmers
who are lagging behind to show the
“Demo” to inspire them.
Reaching out to women farmers: It was
observed that women are generally more
involved in farming and thus it makes more
sense to expose them to such demo plots as
opposed to exposing only men. This also
means that the private sector may be
encouraged to employ women employees
for better accessibility to women farmers in
the indigenous community.
Influencing headmen first: Given the fact
that headmen have significant influence on
the farmers, it is a good idea to approach a
headman first and motivate him on the
benefits of new farming techniques and
especially to tell him how this can possibly
lead to the well-being of his people as a
result of more crop output per farmer. This
helps in another way too: farmers often
seek suggestions from their headmen and
once a headman is convinced, he is more
likely to give his nod on the new and
modern ways of farming. In other words,
involve the headman in the community to
establish credibility and access to farmers.
Organizing Exhibitions: Ideas such as
organizing “Krishi Mela” (Agri-Exhibition),
harvest festivals or short movies followed
by information on modern farming tools
and techniques attract more farmers than
company presentations. In other words,
experience tells us that those visual
presentations on multi-media projection
work better.
Reaching out to DAE services: Private
sector companies should reach out to DAE
officials to know the research-based
information they have about crop
productivity and also to learn about the
various government initiatives in the region
so that they can utilize those vis-à-vis their
own private sector efforts.
Creating
Linkages
Forward
Market
It is common knowledge that farmers in the
CHT region hardly get fair price of their
produce. And the first solution that comes
to mind is how to link the farmers with the
right buyers who would pay a fair price and
still make profits at the same time. Here are
some suggestions worth pursuing:
Contract farming: A limited number of
private sector companies are already doing
this and PRAN Group is a case in point.
However, more and more private sector
organizations need to go into contract
farming with the local farmers.
Producers’ associations: It may actually
benefit private sector if companies can
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encourage small farmers to join together to
form some sort of informal associations. For
example, individual maize farmers often
produce in small amounts and only when
several farmers get together is the amount
worthy of attention from the private sector
due to the economy of scale point of view.
Quality products attract buyers: Private
sector companies should also encourage
the use of quality inputs such as good
quality seeds and the right pesticides so
that the crop is of high quality. Obviously,
buyers also get better prices when the
products they buy are of good quality.
Training of farmers: In the interest of its
own profitability, the private sector
organizations should educate the farmers
on how to plan for crops, the seasonality of
it and more. It’s not enough for the
companies only to have plans and vision of
their own; the farmers also need to be able
to see the big picture too in terms of what
actions now would bring better results
tomorrow.
Having Access to Finance
In order to cultivate better crops, farmers
often need access to finance as they don’t
have enough money to buy quality seeds or
pesticide for the purposes of crop
protection. Hence, banks and other
financial institutions in the private sector
can play an important role for a sustainable
supply of money to these farmers. As
mentioned earlier in this report, private
sector banks are facing serious difficulties
to finance farmers due to a lack of land
ownership documentation. Despite this
reality, banks and other private sector
organizations can take the following steps
to improve the situation:
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Locating guarantors: Identifying guarantors
could be one of ways to finance farmers
without any land-related papers. What the
bankers can do is to ask farmers to get hold
of a person who has land or other property
and is willing to be a guarantor for the loan.
Special loans for CHT: Banks can do internal
lobbying for special guidelines on how to
provide loans to farmers who don’t have
entitlement on lands as such lands are
provided to farmers by the ‘Raja’ through
oral decrees and not through any papers.
Hiring local people as bank staff: Banks can
hire local people as employees so that risks
are reduced in recovery efforts.
Lobbying with the central bank: Banks
operating in the CHT, may lobby with the
Bangladesh Bank to create a soft loan
window with lower interest rate for the
region. This would help banks to take
calculated risks and thus more farmers may
get the benefit of such loans.
“Banks operating in the
CHT, may lobby with the
Bangladesh Bank to
create a soft loan
window with lower
interest rate for the
Safety and Security
region.”
Most people would agree that if current
scenario is any guide, it is truly a huge
challenge for the private sector to ensure
the safety and security of its Bengali staff as
well as to keep a smooth movement of
products and money. Nevertheless, here
are a couple of ideas which may work:
Hiring local people: As mentioned
elsewhere, private sector organizations will
do well by hiring indigenous population in
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their in sales force and other positions
requiring movement in remote locations.
Company-supported community policing:
Private sector companies can join hands by
agreeing to create a fund which can be used
for community policing. Technically
speaking, these companies are losing
money through ‘chandabaji’ and other
means anyway and the same amount now
can arguably be spent on community
policing. As is well known, private security is
a thriving business in the metropolitan
areas of the country and we can learn from
this by introducing similar set-up with the
involvement of headman and others
including government law enforcement
agencies. This is tough but can be done.
