In a recent interview, Jan Fransen, Vera Safronova, and Alexander Jachnow shared their experiences and insights on a project called 'Sustainable Capacity Building on Local Economic Development in Secondary Cities of Bangladesh'. The project aimed to strengthen local economic development in the country's secondary cities by enhancing municipal capacities, fostering collaboration between stakeholders, and supporting the implementation of actionable interventions.
Combining experience with good timing
Bringing decades of hands-on experience to the table, Jan Fransen, Lead Specialist in Urban Economic Development and Resilience, joined the project with a rich history of empowering local economies. His work across Africa and Asia shaped his trust in the power of grassroots entrepreneurship over top-down interventions. Vera Safronova, IHS' Project Development Officer, worked as an Academic Assistant in Urban Economics and Governance when she collaborated on an early project proposal that set the stage for ongoing work in Bangladesh. Meanwhile, Alexander Jachnow, a former IHS staff, brought a deep understanding of Bangladesh's municipal landscape. His experience with local municipalities provided valuable insights into governance and infrastructure challenges, particularly ensuring equitable access to municipal services.
The team worked within the approach of the PRABRIDDHI project, implemented by Swisscontact with funding from the Swiss Agency for Development and Cooperation (SDC).
"In this project, we are really talking of the small, very often informal firms in secondary cities that make up 95% of the local economy. Supporting them, rather than attracting big multinationals, is the key to sustainable development." - highlighted Jan Fransen.
The socioeconomic context
Bangladesh, aiming to achieve upper-middle-income status by 2031, has accomplished impressive economic growth and poverty reduction in the past decade. Yet, around a quarter of its population lacks access to socioeconomic opportunities. Although agriculture has driven much of the country's progress, shifting toward a manufacturing and service-based economy is slow and complicated.
The country's secondary cities, with populations ranging from 100,000 to 12 million, often lack the municipal capacity to provide essential services and economic support to their vibrant business community. Local governments in Bangladesh have no formal mandate for Local Economic Development (LED), so encouraging them to take on additional responsibilities can be challenging. What made LED compelling to mayors in this project was its potential to improve municipal finance. By introducing digitalisation, better data systems, and local taxation measures, the project increased municipal income. Some of this income was reinvested into services that benefit entrepreneurs, such as innovation programmes and infrastructure improvements.
Furthermore, the project also focused on "quick wins," small-scale interventions that immediately improve economic conditions. One example was the installation of CCTV cameras in a local market to enhance security, an initiative that required minimal investment but significantly improved business confidence.
"A crucial aspect of the project is ensuring that local governments don't just implement quick wins but also develop a long-term strategic outlook to sustain economic development beyond external funding." - said Vera Safronova.
Project implementation in Bangladesh
The IHS involvement in the project began with a needs assessment (carried out by Jan Fransen, Vera Safronova and Carley Pennink), followed by capacity-building activities, including a training-of-trainers programme at IHS, where officials from the National Local Government Institute of Bangladesh co-created a curriculum on sustainable local economic development.
The project also gained international attention at the World Urban Forum in Cairo last year. The session at WUF aimed to establish global networks to amplify the voices of secondary cities in the Global South, share lessons from Bangladesh's innovative and inclusive partnership models, and discuss how to accelerate and sustain local economic development in resource-constrained environments. The project's examples, such as tangible quick wins and collaborative partnerships, offered a model for adaptation in other contexts, including cities in Brazil and South Africa.
The project's insights were also presented at the World Forum on Local Economic Development (WFLED) in Sevilla in April 2025. This forum provided an opportunity to engage with and receive valuable feedback from peers across Latin America, further validating the relevance of Bangladesh's approach in other regional contexts.
The key is balancing short-term wins with long-term strategic planning, ensuring sustainable growth is driven by local stakeholders.
Challenges and opportunities for local governments
Local governments play a crucial role in facilitating economic development by creating an enabling environment for businesses. However, limited financial resources and governance constraints hinder their effectiveness. The interviewees stressed the need for a dedicated local economic development officer in each municipality and increased fiscal decentralisation.
Jan Fransen emphasised the importance of trust, saying, "Building trust between local governments and businesses is essential. The challenge is not just a lack of resources but also overcoming scepticism among entrepreneurs who have historically received little support."
Many entrepreneurs hesitate to pay taxes due to concerns about corruption and mismanagement. Successful local economic development requires clear regulations, accountability, and cooperation between businesses and municipal authorities.
"Local authorities should not only set the rules but also create an environment where businesses trust the system and see value in paying taxes, which in turn strengthens economic development." - concluded Alexander Jachnow.
Key takeaways
To document and disseminate the project's findings, the team collaborated on a booklet to inspire practitioners to initiate Local Economic Development (LED) efforts in secondary cities. It highlights successful case studies and challenges faced. The booklet starts with showcasing cases that elaborate on the socio-economic context of Bangladesh, then discusses several cases that highlight successful quick wins, and concludes with discussions on long-term sustainability. One noteworthy case was in Shibganj, known for its mango production, where the PRABRIDDHI team explored ways to enhance the local agricultural economy. Shibganj is the case that is closest to the self-sufficient development of sustainable LED, which was achieved through a long-term partnership between PRABRIDDHI, municipal officials, and mango farmers.
Vera Safronova reflected on the documentation process, noting, "The booklet was designed not only to highlight successes but also to acknowledge limitations and provide a roadmap for sustaining economic development beyond external funding."
One of the key takeaways from the booklet is that cities today face mounting shocks—from climate change to political unrest—that strain local economies and demand stronger collaboration. The booklet’s case studies reveal how COVID 19 and political instability complicate the environment that is already challenging. These are undoubtedly complex and unexpected challenges, but they also offer opportunities by providing urgency for collaboration. In response to these issues, public and private actors are finding ways to collaborate and build trust to grown and sustain resilient local economies.
What's next?
While the PRABRIDDHI project achieved notable successes, concerns about its long-term sustainability remain. The team emphasised that true sustainability requires local governments to take ownership, ensuring economic development efforts persist beyond external funding cycles.
Despite these challenges, there is optimism. The recent change in Bangladesh's government presents an opportunity for reforms prioritising local economic development. If municipalities gain greater financial autonomy and capacity, they could independently drive economic growth and reduce reliance on international aid.
The Bangladesh project serves as a model for local economic development in resource-constrained environments. Similar initiatives could be implemented in other secondary cities worldwide by prioritising practical interventions, fostering public-private cooperation, and adapting strategies to local contexts.
