Since Bangladesh’s independence back in the early 70s, the country has been evolving into an economic powerhouse. Bangladesh’s growth has accelerated over the last couple of decades, spearheaded by the apparel sector and augmented by remittance earnings, resulting in rising per capita income, which crossed the USD 2,200 mark in 2020. From being dependent on donor funding for basic healthcare and nutrition to utilizing assistance in developing sustainable agricultural programs, Bangladesh’s Development Sector has evolved rapidly over the last 50 years. Donor funding has clearly played an instrumental role in the transformation of Bangladesh’s socio-economic landscape over the past five decades, lifting millions of poverty, empowering women and marginalized individuals, and facilitating access to basic education and healthcare facilities. Check out how the donor funding landscape will evolve in light of Bangladesh’s shifting socioeconomic conditions and upcoming LDC status graduation. LightCastle Partners recently conducted a study to analyze the evolving landscape of donor funding in Bangladesh and the whitepaper highlights the key trends in the funding landscape over the last 50 years and evaluates the development sector’s funding trajectory for the next five years.

1. Donor Funding Landscape:
Bangladesh

2. Presentation Outline
2
About LightCastle 3-4
Role of Development Funding in Bangladesh 5-8
A Historical Overview of Donor Funding 9-13
Emerging Trends of the Development Sector 14-22
Future of the Development Sector 23-27
Authors & Editors 28-29

3. Role of
Development
Funding in
Bangladesh
3

4. Macroeconomic Overview
Bangladesh sheds the label of ‘Basket Case’
4
▪ Bangladesh was left in shambles after the 1971 war: More than 30% of the country’s population lived in poverty
▪ Constant threat of famines, natural disasters, and political instability gave Bangladesh the label of ‘Basket Case’
▪ However, Bangladesh quickly shed the label with rapid economic growth and socioeconomic development
▪ Donor-funded Projects played critical role in eradicating rural poverty and providing essential services to BOP population
Poverty Headcount
Ratio (%)
USD 1.9/day
RMG Industry
Starts
Lower-Middle
Income status
LDC
Graduation
2026
1983 2000 2016
38.8
35
14.3
Source: The World Bank Data, 2021

5. Importance of Donor Funding
Development Sector Powers Bangladesh’s Improvements in HDI Index
5
▪ Donor-funded projects provided much-needed support for human development, e.g., healthcare, nutrition and education
▪ Bangladesh’s HDI grew almost ~2X between 1990-2019
▪ Bangladesh’s HDI is now ranked 4th in South Asia, 2 spots behind neighbor India
▪ Rapid progress in HDI indicators has supported the growth of the manufacturing industry and labor market
133
131
154
HDI Rankings South Asia
2019

6. Bangladesh’s Evolving Global Image May Influence Donors’ Priorities
Rapid Socio-Economic Progress may signal decreased need for Donor Funding
6
▪ Bangladesh has made significant strides in socio-economic development over the last 50 years since
Independence
▪ Despite COVID-19, Bangladesh’s GDP/Capita crossed that of India’s in 2020
▪ Bangladesh’s image as rising economic star may change donors’ perception and trends in development
funding
USD 200 Mn
FX Swap with Sri
Lanka
USD 7.7 Mn
Debt Relief for Sudan
Recent Diplomatic
Milestones
GDP/Capita
(USD, current prices)
2,138
2020

7. A Historical
Overview of
Donor Funding
7

8. Development Sector Funding for the First 3 Decades (1971-2000)
Donor Funding used to mitigate Malnutrition and improve Connectivity
8
▪ Donors and implementers also prioritized Infrastructure
Investment
▪ These projects aided rural-to-urban labor migration
▪ By 2000s, Bangladesh has almost achieved self-
sufficiency in food production
More than 1/3rd of Donor Funding used for Food Aid
after the War
▪ Development Interventions in rural connectivity and
healthcare supported mobilization of female RMG
workers
▪ RMG sector played key role in robust economic growth
post-1990s
Development Sector plays key role in economically
mobilizing BOP

9. Development Sector Funding over the Last 2 Decades (2000-2020)
Donor Funding shifts to more Long-Term Projects
9
▪ IDA, EU Institutions, UN Organizations − become the
primary funders of Development Sector Projects in
Bangladesh
Multilateral Donors take over Bilateral Donors in Share
of Aid Disbursed
▪ Post 2010, donor funding is no longer used for basic
provisions
▪ This signals the start of the development sector’s
evolution
Bangladesh achieves major milestone in 2010 –
complete sufficiency in food production

10. Sector-wise Priorities over the Recent Years (2015-19)
Funding Priorities differ by Bilateral Donors
10
Agriculture, Forestry and
Fishing, and Food Aid
United States
Energy, Transport and
Communication
Japan
WASH and Education
Netherlands
Education, WASH, Agriculture
Forestry and Fishing
Switzerland
Education
United Kingdom

