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    BRAC sexperience in business, in partnerships&

    future opportunities and prospects

    NGO & PRIVATE SECTOR PARTNERSHIP

    Muhammad A. (Rumee) AliManaging Director, Brac Enterprises &

    Chairman, Brac Bank Limited

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    Fazle Hasan Abed

    Founder and Chairperson

    Fazle Hasan Abed

    Founder and Chairperson

    We always thought nationally, workedlocally and looked for inspirationglobally. We were inspired by PaolaFreires work on pedagogy of the

    oppressed.It is wonderful to have athinker who was thinking about thepoor people and how they canbecome actors in history and not just

    passive recipients of other peoplesaid. He made us realize that poorpeople are human beings and can dothings for themselves, and its our dutyto empower them so that they can

    analyze their own situation, see howexploitation works in society, and seewhat they need to escape exploitativeprocesses March, 2005

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    BRAC in Bangladesh

    Core Programmes of BRAC Economic Development Programme Health Programme Education Programme Social Development Human Rights & Legal Services Programme

    BRACs Social Enterprises Social Businesss that grew out its development interventions Bracs investments in commercial businesses with social underpinning

    Support Programmes of BRAC Training Division

    Research & Evaluation Division Advocacy & Human Rights Unit Human Resources Division Public Affairs & Communications Administration & Special Projects Finance & Accounts Monitoring

    Internal Audit Publications

    It takes a real flash of insight to attack a large-scale problem when you have verylittle money to spend. That, however, is the position in which many socialentrepreneurs find themselves. One solution is to unleash and redirect the creativeenergies of people within the communitiesbeing served. David Bronstein, How tochange the world,2004.

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    Microfinance: Cumulativedisbursement (mil) USD 4,943.04

    Outstanding (in ml) USD 597.54

    Repayment Rate 99.54%Average Loan Size USD 201.56

    Service Charge on Loan 12.50%

    Total Borrowers (in million)/Branches 6.53/ 3,000

    BRAC: Economic Development Program

    No. of Primary Schools 37,500

    No. of Students 1.15 ml

    No. of Graduates 3.80 ml

    Cost Per Child Per Year US $18

    Community Libraries 1,664

    Adolescent Development Centres 8,660

    BRAC Education Program

    Population Covered 88.5 ml

    Health Volunteer 70,000

    Eligible Couple Served 10.05 ml

    BRAC Health Centres (Shushastho) 30

    Patients Received Treatment 100,000

    Pregnant Women received Anti Natal Care 1.46 ml

    Total Latrine Installes 0.63 ml

    BRAC Health Program

    Targeting Ultra Poor;which has overall covered 111,322

    persons with disbursement ofUS$ 6.6M in Asset Transfer andUS$ 7.7M in loans

    We also have Social Development,

    Human Rights & Legal Services

    Other Programs include

    BRAC in Bangladesh

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    Coverage, Staff Information, and Job Creation

    Villages 69,421Population Covered 110 Million

    Job Creation

    Staff 57,119BEP Teachers 53,379

    Total 110,498

    Industry Jobs Created

    Poultry 1,921,141

    Livestock 612,628

    Agriculture 1,078,245

    Social Forestry 84,437

    Fisheries 287,758Horticulture 211,563

    Sericulture 27,297

    Handicraft Products 65,000

    Small Enterprises 532,488

    Small Traders 3,680,042

    Total 8,500,599

    All the data presented here are of March 2008

    BRAC in Bangladesh

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    BRAC International

    BRAC in Africa: Tanzania

    Uganda Southern Sudan

    Liberia & Sierra Leone ( from 2008)

    BRAC in Asia: Afganistan Sri Lanka

    Pakistan

    Total Staff 5,354

    Members of Village Organization 342,116

    Loan Disbursement(in Million USD)

    124.43

    BRAC USA & BRAC UKto mobilize resources, raise awarenessand cultivate partnerships for BRAC International.

    The only international southern NGO

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    Bracs experience in Partnerships withthe Private Sector.

    In the Development Programs:

    Healthcare:Partnerships with: Pharmaceutical Co/Private Clinics/Toiletries co./Foundry:

    for distribution of over the counter drugs/condoms through ShasthoShebikas (SS) . SS are Brac trained health volunteers who work in villagesto raise awareness in five most prevalent diseases , on prevention and earlydetection. SS act as distribution network and create access for villagers toOTC drugs/condoms/birth control pills.

    SS also make primary referals to enlisted private clinics, where villagers getcare on discounted prices.

    Health and Sanitation program which works to raise awareness on use ofsoap and latrines in rural areas has arrangements with ToileteriesCo/Foundarys to supply soap and latrines at affordable price.

