The Sustainable Development Goals (SDGs), also known as the Global Goals, were set by the United Nations in 2015. SDGs are considered the universal calls for ensuring that each person in every corner of the world relishes the benefit of development and lives in peace and prosperity. UN member states have adopted the SDGs and recognised the need for a balance among social, economic, and environmental sustainability. The countries have pledged to "Leave No One Behind" and fast-track progress for those furthest behind first. SDGs are intended to achieve a better and more sustainable future for all, address the challenges our world and the people in it face every day. These goals bring the world to several life-changing zeros, including zero poverty, hunger, discrimination against women and girls etc. There is no doubt that these are ambitious targets in every context and thus, the creativity, know-how, technology, and financial resources from all of society will be necessitated to achieve them.
Bangladesh, as a signatory of the Global Agenda for Sustainable Development, is committed to achieving the SDGs by 2030. The country, as an active contributor to the global discourse for implementing SDGs, is continuously putting efforts into achieving its sustainable development aspirations. It has taken two important steps towards implementing the SDGs. First, the Government of Bangladesh (GoB), for better policy guidance, has completed all the preparatory works such as integration of SDGs in the national plan, mapping of ministries and divisions, SDGs M&E framework, SDGs financing strategy, SDGs action plan, and 39+1 national priority indicators. Second, the country is working on disseminating the produced knowledge among the relevant stakeholders and implementing SDGs at the local level. These are expected to be the important building blocks for achieving the SDGs.
Nevertheless, there are two major challenges in achieving SDGs in Bangladesh. One is to engage related stakeholders in the process of materialising SDGs. To overcome this challenge and recognising the fact that SDGs are overarching, the GoB has adopted the "whole of society" approach and involved the private sector, NGOs, CSOs, think-tanks, academia, and the media in the implementation of SDGs. Besides, the General Economics Division (GED) of Bangladesh Planning Commission has developed an SDG Localisation Framework. The primary aspiration of SDGs, Leave No One Behind, remains at the core of this framework. The framework offers a set of strategies that will enable the local government institutions to take part in the process of local implementation of SDGs in Bangladesh. It also provides an opportunity for the local people to participate in the accomplishment of the SDGs at the grassroots level. At the same time, the localisation process also relates to how the SDGs can provide a framework for local development policy.
Another notable challenge for Bangladesh is to mobilise resources to finance SDG implementation. Lack of resources can burden realising the SDGs in Bangladesh. The "SDG Financing Strategy: Bangladesh Perspective" prepared by the General Economic Division (GED) of the Planning Commission estimates that Bangladesh will need an additional USD 928.48 billion for attaining the SDGs during the implementation period. According to the same report, on average, 85.1 per cent of the financing should come from domestic sources where 42.1 per cent will be financed by the private sector. The public sector will require to contribute 33.5 per cent to the total financing.
The effectual implementation of the 'whole of society' approach with a special focus on private sector investment by the government and expansion of the economy's tax base will play a critical role in reducing financial gap for SDGs implementation. However, as the implementation of SDGs goes forward, just stimulating growth in private investment will not be enough. Bangladesh will need to learn from the successful experiences of other countries and put efforts into designing innovative financing strategies for managing and mobilising required resources from public and private sources.
Bangladesh has lately introduced some innovative solutions to create incentives, especially for the private sector, to promote financing for inclusive development. For example, the country has introduced the Shariah-based bond "Sukuk" in December 2020 as a new investment tool to promote Islamic finance and attract local and foreign direct investment. The purpose of the Sukuk is to raise BDT 80 billion to implement a safe water supply project titled "Safe Water Supply for the Whole Country".
Bangladesh has also approved its first green bond to finance environment-friendly projects including renewables. Bangladesh Securities and Exchange Commission (BSEC) has already approved a Non-Governmental Organisation (NGO) named Sajida Foundation to raise money from the capital market by issuing green bonds. The bond will be issued to institutional investors, insurance companies, corporate entities, and prosperous individuals through private placement. The value of the bond is BDT 1 billion for a tenure of two years. The fund raised from the green bond will be used to enhance the micro-credit operations and ensure environmental development.
