Inadequate green financing constrains green and sustainable development in Bangladesh, leaving the goal of eco-friendly uplift far off, experts at a meet said Wednesday.
The public-and private-sector experts note that though there are many policies in place to promote green growth, they are not in action for a lack of coordinated policies.
Policy Research Institute (PRI) in collaboration with the World Bank Group organized the webinar, titled 'Incentives for Green Finance and Investment', at the policy-dialogue platform of 'Green Growth for Bangladesh'.
Speaking as chief guest, Economic Affairs Adviser to the Prime Minister Dr Mashiur Rahman said there is a gap between environmental concerns, and green financing and outcome of the investments.
"Green growth or environmental concern is not confined to a particular sector-- the concerns involve a whole range of government and private-sector development and growth," he said.
He stresses professionalization of the department of environment as it doesn't have enough competence and manpower to deal with growing environmental concerns.
The adviser also suggests opening a green-financing wing in the planning division as all projects go through the division though it doesn't have environmental expertise.
He notes that Bangladesh Bank has achieved certain capacity on environments.
He finds collateralized loans as a serious issue for green growth and green financing.
"The banks want to be sure that the loan will come back, but given the growing NPL in consideration, banks do not want to take risks to finance green production," the adviser told the meet.
Mr Rahman feels that green incentives to readymade garment sector could be extended to other sectors too.
And solar power requires a lot of land which is scare in the country.
PRI Chairman Dr Zaidi Sattar said, "We can be 'green' and we can grow." The greening of the economy does not have to be growth-reducing.
He said Bangladesh cannot be left behind in the fight against the ravages of climate change.
"The country is gearing up on both adaptation and mitigation avenues of the climate-resilience strategy, all requiring additional financing for investment," he says.
He notes that rapid growth with low-carbon, eco-friendly power generation (shifting to renewable energy), industrial production, transportation, agriculture, and waste management is possible and realistic for leaving a legacy of sustainable living for the country's next generation.
"Bangladesh must set its eyes on a path to net-zero emissions, if not by 2040s, but certainly by 2060s-2070s, in tandem with China and India," he further says.
Additional Secretary at the Ministry of Environment, Forest and Climate Change Iqbal Abdullah Harun said they have policies but need to make it in action plans.
Manpower scarcity is one of the problems that holds them back and can't perform as expected, he told the audience.
Monika Kumar, Environmental Specialist at the World Bank, delivered keynote presentation. She said CMSMEs can diversify economic activity and make significant contributions to reduction of poverty through self? and wage- employment opportunities.
She finds CMEs' environmental impact as a growing concern due to a substantial share of air and water pollution.
Monika says that they are suffering from lack of investment in technology, short-term profitability over environmental sustainability and poor access to financial markets.
Despite the 5.0-per cent rule, the percentage of green finance of total funded loan disbursed by banks and financial institutions remains low.
She mentions that USD $4.3 billion was disbursed for green projects between FY16-20 by banks and financial institutions
Dr Sadiq Ahmed, Vice Chairman of the Policy Research Institute, moderated the session.
Managing Director of Apex Footwear Ltd Syed Nasim Manzur said customers are unable or unwilling to pay for sustainability.
Many industries and manufacturers want transition to more sustainable practices but funding gaps, long paybacks are the challenges, he notes.
Mr Manzur also says cent-percent collateral-based mentality of banks and non-bank financial institutions is also bottleneck for going green.
"No reward for good practices" is also a challenge to sustainable and green production, he told the meet.
"The government announces 10-per cent tax waiver for green factory, specifying one sector-RMG-which is an example of not rewarding good practices for all," he says.
He feels that incentive structures, definition of green, competence auditors to assess green projects, coordination among government agencies are required for promoting green growth.
He also proposed green startup funds including local manufacturing to support green development.
"This fund must include local manufacturing, the obsession of export only needs to move now to local factories as well," he says.
He also identifies knowledge gaps, space constraints in factories, cash-flow crunch, and non-coordination among the government agencies as key constraints to going greens.
Executive Director of the Policy Research Institute and Chairman of Brac Bank Dr Ahsan H. Mansur said it is nowhere near the financing target to green growth set by the central bank.
He noted that the Bangladesh Bank also recognized 10 banks for green financing.
He said the central bank did most in terms of policy intentions in the green financing.
"But the problem lies in the process," he says.
He urged the central bank to make easy for more disbursement of green loans.
CEO of Standard Chartered Bank Naser Ezaz Bijoy said green financing in the country is not only supply problem, it is also a demand problem.
Referring to studies and surveys, he said international buyers consistently pushing local manufacturing to go green and they are ready to provide incentives for sustainable production.
Mr KyungJin Hyung, CEO, Blissvine Ventures, Former Director of the International Business Department of Korea, Korea Technology Finance Corporation (KIBO), shared Korea's experience of green growth.
