Photo by Sazzad Bin Jafor on Unsplash
What does ‘advice’ mean when it comes to the private sector, and more specifically small businesses? Advice can be crucial in driving an economy forward. In a growing country like Bangladesh, advice can contribute to local economic development. Unfortunately, advice for those leading small businesses – whether family firms or small and medium enterprises (SMEs) – is rare in Bangladesh.
Advice provision has a long history. Governments and development agencies across the world have considered it a much-needed tool for economic development. Business advice has many intricate features. It reflects social realities. It has its biases, and it is inequitably delivered. It can be free, imposed, requested or purchased. It can be one-off or regular in nature. It can be systemically delivered by government agencies, the private sector or civil society bodies. It can also come informally from community networks. In short, advice is an important element of the economy that is often overlooked – even though it shapes policies.
During the 1980s and 1990s, the reach of entrepreneurship advice in Bangladesh broadened beyond small businesses. The new clients included rural women entrepreneurs in the informal sector. These women were the borrowers of microcredit schemes delivered by non-profits.
This phenomenon was termed the ‘marketisation of poverty’ by anthropologist Anke Schwittay. It then took a new turn with the ‘bottom of the pyramid’ thinking from the popularised book by entrepreneur C.K. Prahalad. This favoured large-scale entrepreneurship as a solution to poverty. It envisioned new ‘individualised’ neoliberal entrepreneurs. In Bangladesh, the start-up boom from the 2010s has further altered this landscape, expanding the space and scope of advice provision.
The landscape
The entrepreneurial advice landscape in Bangladesh has changed in three ways:
The private sector has become a new driver of development. This means that entrepreneurs have also taken up new roles. The new economy is different from the previous ‘need economy,’ where state or development agencies managed productivity industries. Conventional skills training programmes are essentially welfare support for disadvantaged people. They are also a type of entrepreneurship advice from the government or civil society. But today’s market-driven development has created a de-risked investment environment.
The growth of the digital start-up sector has caught the eyes of policy-makers, investors and international donors. This has been inspired by Silicon Valley models and policies from countries such as Singapore. Advice provision is no longer packaged as technology transfer or micro-lending schemes. It is now a market-driven product. Entrepreneurs invest time and resources in start-ups and incubators with an eye on returns. Advice is commodified.
The financialisation of sectors, such as banking, health and agriculture, has deepened significantly. For example, when there is a saturated credit market, investors seek higher returns by converting low-income people into formal borrowers. In older models, investors would resort to forming savings groups, deploying small group loans or developing enterprise training.
The new entrepreneur
The changes in the ‘advice landscape’ have set a new discourse of entrepreneurship in Bangladesh. An entrepreneur is more than a business owner. An entrepreneur is now an ‘agent of change,’ a new kind of citizen whose role is to reframe dissatisfactions and poverty into opportunities for their backers.
The changes in the ‘advice landscape’ have set a new discourse of entrepreneurship in Bangladesh.
In Bangladesh, there are at least three types of entrepreneurs, using a gendered lens: 1) poor rural women entrepreneurs struggling to improve the economic position of their households (the traditional non-governmental organisation – NGO – targets); 2) struggling business owners growing small businesses; and 3) urban creative youth entrepreneurs, attempting to build scalable solutions (standard-bearers for the new middle-income Bangladesh).
The new economy favours the second and third types of entrepreneurs. Which means that the first type is stranded in the old ‘needs economy,’ shouldered by charity or philanthropy. Previously, entrepreneurs focused on values such as self-reliance, persistence and hard work. But today’s entrepreneurs are more managerial, meaning they rely on business development services. Advice provision plays a key role within these business development services.
This change is reflected in different business-focused courses and start-up incubators. It has also led to a shift in the attitude of both older and younger Bangladeshis regarding what it means to be an entrepreneur. Interestingly, the older generation’s craze for government job-seeking and stable career paths is diminishing. Entrepreneurship is now commodifiable, structured by ‘technical training’ and ‘capacity-building’ programmes.
