New fund raising in capital market may help boost support for SDGs13 October 2021
The stock market, insurance and pension funds could actively contribute to financing the roughly $928 billion needed by Bangladesh to achieve its Sustainable Development Goals (SDGs) by 2030 as bank lending alone is not enough, experts said at a webinar on Monday in the capital. The Bangladesh Association of Publicly Listed Companies (BAPLC) held the event with stakeholders taking part in it. We would say they have rightly pointed out that the banking sector alone cannot supply the long-term financing needed to achieve SDGs as it puts undue pressure on the sector. Besides the stock market, insurance and pension funds, the bond market, mutual funds and secondary stock markets that have also become more vibrant can sufficiently share the load.
We find that the domestic stock market has a variety of fundraising boards, such as the alternative trading board and SME board aside from the main board. The market is also bringing new products so that the stock market can be a strong source of sustainable development financing.
DSE leaders said Bangladesh would need around Tk 78,92,000 crore to achieve the SDGs which makes about Tk 480,000 crore annually for this period. This fund can be financed from various stock market products. But the question is what's to be the new mechanism. The banking sector is suffering from a high rate of non-performing loans and unable to provide adequate financing, so also the insurance sector which is not a viable option but the stock market has a huge potential.
The point here is that when people are confident about the market, it can make big contributions as proven in recent times. The DSE's market capitalisation rose by more than Tk 220,000 crore in the last one year. So it is clear a huge financing demand can be met by the stock market if well performing private sector companies come to raise funds. In our view there is a huge opportunity to enlarge the number of listed companies from 390 to increase the size of the funds. However safety of the funds is the biggest concern. So proper governance in the secondary capital market must be ensured to keep scam masters under control. We are sure if properly managed, new sources of financing may emerge to help sufficiently fund projects that are aimed to achieve the sustainable development goals.