Though there is still a long way to go, the bond market in Bangladesh is taking a shape. There is an appetite for new types of bonds in the market. A recent example is the introduction of the Sukuk bond in the country which has been oversubscribed by almost 4 times. The excess liquidity in the banking sector, relatively higher rate of return, and risk-free investment as the rate of return is fixed for the next five years have produced huge interest among investors for Sukuk bonds. Despite some apprehensions, introducing Sukuk was a timely initiative by the government. It should encourage the introduction of more bonds of new kinds to meet the long-term financing needs of the country. In a true sense, it is high time for emboldening the private sector, particularly big corporate companies to come forward with the issuance of "sustainable bonds" to raise funds.
Sustainable bonds promote environmental sustainability and the socio-economic development of a country since the funds raised from sustainable bonds are used to support the financing of specific projects related to climate change, environment, or social goals. There has been a surge in sustainable bonds in recent years. Global sustainable investing assets are now valued at more than USD 30 trillion-- an increase of 34 per cent over the last two years. However, the blue bond is the newest member of the sustainable bond family which finances projects related to ocean conservation.
Around 71 per cent of the earth's surface is the ocean. Billions of people rely on the oceans resources for their livings. The annual value of the ocean is estimated to be USD 1.5 trillion per year. Therefore, blue economy is receiving growing importance and gaining momentum amongst policymakers all over the world. In the coming days, innovative financing solutions will be essential to explore the ocean - a significant wealth generator and in this case, blue finance, especially blue bonds, have huge potential. It is anticipated that the success of green bonds in the capital markets will create a blueprint for the nascent blue bond market.
The Republic of Seychelles launched the world's first sovereign blue bond in 2018 to raise a total of USD 15 million to implement the small island state's sustainable blue economy plan. Nordic Investment Bank, the international financial institution of the Nordic and Baltic countries, launched a "Nordic Sea Blue Bond" in January 2019 to raise USD 200 million to protect and rehabilitate the Baltic sea. The fund will be spent on wastewater treatment, prevention of water pollution, and water-related climate change adaptation projects. Moreover, Morgan Stanley, working with the World Bank sold USD 10 million worth of blue bonds in April 2019 intending to solve the challenge of plastic waste pollution in oceans.
Bangladesh has great potentials in respect of the blue economy. The country's coastal and marine ecosystem resources can be used in increasing food security, creating jobs, alleviating poverty, reducing inequality, lifting trade and industrial profiles whilst at the same time conserving biodiversity, protecting the coasts and oceans as well as the health, livelihoods, and welfare of the people in the coastal zone. There are huge scopes for ocean-based economic activities in Bangladesh. Fisheries, shipping, and coastal tourism are the traditional use of coastal and ocean resources in the country while there are also new sectors like offshore gas exploration, salt production, and offshore renewable energy.
Bangladesh has taken initiative for huge industrial expansion in the coastal region including coal power plant, deep-sea port, and LPG-LNG terminal. The blue economy concept features prominently as a policy objective in the country's 8thFive Year Plan and Delta Plan 2100 of Bangladesh to support the country's economic development. To help deliver on the objective, the government established a new department called "Blue Economy Cell" in 2017, with a mandate to coordinate across sectoral ministries to better chart a path toward sustainable development of the ocean resources and answer key questions about the implementation of the medium-term development plans.
The old and new sectors of ocean use have a great prospect for innovation and growth. Nonetheless, estimating the value of the blue economy will be important in realizing its full potential. Unfortunately, there is no accurate estimate on the contribution of ocean-linked economic activities in Bangladesh following the methods prescribed in the System of the National Account (SNA). An estimate shows that the value of the blue economy in Bangladesh was USD 6.2 billion or around 3 per cent of GDP in 2014-15 ((P.G. Patil et al, 2018). This value was derived mainly from tourism and recreation, fisheries and aquaculture, transport, and energy. It seems that the estimate is based on guestimate and as a result, it undervalues the contribution of the blue economy in the country.
Bangladesh will need large investment to promote a sustainable blue economy. Experiences of other countries show that long development financing is served through fixed income securities or bonds. The world has experienced a surge in green or sustainable bonds, in particular, in the last 10 years. With an increase of 34 per cent over the last two years, global sustainable investing assets are now valued at more than USD 30 trillion. However, the country should use blue investments financed through blue bonds -- a relatively new type of sustainable bond at promoting the implementation and achievement of SDGs, specifically SDG 14 (Life below water) and related SDGs (i.e. 1,2, 6, 8, 10, 13, and 15), that contribute to the good governance of the ocean and coastal habitats, deliver long term value to marine and coastal ecosystems, reduce carbon emissions and strengthen resilient livelihoods of people who depend on oceans and their resources in a changing climate. Blue bonds will propound an opportunity to mobilise the private sector capital to support the blue economy.