Research by the authors shows that advice-giving is an activity that links would-be entrepreneurs with financial capital. Both formal and informal ‘advice’ is embedded within training, business support services and mentorship programmes. The content of advice might include technical information, contacts and networking, as well as emotional support. Advice receivers vary from young people in rural areas to start-up entrepreneurs at universities. The research focuses on three issues of the entrepreneurship advice ecosystem of Bangladesh: 1) expectations of entrepreneurship, 2) insights into financialisation and 3) the changing nature of development actors.
An ‘ecosystems of advice’ approach
First off, an ‘advice ecosystem’ is a subset of a wider entrepreneurial ecosystem. In the system, there are advice-givers (government, civil society, private sector and family) and advice-receivers (entrepreneurs, trainees and borrowers). Advice provision requires an enabling environment where advice can be received from the giver. To create this environment, resources need to be mobilised.
Taking this context into consideration, ecosystems of advice as a conceptual framework need to be developed to understand Bangladesh’s local economic development. Hereby, ‘advice’ also helps in understanding the functioning of the international aid sector, along with the changes in government policy towards small businesses.
Meanwhile, the ‘entrepreneurial ecosystem’ is a concept identified by management researchers to analyse different actors and policies. It factors in legal infrastructure, knowledge, market dynamics and cultural norms. Diagnostic tools such as the Global Entrepreneurship Monitor (GEM)’s Entrepreneurship Ecosystem Quality Composite Index provides comparative data. Development agencies promoting women’s entrepreneurship use the entrepreneurial ecosystem idea to make decisions.
The South Asian partition of 1947, the period of Bangladesh’s independence struggle till 1971 and the subsequent policy environments have shaped the country’s entrepreneurial advice ecosystem.
The South Asian partition of 1947, the period of Bangladesh’s independence struggle till 1971 and the subsequent policy environments have shaped the country’s entrepreneurial advice ecosystem. If one maps the advice ecosystem in Bangladesh, it is clear that the system is both expanding and becoming market-driven. In Bangladesh there are three main areas of entrepreneurship support: 1) small enterprises (both formal and informal), 2) micro-entrepreneurs (such as microfinance clients) and 3) start-ups (intending to scale up).
Conclusion
This article provides a preliminary framework of the ‘advicescape’ in Bangladesh, along with the effects of entrepreneurship advice. In Bangladesh, advice ecosystems are expanding. They are increasingly private sector- and market-driven, replacing conventional development projects. This means there is a policy shift away from livelihood-oriented small-scale entrepreneurship to tackle poverty. The new policy-making emphasis is on boosting SMEs and start-ups. This shift means that people in the old ‘needs economy’ will be left behind. A shift from skills training to advice provision to access markets will deepen this trend.
There are two significant aspects of financialisation taking shape in Bangladesh. The first is foreign venture capital in the start-up scene looking to secure returns. This is geared towards tech-enabled services in the health, finance, education and agriculture sectors. The second is bank lending to hitherto unreached borrowers, often remote and often low-income, via subcontracted NGO intermediaries.
Private sector-led development has been aided by the marketisation of business advice in Bangladesh. Livelihood entrepreneurship training, once provided by government agencies and non-profits, is now less likely to be offered for free. Finally, it is important to recognise advice as a potential tool to inform, empower and build social relationships.
* This post has been originally published in the Whiteboard Magazine on 17 March 2023.
About the authors
David Lewis is Professor of Anthropology and Development in the Department of International Development. David's research interests lie at the interface between development studies and anthropology, and most of his work has been concerned with understanding people's encounters with development actors and development processes.
Rebecca Bowers is a postdoctoral fellow at the London School of Economics and Political Science (LSE). She is an anthropologist. Her research interests include gendered experiences, inequality, financialisation, labour informality and labour organisation. She pursued her doctoral studies in anthropology at the London School of Economics and Political Science (LSE).