An Innovation Fund for the RMG Sector

The RMG industry in Bangladesh has rightly been pointed out as a lifeline for Bangladesh’s economy. When COVID -19 disrupted businesses all across the country, one of the first responses in saving the business sector in Bangladesh by the government was to launch a USD 588 million stimulus package to come to the rescue of the industry. The RMG industry is also known for something else: creating meaningful employment opportunities for women since the 1970s when the industry was at a nascent stage.

But something has changed over the years and a recent BBS study tells us that the industry, which always, quite rightly so, had the image of a women-first sector, for the first time, now employs more men than women. According to the study, 53.82 percent male workers occupy jobs in the sector while the number of female workers is only 46.18 percent. This has been attributed to lack of training facilities, skill and proper knowledge of technology for female workers to lag behind in the sector. Besides, male workers are taking more interests in the sector due to increasing wages.

Despite being the second-largest apparel exporter in the world, the Bangladesh garments industry appears to have not diversified beyond affordable, mass-market products manufactured through traditional methods. In the face of the 4th Industrial Revolution, the challenges of a lack of upgradation and product diversification loom large, which may hinder the current and potential growth of the RMG industry.

With graduation to middle-income status, it is imminent that Bangladesh will also lose GSP facilities. Therefore, the price competitiveness approach will no longer be feasible. While the global market demand is shifting to higher quality products, the buyers are also pushing to decrease the production lead time which calls for faster technology adoption and requires better infrastructure to make the industry sustainable by strengthening its position in the global competition. Consequently, Bangladesh is currently faced with increased competition from other countries, especially Vietnam with respect to global market share. This fear has turned into a reality in July during Covid-19 when Vietnam overtook Bangladesh in terms of RMG export.

It is now commonly acknowledged that if left unaddressed, Bangladesh’s lack of preparedness with the changing trends of the global market has the potential to preclude future industry growth and jobs. In this context, it has become essential to be able to think out of the box to face the challenges posed by the 4th industrial revolution as well as increased competition in the global market.

Here are some of the things that we have planned out as part of an Innovation Fund that BRAC is launching -

A series of industry dialogues: through which we try to explore issues that are impeding the progress in more investments in R&D, upskilling and technological advancement to build competitiveness in the sector. We will be firmly anchored to the workers’ wellbeing and resilience in this endeavour.

Innovation challenge fund: An innovation challenge to connect innovators and entrepreneurs to factory owners who are ambitious and bold enough to address these gaps and take the first step towards making lasting change in the sector. We will be working with a mindset of learning in an agile manner, in the factory setup to understand what needs to change and scale up, fast.

Learning out loud: We will ensure that the knowledge and learning that we will be generating over the course of the next one year permeates the industry and beyond so that we can all learn from these experiments and can enhance our collective learning of what works and create a robust body of evidence.

You’re invited: we know the only way we can get this done is through leveraging the collective knowledge of everyone interested to contribute to this sector. We aim to bring in a large group of people who are willing to roll up their sleeves and engage with us to collectively solve this problem with us. The case for global cooperation to solve this problem is not just nice-to-have, it’s a must have. In the coming weeks we will share more details on how you can join us in this journey.

We will be pioneering new and improved tools and approaches: the case against business-as-usual thinking is clear and that means we will need new tools, approaches and ways of looking at this challenge if we’re going to make a dent into the problem. To do that, we’re going to look in non-obvious places, work with non-obvious collaborators.

Finally, thanks to H&M Foundation and their partners at The Asia Foundation for having such audacious ambitions for what this could become, and for giving us a chance to make it happen. It is a privilege and honour to do this work. Now, let’s get started!