Finance private sector through stock market to attain SDGs: experts

A vibrant stock and bond market is needed to meet the financing needs of the private sector, which in turn can play a role in achieving the Sustainable Development Goals (SDGs), said analysts yesterday.  

The views came in a conference’s plenary session titled “Innovative finance to achieve inclusive and sustainable business and investment: capital market development, blended finance and FinTech”.

The three-day Asia-Pacific Conference on Financing for Inclusive and Sustainable Development concluded at InterContinental Dhaka yesterday.

The International Chamber of Commerce (ICC) Bangladesh organised the event in collaboration with the United Nations Economic and Social Commission for Asia and the Pacific (UN-Escap), Asian Development Bank’s Trade Finance Program, and the London Institute of Banking and Finance.

“Development of stock market and bond market is crucial because it would be the sustainable financing for private sector,” said AB Mirza Azizul Islam, former adviser to a caretaker government.

Banks lend from their short term deposits, therefore, if they lend for long periods, it creates a mismatch and pressure for liquidity and solvency, he said.

So alternative sources of finance like the stock and bond market is important, he said, adding, “Unfortunately the capital market is performing very poorly.”

Alamgir Morshed, managing director and head of commercial banking of Standard Chartered Bangladesh, said the country was on a graduation trajectory from least developed to middle income. 

It is a huge success but does bringing some challenges to financing, especially in infrastructure, for which alternative sources of finance other than the banking sector had to be sought out, he said. 

The bond market can be a way out both in local and foreign currency and the private sector also needed to issue bonds for availing long term finance, added Morshed.

There is no silver bullet to attain a vibrant bond market, rather, a wholesome ecosystem and participation of all stakeholders were required for a vibrant secondary market, he said.

“We have to acknowledge that financing requirement for growth cannot be fulfilled domestically without bond and stock market,” he added.

Responding to a question, Wendy Werner, country manager of International Finance Corporation for Bangladesh, Bhutan and Nepal, said a benchmark was needed for issuing bonds in the international arena.

“So if you have more data of onshore bond market, instruments and secondary trading, it will improve your positon to offer a bond at a lucrative price in the international market,” she added.

Majedur Rahman, former managing director and chief executive officer of Dhaka Stock Exchange (DSE), said Bangladesh’s capital market was not serving well the interests of achieving the SDGs.

In the past five years, the DSE formed many platforms for bond trading, raising capital for small companies and trading alternative products, he said.

Unfortunately, these initiatives have not borne fruit for a lack of assistance from the regulatory regimes, rules and regulations and several setbacks caused by different stakeholders, he added.

Nguyen Phi Van, chairwoman of Vietnam Angel Network, said the importance of the participation of the private sector in achieving SDGs cannot be underestimated and they should get finance to flourish.

Venture capital and impact investment can play a role in accelerating the SMEs and start-ups but those need the suitable eco-system and environment, she added.

Tissa Jayaweera, managing partner of TJ Associates and former chairman of ICC Sri Lanka, also spoke at the event.