World has seen the 'genocidal' move by Myanmar government clearly to cleanse Arakan ethnically, getting rid of Rohingyas Muslims. Hundreds and thousands fled to Bangladesh, and many more to follow. Prime Minister of Bangladesh and other relevant authorities urged the United Nations to take immediate actions to stop mammoth destruction by Myanmar, and to assist in systematic return of the Rohingyas to their motherland.
The extreme level of benevolence, in financial and social support, presented by the People of Bangladesh was praised by international community. However, the financial support has been extremely limited, and there exists lack of coordination as individuals and groups have been distributing basic necessities out of their feelings.
Media reports read complaints from several quarters on dismantled distribution of charity efforts. Government of Bangladesh has already notified the mass not to engage individually, while a centralised effort in reaching the needy has been planned. This centralised effort is often useful taking into consideration the infrastructural support to reach the affected.
We have also seen the use of financial technologies (including mobile-based financial distribution channels, that is bKash) to transfer funds to the affected people. On the other hand, people are taken to the streets in several countries, irrespective of their religious origins, showing their support for the Rohingyas.
People across borders feel the need to participate in this occasion, either out of their emotional gesture or for the religious cause. Crowd funding is a platform that can be utilised to raise funds, from home and abroad, to help those are in need. Many have already initiated several online sites to raise funds having crowd funding in the backdrop. It is our belief that, if Government of Bangladesh employ Bangladesh Bank to initiate a crowd funding site, the fund collection effort will be centralised and efficient.
*Government must have a clear count of foreign assistance in foreign
currency, even if the amount is negligible, to assess its impact on
currency reserve, remittance flow, and external relations.*
Financial aid, especially in hard cash, to Bangladesh dropped significantly in recent years. Several medium-term foods for work programmes faced the critiques, as the management of fund was questionable. There is a declining trend of aids to Bangladesh. However, as IOM feared that over a million Rohingyas will reach Bangladesh by the end of 2017, and given the limited resources of Bangladesh, Government must decide to engage the power of the mass to survive this difficulty.
Based on multiple sources (crowdfunding.org and others), the crowd funding industry has grown tremendously in recent years, having most of its influence (70 per cent) in non-social causes. Almost a third of the crowd funding initiatives was designed to meet social obligations, including financial support for the poor. Suspecting the importance of engaging the mass in entrepreneurial and social causes, Malaysia has recently introduced legislation for crowd funding.
While funds are intended to flow into the country from several legal jurisdictions, and it is not rational to question the intention of such initiative during bad times, several recent events should ring the bell of leaving this socially demanding activity unmonitored. Take the example of Uber, Grab or Pathao. Imagine the consequences if the government does not have a policy to monitor the charges and performance of these open-sourced logistic support system.
Similar consequences might appear for the cases of crowd sourced online sites (i.e. Wikipedia) and open-access research journals (i.e. Doaj), if these initiatives are not regulated for the greater good. I believe the followings are some of the important prerequisites to making crowd funding successful in social causes.
Policy support
Crowd funding in Bangladesh is a nascent idea. Researchers reported significant contribution of crowd funding in SME development and in other social causes. However, the financial assistance tends to drop over the years as the project reaches a deadline. Size and the currency of funds can be puzzling sometimes. If foreign entities and individuals are interested in sending foreign currency into Bangladesh, there must be a strong policy support from the Central Bank or Securities and Exchange Commission to recognise that investment. Authorities in Malaysia have introduced formal legislation to regulate crowd funding sector.
Similar policy supports are extremely vital for accepting bigger contributions in the future. Even if the fund is locally managed in social causes, Central administration should have close contacts over the administration of the funds.
Managing external assistance and indirect exposure:
In the wake of the social cause-based crowd funding initiatives, massive influx of foreign assistance must be monitored for three reasons. Government must have a clear count of foreign assistance in foreign currency, even if the amount is negligible, to assess its impact on currency reserve, remittance flow, and external relations.
It is indecent that, facing diplomatic clamour over cross-border capital flow carries ill intentions (i.e. terrorist financing, financing extreme religious and racial activism, etc.). Understanding the pattern and size of fund flows through crowd funding may also unearth a critical lead to the relationship between remittance flow, corruption and terrorist activities. Hence, banks receiving such funds must be alerted and should be under formal scrutiny if needs be so.
Balancing private and public initiatives:
If the crowd funding is meant to bring positive changes to any purpose, there must a balance between private and public initiatives. Most of the crowd funding initiatives are privately led, but with an extreme potential of impact on public good. If managed properly, crowd funding can reduce pressure on public funds; but it can put country's image on the edge if managed ineffectively. Often, the disclosure of crowd funded amount is warranted, to bring forward the clarity of the intention behind the initiative. Government must play the vital role to make disclosure a prerequisite.
Crowd funding can be an amazing tool (and often inspiration) for many to start a cause. If properly planned, it can significantly help the current Rohingyas issue and financial inclusivity issue in the long-run. But it is also vital to have proper platform and accountability with respect to the intention, source, size, use, performance, and long-term impact of the fund. We believe this is the time to open the doors for crowd funding with extensive policy support.
The writer is an Assistant Professor of Finance, Nottingham University Business School, Malaysia Campus
This article does not reflect the official
policy of the University of Nottingham