    In the Development Programs:

    Human Rights:Partnership with: Panel of Lawyers:

    A panel of 450 lawyers have been enlisted under this program and for a lump sum fee theyconduct cases of Human Rights violations that are reported, prepared and facilitated byBracs field workers.

    Bracs program exists in 61 districts of Bangladesh and is thelargest legal aid programin the world in terms of size and coverage

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    Bracs experience in Partnerships withthe Private Sector.

    In the Development Programs:

    Agriculture Development: Partnership with:

    Private Sectors Banks (PSB):

    BRAC has stepped in to assist PSBs to disburse agro-loans through its MicrofinanceProgram. PSBs have signed agreement with BRAC to finance BRACs agro-loans.

    Skill-gap and limitations of distribution network has made this partnership possible.There is a level of regulatory persuasion too. Social Mobilization & Advocacy: Partnership with:

    Private Sector TV/Radio/Print Media:

    BRAC has arrangements with these corporation to disseminate public awarenessmaterial in the form video documentaries and publications. The media offers these to

    be published/aired at cutrates. Social Enterprises:

    Renewable Energy/Partnership with: Alternate Energy Co:

    MOU signed between BRAC and Emergence Bio-Energy Inc (USA) to pilot a newtechnplogy of producing Bio-gas and a manure as a by product. On succesful

    completion of pilot. The company jointly owned by the parties will embark oncommercial production. This will makeenergy available to rural areas at a cheaperprice than traditional fuels.

    Private Contract Farms: Private farms have been contracted in Agriculture to grow seeds/vegetable, in

    Livestock to rear chicken. BRAC guarantees off-take of the produce at current

    market price. It also provides technical assistance in modern agro and broiler rearingmethods.

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    Bracs experience in Partnerships with

    the Private Sector. Brac Investments:

    Partnership with Investment Co & Strategic Partners

    Brac Bank Limited/Brac Afganistan Bank both were resulted fromBRACs initiative to create Access to Finance for Small & MediumEnterprises in these two countries. BBL was set up in 2001 andBAB in 2005 by a consortium of Brac, IFC, Shorecap.

    BBL has became a publicly listed company with 50% sharespublicly held in 2007. The charter of the Bank is to have minimumof 51% of the lending portfolio in Small & Medium Enterprises.

    BracNet, an internet service provider, is a joint venture(60/40) withan international consortium of private investors. Purpose was to

    eventually use the communications network for BRACs Health,Education, Advocacy and Microfinance programs.

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    Bracs experience in Partnerships with the

    Private Sector.

    Nature Sustainability

    A commercial arrangement Sustainable

    Address a skill gap Non -Sustainable longerterm

    Contribution linked to strategic

    objectives of the company

    Non -Sustainable

    Address a regulatory requirement Non - Sustainable

    Corporate Philanthropy Non -Sustainable

    There is limited sustainability for most of the partnerships

    Nature and sustainability of the present partnerships

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    BRAC can suggest a solution from itsown experience inbusiness..

    BRAC Enterprises Enterprises

    Program Support Enterprises

    BRAC Investments BRAC Bank Ltd.

    bracNet

    Documenta Ltd. Delta BRAC Housing Finance Corp. Ltd.

    BRAC Afganistan Bank

    Why is Brac in business?

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    BRAC Enterprises:

    BRAC started investing in enterprises so as to ensure sustainability of itsinterventions and through linkages; evolve job creation opportunities andover time become donor independent. This venture includes the followingenterprises:

    Agro & Salt Industries

    Salt Feed Artificial Insemination (AI) Cold Storage Vegetable Export Poultry Broiler Rearing &

    ProcessingRetailing

    AarongDairy & Food Project

    PrintersPrint PackTeaProgram Support Enterprises

    Seed Production &Processing

    Tissue Culture Fisheries Nursery Solar Energy & Bio-gas

    41.5Total Equity

    70.0Total Asset

    Dec. 2007

    (Million US$)

    Balance SheetItems

    7.7Net Profit

    25.0Gross Profit

    85.7Sales

    2007(Million US$)

    IncomeStatement Items

    Financial Information

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    1988:FISH & PRAWN HATCHERY:

    To ensure distribution of environmentally safe fish spawn and prawnPL to the rural people to create income generating activities.

    1996: POULTRY FARMS/FEED MILLS/BROILER PROCESSINGGrew out of one of the core interventions of BRAC employment andincome generating activities. This was to increase the availability ofquality chicks at a competitive price and provide supports to thepoultry extension programme. The need of feed for high yield variety(HYV) birds and the expansion of poultry industry in Bangladesh byusing mainly locally available ingredients led to setting up of thesemills. The linkage to market for farmers involved in rearing poultryled to the broiler processing plant.

