How NGOs can help build a democratic welfare state

The political moment following the July uprising has opened a crucial conversation about constructing a democratic welfare state in Bangladesh. It is the culmination of years of deepening inequality, stagnating wages, and a growing sense that the economy serves a privileged few while leaving many behind. The democratic welfare state is not charity-led, but rights-based, ensuring secure access to basic needs.

The role of NGOs is largely absent in post-July discussions on reimagining institutions. The vast network of economically active NGOs and microfinance institutions (MFIs) holds untapped potential. With 724 MFIs managing a credit portfolio of Tk 1,594 billion and serving 32 million borrowers, these organisations have the reach and resources to reshape markets. This is also true for the food and housing markets.

Oligarchic structures have long dominated food supply chains and property markets. If the state's welfare ambitions are to be substantive rather than rhetorical, economic NGOs and MFIs could be repositioned from primarily providing credit, services and charitable relief to becoming organised and accountable market actors delivering public-good functions, such as stabilised food prices, guaranteed farm incomes, and genuinely affordable housing. However, this should not encroach upon the vital space of civil society organisations engaged in voice, advocacy, mobilisation, and accountability.

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Food insecurity still haunts the poor

Breaking the oligarchy through cooperative markets

A major driver of persistent inflation is soaring food prices. In June 2024, food inflation reached 14 percent, the highest in a decade, according to the Bangladesh Bureau of Statistics (BBS) data. The Household Income and Expenditure Survey (HIES) reveals that food accounts for 45.76 percent of family budgets, down from 54.81 percent in 2010, but still the single largest share. Farmers, however, receive only a fraction of what consumers pay. The missing value is captured by intermediaries who dominate storage, transport, and wholesale trade.

NGOs could disrupt this system by establishing farmer-owned cooperatives and retail chains. For example, Spain's Mondragon Corporation demonstrates how eliminating intermediaries can reduce consumer prices while boosting producer incomes. Its Eroski supermarket chain operates on cooperative principles, ensuring affordability through collective ownership. Similarly, India's Amul dairy cooperative empowered small milk producers to become a unified force by creating village-level collection systems, processing infrastructure, and direct retail channels. Bangladesh's MFIs could work on the triad—producer organisation, shared logistics, and branded retail—for staples like rice, vegetables, and pulses.

Three steps could anchor this transformation. First, NGOs could organise smallholders into legally recognised farmer-producer organisations, enabling collective bargaining. Second, investments in shared cold storage and transport networks could reduce post-harvest losses, currently estimated at 20 percent. Third, a national digital marketplace could connect growers directly with buyers through MFI-managed escrow accounts. Together, these measures could raise farm-gate prices by 15-30 percent while reducing retail costs by 10-15 percent, striking directly at oligarchic control of supply chains.

Housing for the many, not the few

Urban land and housing prices in Bangladesh are among the most inflated relative to income in South Asia. In Dhaka, a square metre of city-centre apartment space costs around $717. For a worker whose real wages have barely moved, this is a mountain too high to climb. The HIES 2022 shows housing now takes up 10.25 percent of household spending, compared to six percent in 2000. Urbanisation, land speculation and weak regulation have made home ownership increasingly unattainable for most.

Bangladeshi NGOs can provide context-specific schemes following international models. For example, Mexico's INFONAVIT offers micro-mortgages at 4-6 percent to informal workers, breaking the bank-loan barrier. Another viable option is the introduction of rent-to-own schemes. South Africa's People's Housing Process showcases how gradual ownership can be achieved through structured payment plans. Community land trusts represent a third innovative solution. Under this model, NGOs could develop housing on their land while retaining collective ownership to prevent speculative price increases. The Champlain Housing Trust in the US exemplifies how this approach removes the land from the speculative market, striking at the core of the oligarchic real estate structure. A fourth layer involves public subsidy and infrastructure facilitation, with the government providing land and subsidised credit while NGOs manage the whole scheme.

However, realising such initiatives requires regulatory reforms. NGO-led enterprises providing socially priced goods need a clear legal category that allows them to retain surplus for reinvestment rather than being taxed as for-profit firms. Warehouse receipt systems must be linked to MFI lending so farmers can use stored produce as collateral. Public procurement—from school meals to hospital kitchens—could be tied to NGO-led supply chains, guaranteeing stable demand for farmers and cooperatives.

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A Social vision for Dhaka’s Housing

Housing policy needs to provide land-use concessions, expedited approvals and infrastructure finance to NGO-MFI housing projects, coupled with binding affordability covenants to ensure units built with public support remain affordable.

Given the political economy of rent extraction in Bangladesh, safeguards are essential. Governance frameworks should limit concentration of power, ensure elected boards with producer and consumer representation, require external audits, and mandate transparent procurement and pricing. A public oversight commission for NGO-led market interventions could be set up with representation from the Ministry of Finance, the microfinance regulator, civil society and producers. Bilateral and multilateral technical assistance can be used to underwrite initial investments in systems and capacity while governance norms are established.

These shifts could not only reduce inflation and housing costs but also democratise economic access, advancing the welfare state agenda alongside ensuring price stability. The social contract and actors must be reimagined by turning NGO enterprises into vehicles for collective bargaining, fair pricing, and inclusive development. The road to a democratic welfare state will be neither automatic nor costless without bold collaborations woven through a whole-of-society approach.

Dr Rashed Al Mahmud Titumir is professor in the Department of Development Studies at the University of Dhaka.

Views expressed in this article are the author's own. 

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