Fazle Hasan Abed: The canny serial entrepreneur

The late 1970s into the early 1980s was a period of intense activity and wrenching change that permeated all aspects of Abed's life, both personal and professional. It started with Abed's shift toward moneymaking ventures.

Microfinance would eventually become BRAC's largest source of internally generated revenue, but long before that happened—and before it was even launched as a standalone program—Abed had already turned heads in the nonprofit world by creating several BRAC-owned money- making ventures. His aim was to chip away at the dependence on donor funding. "We have always thought that donor money is too fickle," he said. "It is here today, gone tomorrow."

In BRAC's first three years, all his letters of appointment to staff— the official document giving them a job—explicitly offered "temporary" appointments. "We were completely dependent on donor money, and if it stops, you have no job," he said. "So I used to give temporary appointments." This stopped in 1975, when he became more confident of the inflow of donor funding and began offering permanent positions. He seemed to have little difficulty raising money for expansion despite BRAC's often middling results.

Nevertheless, he wanted a more solid foundation. As he wrote in donor proposals, "uncertainty of a continuous flow of funds saps staff morale." Cole Dodge recalled when Abed raised the idea of a BRAC printing press, the first of BRAC's own enterprises. Functional education and other training programs always needed new posters and booklets, and they also published a magazine for the newly literate, so the organization had considerable printing needs. There were not many good printers in Dhaka. Rather than outsource the job, Abed thought he would be better off starting his own printing company, which could Operate commercially after meeting BRAC's needs. Cole sensed that Abed's driving motive was the commercial objective. "There was a market niche in Dhaka, but in my mind, it was very clearly a money-earning operation," said Cole. "It had nothing to do with efficiency of programs."

Abed and Cole put together a short proposal that was flat-out rejected by Oxfam's overseas director, Michael Harris, who said, according to Cole, "We have never given money for an enterprise and have no intention of doing so. You should spend the money on social welfare and development. We should raise the money and BRAC should spend the money." Cole said he then "kicked it upstairs" to Guy Stringer, the deputy director. Like Abed, Stringer had experience in the business world and was interested in the printing press proposal. Cole invited him to see for himself, along with the top man at Oxfam, Brian Walker, who was relatively new on the job. According to Cole, Bangladesh was Walker's first overseas field visit, and he was impressed by BRAC's tight accounts, regular reports, and management structure. It would take Cole eighteen months to steer the proposal through the personalities, committees, and boards that made up Oxfam's internal management, but he was ultimately successful.

By then, another funder had appeared on the scene-a Dutch non- governmental organization (NGO) called the Netherlands Organization for International Development Cooperation (Novib). Oxfam and Novib jointly funded the $210,000 start-up costs for BRAC Printers, including the purchase of a Heidelberg Press from West Germany, considered the Rolls-Royce of printing presses. Operations started in 1977 in Mohakhali, a relatively quiet area of the capital adjacent to Gulshan, the leafy suburb where most of Abed's friends had lived prior to the war. "The brilliance of it was buying the land in Mohakhali," said Cole. Above the printing press, BRAC went on to build a five-story building, which in 1980 became its new head office.

The next venture was a textile and handicrafts shop. For Amin, who was heading the Manikganj program at the time, the idea for this began when a group of people from the home office, including Marty Chen, visited the district for a survey and misplaced the keys to their car. Amin used the delay to raise an issue that had been on his mind. He had recruited shebikas, or female "helpers," on a voluntary basis to conduct the functional- education classes. After six months of classes, the landless groups would begin receiving loans to jump-start their livelihoods. The shebikas themselves were not poor enough to qualify as BRAC group members, so they received nothing. Many of them had handicraft skills such as weaving and embroidery and had asked if BRAC could help them find employment."

At the time, only one shop in Dhaka specialized in rural handicrafts, an artisans cooperative called Karika. Amin asked Marty and the others to find out whether Karika would sell embroidered goods made by the Manikganj shebikas. Karika agreed to do so, but only on consignment-meaning that the women would not be paid until the shop actually sold their goods. It was often several months before the women actually received any cash. "That made me angry," said Abed, who thought rural artisans deserved to be paid on delivery, just as any buyer would treat a commercial supplier. "I said I'm going to show them." He applied for and received grants from Bread for the World and Inter Pares for about $150,000 to set up a BRAC shop to sell fabrics, baskets, embroidered mats, and other traditional craft handmade by Manikganj artisans.

However, neither Abed nor anyone else at BRAC knew a thing about retail sales. He approached a friend, Paul Myers, who headed the Bangladesh chapter of the Mennonite Central Committee (MCC), the relief arm of several Mennonite and other North American Anabaptist churches. 

An early proponent of the "fair trade" movement, MCC would produce handicrafts like handmade paper Christmas cards in Bangladesh, export them to its headquarters in Akron, Pennsylvania, and sell them in its shops, called Selfhelp Crafts of the World (later renamed Ten Thousand Villages). Abed proposed that with BRAC donor funding, MCC be commissioned to run the BRAC shop, including hiring and supervising the employees, for two years. The shop was called Aarong, for "village market."

"For the first two years there was a little bit of tension as to where the loyalties of the employees should lie," Abed said. As far as he was concerned, the first Aarong staff "were all BRAC employees, but managed by MCC." He and others from BRAC visited the shop often and quickly learned how to manage retail operations. In January 1981, MCC officially handed over management to BRAC. Bahar Abed became the first director of Aarong, which started turning a profit in 1983. Still owned by BRAC and employing tens of thousands of rural artisans, it is now one of the largest Bangladeshi retail fashion chains.

By then. Abed was acting like a canny serial entrepreneur, on the lookout for moneymaking opportunities everywhere, as long as they would serve the poor while reducing BRAC's donor dependence. It came to his attention, for instance, that productivity per acre for Bangladeshi potato farmers was among the highest in Asia. The greatest obstacle to profitability was not productivity but the country's shortage of cold-storage facilities: Unlike rice, potatoes in tropical Bangladesh start to shrivel and rot soon after harvest. Farmers therefore had to sell their entire yield at harvest time, when prices were at their lowest, and smallholders, with no access to refrigeration and under pressure to repay loans, barely made a profit.

Backed by a $1.4 million commitment from the United Nations Capital Development Fund, BRAC built a refrigeration facility, called BRAC Cold Storage, to store up to four thousand tons of potatoes from the area surrounding the city of Comilla. It was launched as a commercial venture, with the twin objectives of generating revenue for BRAC itself through the rental of refrigerated storage space and improving income for small potato farmers. In its proposal, BRAC estimated it would raise earnings for no less than ten thousand farmers. Most private cold-storage firms preferred large growers, due to the ease of handling fewer clients with greater volumes, but BRAC Cold Storage would reserve space to be rented to small growers.