Stronger mobile network
We all know that the telecom providers in
Bangladesh—who are all in the private
sector except for TeleTalk-- are actually
capable of investing in the network
infrastructure. Thus the question remains as
to why they are not erecting enough
number of towers to cover all the three
districts of CHT? The answer must be that
they are not getting the ROI (Return on
Investment) of their current investment and
thus are shy to do more.
Other Long-term Solutions
Needless to say, it is quite difficult for
private sector companies to tackle the
issues such as creating a safe and secured
environment conducive to business.
Similarly, it is even more difficult, if not
impossible, to create infrastructure facilities
in terms of roads, tunnels, etc. for ease of
movement. Despite these challenges,
private sector players can still take the
following initiatives as long-term solutions:
Making CHT a tourism hub: While this may
not be possible for an individual company
to achieve alone, together by forming an
alliance the private sector organizations
may work together through an alliance or
forum to enhance tourism and in particular
eco-tourism. To begin with, they can work
with donor-funded projects to request
them to pick tourism development in the
CHT as interventions. Secondly, this forum
can lobby with the government so that it
pays attention to creating infrastructure
with help from bi-lateral and multi-lateral
donor community. UNDP, for example, has
a long-term development plan for CHT and
it probably still has a Police Reform Project
which can initiate interventions related to
community policing and beyond.
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Opportunities for the Private Sector in the Region
Generally speaking, all private sector
organizations mention that there are huge
opportunities and potentials for business
development in the CHT region. For
example, if seed companies operating there
talk about the business potentials, they
mention in unison that they perhaps have
served only 30% of the customers so far and
remaining 70% yet to be covered. More
specifically, opportunities are seen in the
following areas:
security guards of indigenous origin in other
parts of the country, private sector players
can think of ways to scaling them up. Simply
put, products and services of CHT can thus
be integrated into the mainstream.
Branding CHT and its unique products: For
its own benefit, private sector can promote
the products and services coming out of
CHT. Research studies, for example, can be
commissioned to identify the exact goods
and services which are unique to CHT and
are in high demand elsewhere in the
country. Now, given the demands for those
crops (ie “aam rupali”) or services such as
List of “If-then” opportunities: All
discussants at the meeting pointed out that
if the challenges (such as lack of safety, lack
of agricultural knowledge, lack of access to
finance, etc.), can be overcome, then huge
potential for business development exists.
Development of tourism: As mentioned
above, tourism, especially eco-tourism is
the one area of business development
which has the highest potential and is a
win-win for all parties—private sector as
well as the inhabitants of the CHT.
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Conclusion
There is no doubt about the fact that
private sector organizations face difficult
challenges of business development in the
Chittagong Hill Tracts (CHT). Despite these
challenges, many companies in agricultural
input and other related services have, in
recent years, started operating successfully
in the region. However, it’s obvious that
huge potential for business expansion exist
which can benefit the indigenous
population in terms of increasing income
through higher agricultural output as well
as profits for the businesses. To realize
these
potentials,
private
sector
organizations need to take necessary steps
outlined in the report and contribute to a
mutually-beneficial outcome for both the
disadvantaged
population
and
for
themselves.
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Annexure: List of Participants
It was a pleasant surprise to see that all who were invited could join the discussion meeting.
Here goes the list of participants along with their respective designations and organization
names:
Name
Designation
Organisation
Mr. Salauddin
Key Account Executive
Enroute Ltd.
Mr. Md. Ziaul Haque
Regional Sales Manager
Syngenta Bangladesh Ltd.
Mr. M. Kaisher
Deputy Coordinator
Integrated Development
Foundation (IDP)
Mr. M. Faruque Hossain
Area Sales Manager
Auto Crop Care Ltd.
Dr. Chinmoy
Dept. Manager
CP Bangladesh Ltd.
Mr. Md. Shafiqul
Area Manager
Supreme Seed
Mr. Chigi Muni Chakma
Officer-Sales and Marketing
Ispahani Agro Ltd.
Mr. Md. Atiqur Rahman
Assistant Manager
Lal Teer Seed Ltd.
Mr. Md. Monir Hossain
FAVP and Territory Manager
BRAC Bank Ltd.
Mr. ABM Morshed Alam
Regional Sales Manager
Sanofi Bangladesh Ltd.
Mr. Shamim Hossain
Head Food Security
Concern Universal Bangladesh
Mr. Cornelis de Wolf
Country Director
Concern Universal Bangladesh
Ms. Arjumand Ara Lucky
Senior Executive
Nestle Bangladesh Ltd.
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Prepared by Katalyst
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