Joint Venture BASF Grameen Ltd. Established to Promote Health for People in Bangladesh

BASF will contribute the funds for one million sachets of vitamins and micronutrients and 100,000 mosquito nets to the joint venture. Grameen’s contribution includes its knowledge of the market, distribution structures and networks in Bangladesh.

05/03/09 BASF SE and Grameen Healthcare Trust have announced the establishment of a joint social business venture. Dr. Jürgen Hambrecht, Chairman of the Board of Executive Directors of BASF SE, and Dr. Muhammad Yunus, Nobel Peace Prize Laureate and Managing Director of Grameen Bank, signed an agreement in Ludwigshafen to establish a joint venture called BASF Grameen Ltd. The purpose of the company is to improve the health and business opportunities of the poor of Bangladesh. BASF Grameen Ltd. will start by utilizing two products from BASF’s portfolio: dietary supplement sachets containing vitamins and micronutrients, and impregnated mosquito nets that offer protection against insect-borne disease.

“Our social business joint venture is intended to empower people to take part successfully in business life,” said Hambrecht. “The more people who do so – be they business partners, customers or employees – the better the economic and social development of a country and its population. Investing in people’s entrepreneurial skills is therefore part of corporate responsibility.” Social business is a new business model for BASF. The idea is for a business venture to serve a social purpose, cover its own costs and recoup the partners’ initial investment. Any additional profits are reinvested fully in the company. “BASF Grameen Ltd. is not a charity. It combines business sense with social needs,” stressed Yunus. According to the WHO World Malaria Report 2008, Bangladesh had an estimated 2.9 million cases of malaria in 2006 and 72 percent of the population is at risk of the disease. Bangladesh also has some of the highest child and maternal malnutrition rates according to the UNICEF State of the World’s Children Report 2008. Approximately 8 million children under the age of 5 years are malnourished. “In the long term, we can better help these people through a business model that offers them beneficial products and services at affordable prices rather than through charitable donations,” said Yunus.

Given the substantial need for dietary supplements and mosquito nets, BASF and Grameen have decided to locate their joint venture with these two products in Bangladesh. The joint venture will initially operate from the BASF’s site in Dhaka, the country’s capital. Alongside an initial investment of €200,000, BASF will contribute the funds for one million sachets of vitamins and micronutrients and 100,000 mosquito nets to the joint venture. Grameen’s contribution includes its knowledge of the market, distribution structures and networks in Bangladesh.

In the initial stages, the dietary supplement business will focus on large consumers such as schools, and established distribution channels such as pharmacies. This will familiarize people with the benefit of the sachets as part of everyday nutrition and for healthy nutrition. In the medium term, the products will also be sold directly to end users via established Grameen networks. In towns, the impregnated mosquito nets will be sold in food stores, clothing stores and pharmacies. In rural areas, agricultural wholesalers will sell the malaria protection nets in association with the Grameen network and will also instruct purchasers in their use. Grameen Bank plans to provide microcredits to support people in setting up their own distribution outlets and in funding the purchase of mosquito nets.

“Social business is an excellent way of creating value from values, and BASF is seizing that opportunity,” said Hambrecht. “Our market-oriented joint venture will provide long-term help in addressing social challenges in Bangladesh. In addition, it will allow BASF to explore new markets and customer groups.” BASF is the first DAX30 company and the first chemical company in the world to set up a social business with Grameen.