11. Effect of COVID-19 on Development Funding in 2020
Focus of Bilateral Donors Shifts to Healthcare
11
▪ USAID donated more than $96 million in COVID-19
assistance till August 2021
▪ Development of Social Infrastructure & Services,
Transport & Energy also receive priority
Over 1 Bn USD Disbursed for Health and Healthcare-
Related Sectors

12. Emerging
Trends of the
Development
Sector
12

13. Climate Change, Sustainable Agriculture & Food Security
Bangladesh has received 1 Billion USD for Climate Change till 2018
13
Making Bangladesh one of
the most vulnerable
countries to Climate Change
Long-term
Vulnerability Index
Ranking
7
Putting Agriculture, Food
Security and livelihoods at
high risk
Floodplain
Land 80%
Risk Factors:
▪ Sea Level Rise, and Flooding
▪ Cyclone, Drought, Erosion and Landslides
▪ Salinization
Climate Refugees in Bangladesh
(by 2050) 18 Mn
Provides:
▪ Agricultural Support
▪ Assistance in Policy Advocacy
▪ Access to Climate Funds
Sustainable Agriculture, Food Security
and Linkages (SaFaL) +1.7K
Farmers
SaFaL reduces post-harvest loss/Source: Solidaridad Bangladesh
Damage due to:
▪ Climate change-induced migration
▪ Loss of Crops
▪ Loss of Livelihoods
Economic Loss due to Climate Change
(2000-2019) 3.72 Bn
USD

14. Rohingya Crisis
Ongoing Humanitarian crisis for the last 5 years
14
▪ 700k fled from Myanmar to Bangladesh in August 2017
▪ Refugees residing in 30+ congested camps
Rohingya Refugees in Bangladesh
+900K
Funding Needed for:
▪ Maintaining 30+ camps
▪ Health and Hygiene Programs
▪ Education & COVID-19 Vaccination Campaigns
Funding Required from UNHCR
285 Mn
USD
UNHCR Partners include:
▪ Ministry of Disaster Management and Relief
▪ BRAC
▪ Embassy of Switzerland in Bangladesh
Funding Received from UNHCR
+28 Mn
USD
Rohingya Camp in Bangladesh/Source: UNHCR Bangladesh
UNHCR Partners:

15. Skill & Enterprise Development
Bangladesh needs to Capitalize on the Demographic Dividend
15
Lowest Ranking amongst
South Asian Countries
Global Knowledge
Index Ranking
2020
112
High mismatch between
education and employer
demands
Graduate
Unemployment
Rate 2019
33%
▪ Develop job-ready and demand-responsive skills among
youth
Bangladesh: Supporting Technical
Education and Skills Development
Facility
1 Mn
USD
▪ Support growth of social and impact-oriented start-up
enterprises
▪ Improve services and facilitate investments for early-
stage social enterprises
SSIE-B - Scaling Social and Impact
Enterprises in Bangladesh +6 Mn
USD
B-SkillFUL Program in Bangladesh/Source: UNB
Donors and Implementers Involved:

16. Good Governance
Development Interventions to be even more successful with Good Governance
16
▪ Laid out 47 policy actions to reform anticorruption,
judiciary, public service, and sector governance
Bangladesh: Good Governance
Program
150 Mn
USD
Training Program - USAID 2019
40k
Political Activists/Leaders
Trained in Election/Political Process
▪ voice and accountability
▪ political stability and absence of violence
▪ government effectiveness
▪ regulatory quality
▪ rule of law
▪ control of corruption
Interlinked Indicators of Good Governance
6
53
Women
Joined Major-Political Leadership
Committee
Women Voting in Election /Source: LA Times
Donors and Implementers Involved:

17. Emergence of the ‘New Poor’
+20 million individuals have slipped back into poverty
17
▪ Reducing urban poverty and contribute to balanced
sustainable growth
Livelihoods Improvement of Urban
Poor Populations (LIUPC) project
4 Mn
Poor
Beneficiaries
Children selling masks to support family/Source: The Daily Star
▪ Improve the livelihoods of about 750,000 poor and
vulnerable rural people across 3,200 villages in 20
districts
Resilience, Entrepreneurship and
Livelihood Improvement (RELI) 300 Mn
USD
▪ Cash aid to transport workers, daily laborers, shipping
workers
▪ Assistance for job creation, salary payments of hospitality
workers, etc.
Government Stimulus Package
July 2021 +300 Mn
USD
Old woman collecting Govt. Aid/Source: Dhaka Tribune

