Capital market can help achieve SDGs: experts
The stock market, insurance and pension funds could actively contribute in financing the roughly $928 billion needed by Bangladesh to achieve its Sustainable Development Goals (SDGs) within 2030 as bank lending alone will not suffice, various experts told a webinar yesterday.
The country needs an additional $928.48 billion from 2017 to 2030 to implement the SDGs, as per the findings of a recent study.
The webinar on "Sustainable Finance in Bangladesh: Strategies and Options for Implementation" was organised by the Bangladesh Association of Publicly Listed Companies (BAPLC).
"Bangladesh aims to meet its SDG targets within this period but we need a wonderful economy with strong foundation to this end," said Prof Shibli Rubayat Ul Islam, chairman of the Bangladesh Securities and Exchange Commission (BSEC).
The banking sector alone cannot supply the long-term finance needed as it puts undue pressure on the industry whereas the stock market, insurance and pension funds could be a remedy in this regard.
Besides, the BSEC has worked to make the bond, mutual funds and secondary stock markets more vibrant.
As such, the domestic stock market has a variety of fundraising boards, such as the alternative trading board and SME board aside from the main board.
"We are bringing new products also so that the stock market can be a strong source of sustainable finance," Islam said.
Eunusur Rahman, chairman of Dhaka Stock Exchange (DSE), said Bangladesh would need around Tk 78,92,000 crore within 2030 to achieve the SDGs.
In other words, about Tk 480,000 crore is required annually for this period. "So, how can this fund be financed?" Rahman asked.
Since the banking sector is suffering from a high rate of non-performing loans, it will be unable to provide adequate financing.
Similarly, the insurance sector is also not a viable option but here, the stock market has huge potential.
When people are confident about the market, it can make big contributions as proven in recent times with market capitalisation at the DSE having risen by more than Tk 220,000 crore in the last one year.
"So, a huge financing demand can be met by the stock market if well performing private sector companies come to the market to raise funds," the DSE chairman said.
"Apart from the five basic needs, finance for entrepreneurship should be considered as a basic need of the people but we cannot ensure finance for all," he added.
Bangladesh's GDP to market capitalisation ratio is still very low at 21 per cent while it is 76 per cent in neighbouring India.
"So there is a huge opportunity to enlarge the market and source of financing," said Shaikh Shamsudding Ahmed, a commissioner of the BSEC.
The number of listed companies in the country, which currently stands at about 390, should be increased as well.
"It's a collaborative approach and so, we should all work together to bring highly reliable, creditworthy companies to the market," he added.
Many companies submit audit reports that do not depict the actual scenario of their businesses and that withhold price sensitive information, which creates the scope for scams.
"So, we are working to ensure good governance as a whole so that the stock market can attract investors and play a pivotal role in sustainable financing for the long-run," Ahmed said.
Company boards need to be prompt in ensuring adequate environmental, social and corporate governance (ESG), he said.
Sustainable finance could contribute to the implementation of sustainable development goals, said Asif Ibrahim, chairman of Chittagong Stock Exchange (CSE).
The money market, which refers to trading in very short-term debt investments, and the stock market as a whole could help elevate the ESG in the country through adequate financing.
Besides, green financing should be more easily accessible for all, he added.
"If we can issue green bonds, then it would attract ESG investors from abroad," said Anis Ud Dowla, chairman of ACI Limited.
Regarding the country's post-Covid recovery, he said it was going to be a slow and painful process, with many countries having already revisited their plans.
"We also need to review our plans taking into consideration poverty reduction, job creation and environmental safeguarding," he added.
Bangladesh is one of the most environmentally challenged countries in the world, according to Nihad Kabir, president of the Metropolitan Chamber of Commerce and Industry.
"The pressure will be higher in the upcoming years so we can't avoid the environmental issues in our business," Kabir said, adding that the capital market was now in good hands and could contribute to sustainable finance for the long-term.