Diversifying Exports for Better Jobs in Bangladesh

Development Challenge

Bangladesh has a strong record of reducing poverty but many Bangladeshis-around 21 million-still live in extreme poverty. Nearly nine out of ten Bangladeshi workers operate in the informal sector, and three out of five workers are in vulnerable employment. Raising the quality of jobs and earnings is central to addressing the challenges of poverty and shared prosperity. The country's rapid growth and job creation are largely dependent on the ready-made garments (RMG) manufacturing sector, which accounts for 82 percent of exports. As Bangladesh looks to prioritize export diversification, the focus has shifted to non-RMG manufacturing sectors-such as leather goods, footwear, light engineering, and plastics-which have a significant potential for job creation and export growth. These sectors, however, face barriers to integration into global value chains due to insufficient technology and skills adoption, and a general lack of compliance with international environmental, social, and quality standards.

Results and Outcomes

• Export growth in targeted non-RMG sectors increased by nearly 83 percent annually, from the baseline indicators in 2016 to 2023. This far exceeded the initial 30 percent target.
• Export diversification among the targeted firms-including leather goods, footwear, light engineering, and plastics, supply chains for electrical goods and automobiles-created nearly 180,000 new jobs, surpassing the original target of 60,000[PB1] .
• The project directly benefited more than 107,000 people, 38 percent of whom were women. Beneficiaries received upgraded skills training, learnings on environmental and workplace safety compliance standards.
• Five hundred seventy (570) firms, including women-led businesses, received grants from the project's Export Readiness Fund (ERF) to help them improve environmental, social, and quality compliance and to diversify into new markets. These firms obtained 260 internationally recognized compliance certificates, which facilitated access to new markets. The ERF-a catalytic, risk-sharing instrument-addressed market failures by mobilizing investment in priority industries and generated over $18 million in private co-investment.
  
• The ERF beneficiary firms recorded 59 percent sales growth, substantially above the 15.4 percent target. The Fund created new market opportunities across 22 new countries and supported 73 Bangladeshi firms to participate in 14 international sourcing shows, generating business leads and new export opportunities. The Market Intelligence Platform, launched in May 2025, provides export market information and has established communication channel between Bangladeshi producers and international buyers.

WBG Approach

• The Export Competitiveness for Jobs project is an example of collaboration between International Finance Corporation (IFC) and the World Bank. IFC's Sector Competitiveness Advisory-which was funded by United Kingdom's Foreign, Commonwealth & Development Office-provided technical assistance to develop sector-specific compliance guidelines, assessment toolkits, and policy reforms. The World Bank's International Development Association (IDA) lending provided funding for sector-wide awareness and capacity building and established the Export Readiness Fund to provide grants to firms to invest in diversified sectors and address market access constraints.
• The private sector actively participated from the project design phase through its implementation. This ensured that the project addressed actual needs and gaps in the sector, and the support could be adjusted accordingly. For example, during COVID-19, the project launched a separate grant window to help firms diversify into the medical and personal protective equipment sector. Post-COVID-19, the firms continued to expand these products into export markets, which proved to be nearly four times more profitable.
• The grant management mechanism played a vital role in the program's successful completion. An internationally recruited third-party grant management entity was engaged to assess the eligibility of the beneficiaries, set milestone-based deliverables, monitor the progress, and disburse funds on reimbursable basis, in line with the agreements with beneficiary firms. This approach was unique in contrast to the regular government-managed grant programs that often face complaints from ineligible firms, vested interests, and influence. The program was completed on time, with almost 98 percent of funds disbursed, followed by co-investments by beneficiary firms to further improve compliance standards.

Contribution to WBG Targets and Jobs

The project has contributed to the jobs agenda, with nearly 180,000 jobs created across private sector export firms, including for women in non-garment sectors. For example, Apex Footwear Limited, which received a grant from the Export Readiness Fund, was able to restart it operations after COVID-19, creating over 9,600 jobs, with over 38 percent women employees. The project also mobilized private capital investment of nearly $18 million.

Lessons Learned

• Grant programs are better managed if a third-party grant manager is engaged. The grant manager takes up larger responsibilities to assess grant eligibility and monitor progress based on agreed milestones, ensuring efficiency, transparency, and accountability. This works as a firewall between the actual beneficiaries and the government, reducing risks of undue external influence in the program.
• Financial grants and investments that are awarded based on improved compliance should be complemented by a robust awareness and capacity-building program to ensure that the firms are equipped with technical know-how to make compliance improvements. The project supported nation-wide awareness program on international environmental and social standards and compliances for diversifying exports. This program reached more than one million workers in targeted sectors and helped firms co-invest to improve infrastructure, obtain compliance certifications, and improve production efficiency.

Next Steps

The targeted sectors that received grants and training support have expanded into new markets and their exports have grown. Important stakeholders, including government and the private sector, have expressed interest in expanding similar support to other promising industries and firms. For example, the Bangladesh Economic Zone Authority, a government agency, will replicate the approach to provide support on improving environmental standards to targeted firms in the special economic zones.