    INTERVENTIONS TO CREATE LIVELIHOOD IN LIVESTOCK &FISHERIESSECTORS BY EXTENDING MICRO FINANCE LEADING

    TO ENTERPRISE DEVELOPMENT THROUGH LINKAGES

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    1998: DAIRY & FOOD:BRAC designed a particular model for cattle developmentcomprising of technical training, vaccination, fodder cultivation, AIand credit facilities to the rural poor. As a result of these activitiesmilk production has increase substantially in the BRAC operational

    areas. The Project was set up to create a supply chain to providefair price to the farmers.

    1999: BULL STATIONS:

    Artificial Insemination (AI) program was begun to improve the qualityof the livestock sector in Bangladesh. It is an important strategicindustry for BRAC since it is expected that improvements in thecattle population in Bangladesh will lead to greater yields in raw milk.

    INTERVENTIONS TO CREATE LIVELIHOOD IN LIVESTOCK &FISHERIESSECTORS BY EXTENDING MICRO FINANCE LEADINGTO ENTERPRISE DEVELOPMENT THROUGH LINKAGES

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    1995/6: SEED PRODUCTION/ PROCESSING/ TISSUE CULTURE/NURSERY:

    In order to meet the increasing demand for good quality and highyielding seed and seedlings for poor and marginal farmers toincrease agro-productivity and increase farm earnings led BRAC to

    initiate this program. BRAC also provides training to farmers inmodern methods to successfully adapt to High yielding varieties ofseed.

    2003: BRAC TEA:

    Started in 2003 with four tea estates in Chittagong. Aim to set up model teaestates with the objective of improving the lives of Tea Estate workers.Introduce Teak, Rubber, Bamboo Shoots, Agar plantation.

    INTERVENTIONS TO SUPPORT AGRICULTURE EXTENSIONANDGENERATE HIGHER EARNINGS FOR FARMERS LEADING TOENTERPRISE DEVELOPMENT.

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    JOB CREATION INTERVENTIONS WITH LINKAGES TO SKILLDEVELOPMENTLEADING TO ENTERPRISE DEVELOPMENT THROUGH

    LINKAGES

    1978: AARONG : Supports and ensures the livelihoods of more than60,000 rural artisans, mainly women. Protector and promoter of

    Bangladeshi handicrafts and craft producers. Trains and supportsartisans through well rounded member support program. Thisincludes access to health and sanitation, education for the childrenthrough Bracs schools, microfinance and also Aarongs welfareprograms.

    INTERVENTION TO SUPPORT HEALTH PROGRAM

    2001: BRAC SALT came about to fulfill the need to give people accessto a cheap source of iodized salt in Bangladesh. This intervention wasinstrumental in tackling iodine deficiency diseases.

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    Raison d'tre of BRAC Enterprises

    To enable BRAC to attain its vision and mission statements by

    Sustaining the development interventions

    Creating job opportunity and thereby contributing to povertyalleviation

    Generating surplus for BRAC

    The investments (companies/land/shares) are a hedge forfuture market volatility..

    Essential to ensure continuity and sustainability of BRACs interventionsto improve the lives of the people who are the most vulnerable in thecommunity.

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    Donors Contribution in Annual ExpenditureBangladesh Operations consolidating

    sustainability

    YearAmount

    (million US$)

    Donor Contribution

    (Percentage)1980 0.78 100

    1985 2.30 97

    1990 21.25 68.20

    1995 63.73 54

    2000 152.0 21

    2005 259.0 24

    2006 330.0 30

    2007 485.0 20

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    BRACs annual budget is more than USD 450 million, but BRAC hassuccessfully reduced donor funding as was directed by the Govt. of

    Bangladesh

    Presently (2007), 80% of this budget is financed by BRAC itself

    BRAC Enterprises, the profit wing of BRAC, is a partner of this success

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    BRAC Enterprises runs somewhere between profit

    seeking organization and nonprofit social organizationwith the vision of serving the society in a profitablemanner.

    The concept of double bottom line in BRAC, is drivenby the second bottom line, that is, social objective and

    this takes precedence over the first; profit

    BRAC: pioneer of social business model

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    COMMERCIAL B USINESS SOCIAL BUSINESS

    EXPLOTATIVEIDEALISTIC

    WHERE IS THE RIGHT BALANCE?

    SUSTAINABLE

    BRAC has pioneered a social business modelwhich defines Corporate Social Responsibility

    r

    BUSINESS MOTIVE SPECTRUM&SUSTAINABILITY

    THE CHALLENGE..HOW TO ACHIEVE THERIGHT BALANCE?

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    Our effort at BRAC Enterprises is not driven towards

    maximizing profit for the shareholdersbut we work to

    benefit our stakeholders.

    Our main stakeholders are not, as in the commercial

    firms, the owners/ shareholders but the millions of

    deprived and disenfranchised poor of the country.