18. Gender Gap and Inclusion of Women
COVID-19 may dampen Bangladesh’s Gender Progress
18
▪ Project targeted 180,000 rural households, including
30% women
▪ Provided improved technical and market services to
enhance productivity of farming and cottage businesses
Shomoshti
+7 Mn
USD
Female Labor Force Participation Rates in South Asia/Source: ILO
▪ Loans assist low-income women to buy productive
assets, invest in business or property, and manage
economic shocks
BRAC’s Microfinance Program
+6 Mn
Women
▪ Bangladesh fares better than India and Pakistan
▪ RMG sector is a dominant employment sector for women
▪ COVID-19 has led to layoffs, especially for women in
informal sector
Female Labor Force Participation
Rate 2019 36%
Participants of BRAC’s Microfinance Program/Source: BRAC
0
5
10
15
20
25
30
35
40
45
50
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Source: Modeled ILO estimate, The World Bank Data
Female Labor Force Participation Rate (%)
Bangladesh India Sri Lanka Pakistan

19. WASH
Bangladesh needs investment in high-quality WASH Products & Services
19
▪ Help 3.6 million people access hygienic sanitation
facilities and about 600,000 people access clean water in
rural areas
Rural Water, Sanitation, Hygiene
(WASH) for Human Capital
Development project
200 Mn
USD
Access to Sanitation/Source: WHO/Unicef
▪ Installed handwashing systems, supplied
schools with hygiene materials, installed
WASH blocks, demonstrated rainwater
harvesting
WaterAid’s Urban WASH Program
2020-21 +200k
gained access to
Handwashing Facilities
▪ However, many still lack access to safely managed
sanitation
▪ Hygiene has become extremely important because of
COVID-19
Population with access to at least some
sanitation service in 2020 +99%
School Handwashing Program/Source: Unicef
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2005 2010 2015 2020
Household Data - Bangladesh - Service Levels
Open defecation
Unimproved
Limited service
Basic service

20. Summary of Priority Areas
Climate Change, Rohingya Crisis and Skill Development are in High Need of Funding
20
Thematic Areas were sorted into High, Medium, &
Low Priroty based on:
Urgency of
Resolution
Mitigation of
issues, e.g., climate
change, which are
threat to
Bangladesh’s
Economy &
Landscape
Growth
Factors
Areas, such as skill
development,
where investment
will yield long-
term economic
benefits

21. Future of the
Development
Sector
21

22. Aid for Trade
Transitioning Towards a Mutually Constructive Relationship by Facilitating Growth of Trade
22
IMPACT
DEMAND
OUTCOME
RESPONSE
Aid
for
Trade
Mainstreaming and
prioritizing trade
Trade-
related
projects and
programs
Improved
trade
performance
and reduced
poverty
Enhanced
capacity to
trade
Donors Transitioning to Aid for Trade:

23. Market Systems Development
Increasing Sustainability of Donor-Funded Projects
23
▪ Benefited 307,419 rural
households in BD’s Southern
Delta
▪ Increased yield by 131% of
300k farmers
USAID’s Feed the Future AVC
(2013-19)
Source: DAI
▪ Benefited 4.75 million SMEs
▪ Participating Farmers
experienced an income
increase of USD 724 Mn
Katalyst (2002-2018)
Source: Katalyst
Infrastructure Skills and Technology
DEMAND
SUPPLY CORE
Supporting
Functions
Related Services
Information
Laws
Informal
rules &
norms
Regulations
Standards
Rules

24. Strategies for Donors
24
3
Bangladesh’s Evolving
Global Image
1
Macroeconomic
Scenario in Donor
Economies
2
Blend of Financing
Mechanisms
5
Prioritize Pertinent
Areas of Need
4
Upcoming
LDC
Graduation
Donors to consider Bangladesh’s Evolving Global Image & Prioritize Areas of Need

25. Strategies for Implementers
25
3
Prioritize Sustainable
Development Practices
1
Increase Efficiency of
Short-term Projects
2
Invest in Capacity
Development of Staff
5
Harness Power of
Technology and Data
4
Regularly
Update Scope
of Projects
Implementers to consider more Sustainable & Dynamic Development Projects

26. Authors
26

27. Authors
27
Zahedul Amin
Co-founder & Director, Finance,
Strategy & Consulting Services
Farah Hamud Khan
Senior Business Consultant
& Project Manager
Khandaker Muhtasim Rafi
Business Consultant
Samiha Anwar
Business Analyst
Authors

28. THANK
YOU
LightCastle Partners
Level 5, House 10/12, Road 1, Block B, Niketan, Gulshan 1,
Dhaka - 1212, Bangladesh
Email: info@lightcastlebd.com
Mobile: +8801744 736621, +88 01711 385988
Web: www.lightcastlebd.com
Data on Demand Platform: www.databd.co