Country Private Sector Diagnostic - Unleashing the Private Sector to Sustain Development Success - Executive Summary (June 2021)

Jul 19, 2026

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This Country Private Sector Diagnostic (CPSD) evaluates opportunities and requirements to expand Bangladesh’s private sector contribution to sustainable economic growth. It identifies key constraints limiting private investment from delivering diversified, export-led progress and sets strategic entry points for private investment. The findings will inform the IFC Country Strategy and the World Bank Group’s Country Partnership Framework, supporting joint programming to create markets and unlock private sector potential through prioritized reforms.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages13

Reading Time33 min

AccessFree to download

Executive Summary

Bangladesh at an Inflection Point: Development Success, New Ambitions, and Persistent Challenges

Constraints Facing the Private Sector and Key Development Gaps

Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public COUNTRY PRIVATE SECTOR DIAGNOSTIC CREATING MARKETS IN BANGLADESH Unleashing the Private Sector to Sustain Development Success EXECUTIVE SUMMARY June 2021 EXECUTIVE SUMMARY This Country Private Sector Diagnostic (CPSD) assesses opportunities and requirements for expanding the private sector’s contribution to sustainable economic growth in Bangladesh. It evaluates the chief constraints to realizing private sector potential and identifies strategic entry points for private investment. The CPSD will be used to craft the IFC Country Strategy and the World Bank Group’s new Country Partnership Framework with the government of Bangladesh, paving the way for joint programming to create markets and unlock private sector potential. This executive summary starts by briefly setting out the development context, highlighting opportunities for the future, and discussing the main constraints hindering the private sector from addressing Bangladesh’s development challenges and then sets out recommendations for reform priorities. Bangladesh at an Inflection Point: Development Success, New Ambitions, and Persistent Challenges Bangladesh has been one of the biggest development success stories of recent decades. Despite high poverty levels at the moment of independence in 1971, Bangladesh is on course to graduate from the United Nations least-developed countries list in 2026. Annual gross domestic product (GDP) growth has accelerated in every decade, reaching over 8 percent in 2019. At the same time, the rate of extreme poverty has fallen from 43.5 percent in 1991 to just 14.3 percent in 2016, an extraordinary rate of progress in social development. Child mortality has fallen by nearly 90 percent since 1990, life expectancy has increased from 58 to 72 years, and secondary school enrollment for girls has increased from just 14 percent in 1990 to nearly 80 percent today. Sustained growth has been made possible by prudent government policy choices, along with the successful development of the ready-made garment (RMG) sector and the strong inflow of remittances. First-order policy reforms introduced by the government of Bangladesh in the 1980s and 1990s and solid macroeconomic management—which ensured a prudent fiscal approach, a competitive exchange rate, and low inflation, along with investments in basic health, education, and infrastructure—unleashed a response from the private sector, which leveraged the country’s comparative advantage in lowcost labor to exploit global market opportunities. Exports of RMG, which alone created more than 4 million jobs, along with remittances from Bangladeshis working abroad, have been the key growth engines of Bangladesh’s economy. Private investment overall grew from close to 15 percent of GDP in 2000 to more than 23 percent by 2019. Bangladesh has nonetheless reached the limit of its current development model. Moving to the next stage of development will require a new round of reforms to strengthen and modernize the private sector, which faces an economic policy environment that increasingly undermines its potential to drive diversified, export-led growth. The government of Bangladesh’s Perspective Plan 2021–41 sets the objective of becoming an upper-middle-income country by 2031, along with reaching full employment and eliminating extreme poverty. Nearly half the population is vulnerable to falling back into poverty. It is therefore critical to boost development of a broad-based private sector that can grow, export, and create quality jobs at scale. Bangladesh’s private sector faces one of the most burdensome business environments in the world. The financial sector lacks the capacity to efficiently channel domestic savings into productive investment because of an elevated ratio of nonperforming loans (NPLs) and weak capital buffers, underscored by inadequate corporate governance, weak supervision, an

FAQs

What is the purpose of the CPSD for Bangladesh?

The CPSD assesses opportunities and requirements for expanding the private sector’s contribution to sustainable economic growth. It evaluates constraints and identifies strategic entry points for private investment.

Which factors have supported Bangladesh’s past growth?

Prudent government policy choices, the ready-made garment (RMG) sector, and strong remittances supported growth. Policy reforms since the 1980s and 1990s helped unleash private sector responses.

What are the main constraints hindering the private sector’s next-stage growth?

The environment is undermining private potential through burdensome business conditions. The financial sector’s limited capacity, weak governance and supervision, restrictive trade and regulation, and slow competitive infrastructure participation constrain investment and modernization.

Jul 19, 2026

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