Recent consultation with the relevant state and non-state stakeholders reveals that Bangladesh will require to emphasise on new innovative financing strategies to engage the private sector in financing the SDGs. In this regard, the blue bond can be an innovative tool to finance public investment in projects related to ocean and marine that will ultimately contribute to environmental sustainability, employment generation, poverty alleviation, and reducing inequality in Bangladesh. Nevertheless, the blue bond is a new concept, and thus, there is a lack of aeareness and expertise in this area. Knowledge products and more discussion will be required to sensitise the relevant stakeholders on this issue to explore the full potential of blue economy in the country.
GED, with support from the "Strengthening Institutional Capacity for SDGs Achievement in Bangladesh (SC4SDG)" project of UNDP Bangladesh and UNEP-PEA4SDGs, has recently conducted an important study on "Assessing the Feasibility of Instituting Blue Bond in the Bond Market of Bangladesh". GED, through this study, has endeavoured to understand the possibility of promoting the blue economy in Bangladesh through the issuance of blue bonds. The blue economy and its prospect, bond market, suitability of bond financing, and likelihood for releasing a blue bond in Bangladesh along with mapping the pathway of releasing such a bond have been evaluated in this study.
The study has attempted to project the value of blue economy in Bangladesh. Since there is no accurate estimate available for Bangladesh and there is a lack of data on the blue economy, it is tough to project the future potentials of blue economy. However, there have been efforts to introduce assessment of the blue economy through developing the "Blue Economy Satellite Account"(BESA) - a method proposed in the SNA. It fits well with the SNA endorsed national account measurements such as the Supply and Use Table (SUT) and Input-Output Table (IOT).
The study has considered three scenarios for the Bangladesh Blue Economy (BBE). They are - BBE will grow at (i) 5 per cent, (ii) 8 per cent, and (iii) 10 per cent rates. Under these three scenarios, projections have been made up to 2035. The calculation shows that the size of BBE can be between USD 12.9 billion to USD 25.9 billion in 2035. The study has also tried to estimate the required investment for the three scenarios since one of the key preconditions of 5 to 10 per cent growth rates of BBE is to invest in the BBE. The results show that Bangladesh will need to invest between USD 2.45 billion to USD 7.22 billion annually during the years 2021-2035.
Harnessing the blue economy is a costly venture and thus, will require a huge investment in projects with time-bound completion and clear outcomes. There is a demand for development financing in Bangladesh. However, the current model of development financing with excessive reliance on the banking sector may not be suitable for long-term investment needs. Thus, Bangladesh must adopt a strategy to mobilise funds through developing fixed-income securities or bonds. In this case, sustainable bonds - for instance blue bonds - should be a priority policy option for Bangladesh.
Several issues need to be addressed to carry forward the plan of a sustainable blue economy through sustainable financing, i.e., blue bonds. Due to the scarcity of data, there should be a comprehensive study on the Bangladesh Blue Economy (BBE) encompassing - setting the BBE vision and goals; defining the scope of the BBE; better valuation of the BBE; firmer projections of the BBE (in conformity with PP 2041 time frame) and additional resource requirements; and exploring financing options including the issuance of the blue bond. There is also a need for awareness and capacity building on the scopes and potentials of blue economy. This is not known to many local investors in Bangladesh. Thus, Bangladesh may conduct a survey on the future of the blue economy covering investors (mainly institutional investors), regulators, policymakers, environmentalists, and researchers. External companies and investors interested in sustainable projects should also be made aware of the potential of the blue economy in Bangladesh. Lastly, Bangladesh should gather first-hand knowledge from Seychelles or Indonesia in the areas of defining the blue economy, assessing the potential, addressing the barriers, and determining the institutional arrangements for promoting the BBE.
(The article is based on a recent study titled "Promoting Sustainable Blue Economy in Bangladesh through Sustainable Blue Bond: Assessing the Feasibility of Instituting Blue Bond in Bangladesh", conducted by GED with the technical and financial support from the SC4SDG project of UNDP Bangladesh and UNEP-PEA.)
Dr Shamsul Alam is Member (Senior Secretary), General Economics Division, Bangladesh Planning Commission.