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    Brac-Aarong: Financing and Promoting the Creative Industries


    International Trade Forum - Issue 3/2009

    Photo: Saiful Haque Omi BRAC's Aarong project, which employs 65,000 artisans across Bangladesh.

    In 1972, Fazle Hasan Abed founded the Bangladesh Rural Advancement Committee (BRAC) and a holistic development model that has revolutionized income-generating opportunities for rural communities in developing countries. Through its handicraft and fashion section, Aarong, BRAC has developed a sustainable national brand that provides a livelihood in the creative industries for tens of thousands of people across Bangladesh.

    Initially established as a small-scale relief and rehabilitation project to assist refugees returning from India after Bangladesh's war of liberation, BRAC is now one of the world's largest development organizations. With a founding donation of £189,000 (about US$ 315,000) from Oxfam, Mr Abed established four health clinics, built fishing boats and offered housing assistance to promote employment in more than 200 villages in northern Bangladesh. Since then, BRAC has disbursed more than US$ 7 billion to more than 7 million borrowers in Asia and Africa.

    With more than 120,000 employees and an annual turnover of US$ 535 million, BRAC's commercial success is obvious. But for BRAC, the real measure of achievement is the positive impact it has on the lives of the 110 million people it reaches through its development work every day.

    Aarong - BRAC's flagship social enterprise
    BRAC established Aarong, its handicraft-marketing branch, in 1978. The initiative was dedicated to creating economic opportunity for disad-vantaged artisans and rural women through the revival and promotion of their traditional handicrafts. Today Aarong has become the foundation
    for independent cooperative groups and family-based artisans to market their craft, both within Bangladesh and internationally. The project currently has nine retail outlets and supports more than 65,000 artisans in 2,000 villages across Bangladesh. An additional 25,000 independent cooperative groups and traditional family-based artisans also sell their crafts through Aarong. Potters, brass workers, jewellers, jute workers, basket weavers, handloom and silk weavers, wood carvers, leather workers and other artisans from all over the country come to Aarong for marketing and support services.

    Every woman who works in Aarong-owned production facilities is also a beneficiary of BRAC's multifaceted development programmes with access to microcredit to develop income-generation activities in addition to their regular wages.

    As further evidence of BRAC's successful business model, Aarong has seen an average annual business growth of 40 per cent in the past four years (see Figure 1). While many local export-orientated businesses have suffered as a result of the current world economic climate, Aarong's market, which is 95 per cent domestic, has grown by an estimated 12 per cent this year. Built on the strength of its strong domestic market, the Aarong label has become Bangladesh's leading fashion brand. The sheer scale of BRAC's reach and reputation within Bangladesh has been part of the reason the Aarong project has been so successful. The brand has a strong national identity and customers are proud to shop there. They also trust BRAC's sustainable business practices that have evolved through a model of trial first before scaling up.

    Aarong has also successfully found a niche in the retail fashion space. Prior to the establishment of Aarong's retail outlets, shopping for quality textile products was either through the backstreets of local markets or in up-market boutiques inside hotels. It is the closest shopping experience to a department store in Bangladesh, offering a range of products ranging from clothing, shoes, jewellery and accessories to furniture and homewares. So, although the brand's marketing includes billboard advertising and fashion shows within the country, it is really the elements of convenience, range and quality of product, combined with a strong national identity, that have effectively become its marketing tools.

    The value of Aarong to the creative industries in Bangladesh is not only economic. The success of the retail brand has inspired consumer interest in indigenous Bangladeshi design through blending the traditional with the contemporary in a manner that has won instant consumer appeal. Aarong's product designs focus on the diverse types and textures of crafts and patterns that have been passed along from generation to generation among weavers and artisans in craft hubs around the country. Aarong also plays a role in protecting and promoting traditional Bangladeshi products and designs through its extensive design library where remnants of the country's rich craft heritage, such as Nakshikantha art and Jamdani patterns, have been widely researched and archived.

    Khodeza's story
    In keeping with BRAC's business model, 85 per cent of the artisans employed by Aarong are women. Khodeza Begum is one of them. She was one of the founding producers in the Aarong project. Her childhood pastime in Nakshikantha embroidery became a source of income during the early 1970s when her husband's job was not enough to support their family. In time, demand grew to a point where she needed to enlist the women in her own and neighbouring families to help. Today, she continues to train groups of
    Nakshikantha embroiderers who form what has grown into a successful business as
    an Aarong sole supplier, employing 400
    marginalized rural women.

    The BRAC model

    BRAC's model for poverty alleviation and empowerment of the poor addresses the various causes of poverty through interlinked programmes including economic development, health, education, human rights, legal services and disaster management. Key features of the BRAC development model include:

    Focus on empowering poor rural women

    From its inception, BRAC focused mainly on rural women, by making small loans available to them for income-generating activities that enabled them to take charge of their lives and make improvements for themselves, their families and their communities. Today, more than 98 per cent of BRAC's borrowers are women.

    Making a significant difference

    The national scale and impact of BRAC's anti-poverty interventions are what makes BRAC unique in the development community.

    Social enterprises and long-term financial sustainability

    In addition to BRAC's core programmes, it also runs commercially operated, pro-poor enterprises that are strategically linked to its development programmes. These enterprises form the crucial value chain linkages to increase productivity of assets and labour to reduce risk for the poor. BRAC's enterprises range from agriculture and dairy farming, to water sanitation, handicrafts and fashion through Aarong. The enterprises also help to make the organization increasingly self-sustaining.

    BRAC's approach to microfinance

    A core component of BRAC's economic development initiative is its microfinance programme. BRAC has also developed a comprehensive credit-plus approach to microfinance that differentiates it from other institutions. "Just providing a loan is not enough," says BRAC's founder and Chairperson, Fazle Hasan Abed. While BRAC believes that microcredit is an important tool in breaking the cycle of poverty, it also believes that in order to be effective, the loans must be coupled with training in income-generating activities, support in obtaining quality raw materials and the facilitation of engagement with consumer markets. The result is an impressive 99 per cent repayment rate among borrowers and a sustainable growth model that has been replicated in countries across Africa and the Middle East.

    As befits its name and heritage, BRAC's original tenet for rural advancement is as relevant today as it was in 1972. At that time, 15 per cent of Bangladesh's 68 million people lived in cities. Today 25 per cent of the nation's 150 million are city-dwellers. The resulting challenges are evident in the ever-growing city slums of Dhaka, most of which are a function of Bangladesh's rural population who come to work in the many export garment factories from which the country derives around 70 per cent of its gross domestic product. In the last 30 years Dhaka's population has grown from 2.5 million to 12.8 million and is forecast to double by 2025. BRAC's approach to sustainable steady employment for people in well-established rural communities provides a viable solution to containing Bangladesh's burgeoning urban population.

    BRAC-Aarong is a member of the World Fair Trade Organization, for information about ethical and fairtrade with BRAC-Aarong. visitwww.brac-aarong.com

    Paula Rogers has 25 years' experience in the international supply chain management of textiles clothing and footwear. Over the past five years, she has worked with BRAC to develop an international platform for Aarong's work. Ms Rogers is also a member of the Fair Trade Association of Australia and New Zealand Executive Committee and an associate member of the Textile Institute, London.

    Ms Rogers thanks Pushpita Alam, Radin Ahmed and Tamara Abed from BRAC for their support in writing this article.