In rural Bangladesh, an increasing flow of capital from returning migrant workers is reshaping the economy, a trend often overlooked in official records. These returning migrants are turning their remittances, traditionally seen as a crucial source of foreign currency, into a driving force behind rural entrepreneurship, using their savings to kick-start new ventures.
During the fiscal year 2024-25, Bangladesh saw a record remittance inflow of $30.32 billion, with significant funds reaching rural areas like Sylhet, Noakhali, Cumilla, and Jashore. Official data from the Bangladesh Bureau of Statistics indicates that around 466,666 expatriates returned permanently in the two years surrounding 2021-22. The World Bank’s Bangladesh Return Migration Survey (BRMS) highlighted that a substantial number of returnees opt for self-employment, with many launching small businesses and micro-enterprises such as grocery stores, mills, transportation services, and fisheries, funded by their foreign earnings.
A socio-economic survey conducted in 2024 revealed that in some upazilas, 54.3 percent of returnees invested their savings in small businesses, and one out of every three new enterprises is established by returning migrants. If even a portion of the savings brought back by returnee migrants were directed towards small businesses systematically, it could have a significant economic impact. These returnee-backed businesses operate within the rural informal economy—legal but outside formal systems and policies. Despite their positive effects on creating diversified incomes, local jobs, and new rural supply chains, these ventures are not reflected in national investment figures, do not receive formal financial support, and make minimal contributions to the GDP.
The main challenge lies in the absence of supportive policies. There is a lack of structured reintegration mechanisms for returning workers. A study on 270 returnees revealed that 74 percent had savings of at least Tk 100,000 and over 80 percent expressed interest in establishing businesses in their hometowns. However, most encounter common obstacles such as lack of collateral for loans, absence of policy recognition, and inadequate entrepreneurial training.
While there are some commendable support programs available for returnees, they are limited in number and reach only a fraction of the returning migrant population. Even those who receive initial funding or formal training often end up running small-scale ventures, mainly due to the lack of a clear pathway for these micro-businesses to grow.
Estimates suggest that informal capital accumulation by returnees now rivals the country’s entire foreign direct investment (FDI). Despite attracting approximately $3 billion in FDI in 2023, Bangladesh’s own returning citizens are believed to be investing on a similar scale on the ground.
With total remittances hitting a record $30.32 billion in the fiscal year 2024-25, contributing over six percent to the GDP, there is a vast pool of untapped investment capital in the savings brought back by permanent returnees. Recognizing and empowering these returning citizens could potentially spark a domestic investment boom alongside the foreign investment efforts.
To address rural inequality and reduce dependence on Dhaka-centric industries, policymakers need to prioritize returnee investments as a key economic strategy. The government-led Recovery and Advancement of Informal Sector Employment (Raise) project, supported by the International Organisation for Migration (IOM) and the World Bank, aims to establish welfare centers and a database of returnees. A comprehensive data registry must include information on savings amounts, skills acquired, investment preferences, asset ownership, and business sectors. The “Recognition of Prior Learning (RPL)” under the Raise project assists numerous returnees in validating overseas-acquired skills. Expanding RPL and integrating it with business training can reduce business failures and enhance access to formal markets.
Moreover, lending schemes should be simplified and customized to meet returnees’ needs, bridging the gap between informal savings and formal investments, especially in rural areas. Financial tools should include grants matching start-up capital, low or zero-interest loans for small businesses, possibly through Probashi Kallyan Bank, and a special credit window for returnee SMEs. Small rural enterprises funded by returnee savings should benefit from simplified registration processes, reduced fees, and tax incentives.
While debates continue on attracting more foreign investors, Bangladesh’s own investment potential remains largely unrecognized due to gaps in policy frameworks and economic data. For a nation aspiring to achieve upper-middle-income status, acknowledging and leveraging this domestic investment opportunity is crucial for a robust economic strategy.