An innovation fund for the RMG sector

December 20, 2020

Reading Time: 3 minutes

The ready-made garments (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 sector in Bangladesh by the government was to launch a USD 588 million stimulus package.

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. A recent Bangladesh Bureau of Statistics 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% male workers occupy jobs in the RMG sector compared to 46.18% female workers. This has been attributed to lack of training facilities, skill and proper knowledge of technology for female workers. Male workers are also taking more interest 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 fourth industrial revolution, the challenges of a lack of up-gradation and product diversification loom large, which may hinder the current and potential growth of the industry.

With graduation to middle-income status, it is imminent that Bangladesh will lose the Generalised Scheme of Preferences (GSP) facilities which currently provide preferential tariff benefits with 37 partner countries, enabling us to compete with other emerging markets. Thus, relying on price competitiveness will no longer be feasible in the near future.

While the global market demand is shifting to higher quality products, buyers are pushing to decrease production lead time – which calls for faster technology adoption and requires better infrastructure. Bangladesh currently faces increased competition from other countries, especially Vietnam, who are quickly growing their global market share with higher quality, diversified products and greater ease of doing business. In July this year, during COVID-19, Vietnam overtook Bangladesh in terms of RMG exports.

It is now commonly acknowledged that if left unaddressed, Bangladesh’s lack of preparedness for 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 fourth industrial revolution as well as increased competition in the global market.

BRAC is already collaborating with factories and workers to enable service improvements and rapid testing of innovative ideas in the RMG sector. Through our brick and mortar one-stop service centres, we continue to extend integrated health, legal aid, skills training and financial products and services to women RMG workers. Our network engages 415 factories through a strategic social compliance portfolio and the Mapped-in-Bangladesh project has so far digitally mapped 2,500 export-oriented factories.

This December, BRAC will be launching a number of new initiatives through the Social Innovation Lab, as part of an Innovation Fund to further strengthen the future of work in the RMG sector:

A series of industry dialogues through which we try to explore issues that are impeding the progress in more investments in research and development, upskilling and technological advancement, to build competitiveness in the sector. Understanding and designing for workers’ wellbeing and resilience will be a priority 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, enhance our collective learning of what works, and create a robust body of evidence.

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

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 is a must-have. In the coming weeks, we will share more details on how you can join us in this journey.

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 us get started.

 

Rakib Avi is Programme Coordinator, Executive Director’s office and Social Innovation Lab, BRAC.

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