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    An interesting dialogue

    *CCIC website on PS/NGO partnership..We would like to dance with the voluntary sector -James Gallon, President,

    Canadian Institute for Business & Environment

    NGOs have values and these values can bring income and resources that will keep the ethical work going. You haveskills and expertise that the private sector wants.

    But, if we agree to dance, who leads?"There is a danger in such marriages that NGOs will lose their idealism and their ability to be creative in terms of afuture world. . If they ever lose what is their own ideology or what they are working for then they will be gobbled up bythe business ethic - - Dr. Bill Ryan, Director, Jesuit Project on Ethics in Politics

    Will I respect myself in the morning?"Is there a danger of getting involved with the private sector and then being discarded once a firm's internationalmarketing efforts are in place; ultimately business would set the terms?

    - Dr. Bill Ryan, Member of the CCIC Taskforce on Building Public Support for Sustainable Human Development

    * Seminar held by Canadian Council for International Co-operation (CCIC) in Ottawa,Canada to discuss opportunities for collaboration between NGOs and PrivateSector in May, 1996.

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    Private Sector/NGO partnership.What stands in the way?

    A commercial organization primarily looks for profit or shareholdervaluewhereas a NGO focuses on altruistic outcome.

    Markets determine success of a commercial enterprise purely onfinancial parameterswith compliance issues as an add-on

    Corporations do not feel any responsibility for solving worldsproblems

    Corporations are control-orienteddo not want to risk giving upcontrol

    Lack of trust.Confrontationalpostures?

    A meaningful engagement can happen only when the society andmarkets puts a premium on non financial parameters that make anorganization socially responsible

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    How does Bracs businesses provide aplatform for PS/NGO Partnership.

    Brac Bank an act as models for future partnerships in: Retailing : Aarong Dairy Products Agro business Poultry and Livestock Alternative Energy: Bio gas & Solar Energy

    Structure of the Partnership:

    Use the Strategic Partner/Investment co. Model as in Brac Bank Franchise Model for a retail business like Aarong Outsourcing upstream or downstream production chain

    Any partnership which a Private Sector Corporation enters into with an NGO;whether for financial, expertise, raise profile, supply of goods reasons; or forleveraging to gain additional financing; can assist an NGO engaged indevelopment using the BRAC model by making them more efficient therebygenerating a greater surplus from their social enterprises to fund the programswhich are essentially non-earning in nature

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    How do we overcome the concerns and

    issues raised in the CCIC dialogue..

    Conflicting objectives

    Dominant partner?

    Sustainability?

    Trust?

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    Can these issues be resolved?

    BRAC has been able to resolve these issues by:

    Finding common grounds and shared objectives for partnership

    Dominant partner issue is resolved through: Clearly defined expectations

    Roles

    Accountabilities

    Policies

    Sustainability is ensured by making the enterprises commercially viablewithout moving away from the core objectives of BRAC

    Trust is a function of transparency, accountability and reputation of the

    partnering institutions. acknowledgement of possible constraints

    mechanisms for communication

    shared risk-taking

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    What do we actually put in place to ensure these

    issues are resolved Know your intended partner

    Agree what objective we are trying to achieve?

    Identify what competencies, expertise or physical resources each can offer.

    What role in terms of accountability each of the partners are going to play

    Agree the risk sharing parameters

    Agree to a information sharing and communications mechanism

    Agree a structure e.g Board, Advisory Committee or Governing Body to manage thepartnership

    THE ABOVE STEPS WILL RESULT IN A BINDING AGREEMENT..AND TRUST!!

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    This model will have:

    Sustainabilitysince it will be run on sustainable basis as

    Bracs businesses are.Social ObjectiveIt will not deviate from the core objectives

    since is ingrained in the organizational DNA and be a one offounding charters

    CSROrganizations that are focused on CSR can considerthis as their contribution which will be on a sustainable basissince this is not charity.

    How does Bracs businesses provide aplatform for PS/NGO Partnership.

    However, ultimate sustainability (to reiterate) can onlybe assured when it can get a consensus onmeasurable parameters of social responsibility and

    the markets start attaching a premium to this activity.

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    SHALL WE DANCE?

    BRAC has presented a scenario or shall we say a dance floor

    what a possible partner can offer and some new steps.WHO SHALL LEAD?

    If a level trust can be created by ensuring transparency andaccountability in the engagement, this should not remain an

    issueWILL I RESPECT MYSELF IN THE MORNING?

    If we are committed towards working for a common andaccepted shared value and can make sure that we do notdeviate.the morning after should only bring pleasant thoughts.

    REMEMBER: IT TAKES TWO TO TANGO

    ARE WE READY TO RIDE THE WIND?.....THE WIND OF CHANGE?

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    Never doub t that a small group of thoughtful,c ommitted people c an change the world. Indeed, it is

    the only thing that ever has.

    Margaret Mead

    THANK YOU !