Challenges of poverty reduction in Bangladesh


 A. K. M. Enayet Kabir


Although our economic growth has reduced poverty substantially, it has also been associated with higher inequality. Thus, to achieve faster poverty reduction, we must:* maintain pro-growth macro-economic fundamentals that support higher growth and investment, and support measures preventing further rises in inequality (such as improvements in safety nets)* invest in the human capital of the poor so that they are not left behind by growth.* make more effective use of consessional aid flows to spur sustainable growth and finance high-priority public programmes that reduce poverty directly. Reducing poverty is the central development challenge in our country. But the lack of access to primary data on poverty in Bangladesh has been a serious, long-standing hurdle to more-detailed poverty analysis. In addition to our faster economic growth, efforts to limit rising inequality are required. During the transition from an economically backward to a progressive sector, technical change, migration, assets and labour may all increase inequality———but effective public policies may help to reduce inequality over time. Economic growth in which the poor can participate must accelerate if our poverty is to decline faster. The needs of our rural poor and the poorest require special attention in government, NGOs, and donor-funded programmes. A combination of high growth, good social policies, and investment in human capital of the poor can help our country to achieve the rapid rates of poverty reduction. We should learn from the pro-growth policies adopted in South and East Asia (such as in Indonesia) to promote faster growth with equity. For success of any poverty alleviation strategy, in the long run, the greatest is likely to come from investment in human capital, in education, in health and family planning, and improving long-term fundamentals, such as high savings, a commitment to education, labour-intensive factories, a relatively egalitarian distribution of income and aggressive pursuits of export. In short run, the ability of current generation to earn more and to contribute more to their children’s future earning capacity, can be improved by measures to increase their access to resources, including information and credit.More specifically, strategies for poverty alleviation should include the following two types of strategies:(1) Income Generating Strategies* Increase income earnings opportunities (by switching to an efficient labour- intensive pattern of development) to the poor, through increasing their access to employment and assets, as the poor depend on income from labour. * Special measures can help channel credit to the poor. These measures may include: (a) Providing credit to groups, relying on group-and keep pressure to repay instead of assets-based collateral. (b) Encouraging savings and letting them serve as collateral for loans.(c) Providing training and administration support to help the poor handle money and bureaucratic requirements. (World Bank-1991)(d) Provisions of small-scale credit, technical assistance and training have a great potential for income generation. (2) human Capital StrategiesThe principal asset of the poor is labour time. Education increases the productivity of these assets. A healthy, educated and well-fed labour force is more physically and mentally energetic than one that is sick and hungry. * Improving the effectiveness of public expenditures to increase opportunities for human capital formation for the poor. Support for the eradication of illiteracy and drop-out rates among the poor is the single-most important strategy objective from a development perspective. Policies should be designed to encourage girls to join schools.* Improvements in the quality of primary and preparatory-level education could be financed by reallocating resources from higher basic education.* A well-designed programme to improve the nutrition of vulnerable groups should be implemented. Emphasis should be put on the protection of children in particular. Providing daily meals (school feeding) for primary public school children, as a way of targeting the poor, has the advantage of improving nutrition for poor children and indirectly encouraging them to enroll at schools (sources of funding such programmes may be the government in collaboration with NGOs). In addition to above, a three-pronged strategy offers the best scope to reduce poverty. First, substantial improvement in the rate of growth of the economy, combined with more equitable distribution, will provide opportunities for the poor to increase their incomes. Second, fostering the development of an enabling framework, in which the urban poor take responsibility themselves for planning and managing their environment, holds out much promise. This means developing partnerships between government, especially local government, non-government organisations and communities. It means recognising the importance of the urban poor in the economic and social life of the city, and helping them to mobilise resources and use them effectively. Third, direct targeting of selected projects to the urban poor can redress some of the current imbalances. An essential part of the strategy is that the urban poor become the central players in deciding what they themselves want and need.The government should take responsibility for the preparation of guidelines to achieve an enabling environment conducive to poverty reduction. The government can perform the following activities: * Support the process of mobilisation, organisation and empowerment of the poor so that they are able to participate fully in the following development programmes and poverty reduction activities : (a) Taking responsibility to create public awareness and participation in planning and managing poverty reduction efforts(b) Facilitating and supporting the work of NGOs, and community groups at all levels who have demonstrated an ability to work effectively with the poor to mobilise resources and to expand the coverage of assistance to the poor. * Facilitate introduction of a more equitable allocation of resources and access to productive assets. This would involve the following actions :(a) Foster the introduction of integrated, pro-poor planning which links spatial with economic, environmental and social dimensions.(b) Formulate, negotiate and adopt a national level Pro-Poor urban land policy that will ensure better access to land and shelter for the urban poor.* Help to support those commercial banks and NGOs, which are lending effectively to the urban poor to play a significant role in credit delivery and management.* Foster and support improvements of the physical environmental condition of existing slums and squatter settlements by extending infrastructure services and utilities.* Facilitate the increased access to credit for the urban poor to initiate their own self-employment activities; and help to support NGOs to play a significant role in credit delivery and management.An advocacy programme is required to support above initiatives. This includes advocacy on poverty reduction on a continuous basis and to conduct research on poverty situation over time and to monitor its changes. Poverty alleviation has long been figured as an explicit objective or even a long-term goal in Bangladesh. To the extent that public policy is paying greater attention to poverty alleviation, has unfortunately been determined more with a view of the strong donor support for these programmes. Past experience has shown, the main problem with such grandiose programmes is that of political mobilisation and grass root support.The credibility of anti-poverty programmes is far from clearly established. These programmes have been used largely to cultivate political influence, and their effect on vulnerable groups and households has not been significant. The credibility of the political process through which funds and resources for the poor are delivered has become extremely suspect, while institutions of civil society have not yet become effective enough to act as a countervailing force.

Unless the political commitment to poverty alleviation programme is seen to be genuine and made transparent through participation of the poor themselves, much of the large expenditure on these programmes will continue to lead to non-target group and leave the poverty situation relatively unchanged. There is also a need to change the focus of the anti-poverty programmes to issue relating to income and consumption shortfalls alone. Issues such as the advancement of basic education, provision of public health and legally ensured provision of social and economic entitlements to the poor need to become an integral part of the anti-poverty agenda.If poverty reduction is to be a serious part of the agenda of economic reforms, the reforms will have to be explicitly re-distributive in content. This will require cuts in subsidy to the rich and also higher taxes to maintain and increase public expenditure relevant for the poor. It must be recognised that a reforms strategy which aims to withdraw the state from investment, liberalise agriculture trade and thus enrich the rich at the direct cost of the poor and seeks to control inflation and balance of payments problem through deflation and devaluation is at its root a fundamentally inequities adventure. This suggests that there is much stronger link between public expenditure and poverty reduction than is usually appreciated, and this is turn, has the implication that the reforms process may actually impinge adversely on the poor if its focus continues to be on the reduction of public expenditure.Finally, it is necessary to make society realise that poverty is a cost to our entire society and it limits our economic growth. hence, all of should be serious about the importance of poverty alleviation. There is a substantial risk that inequality between rich and poor may grow over the coming decades, while poverty will deepen. But it need not be so, if we choose the right domestic policies. The legacy of the past may make change difficult or even frightening. Yet, realisation of a new world of work (in which all groups of workers would be included in a dynamic of rising incomes, better working conditions, and enhanced job security) is fundamentally a question of sound choices in the international and the domestic realm. We must understand that the longer our poor people are left behind, the harder it will become for us to break the self-perpetuating inter-generational cycles of poverty.

Source: The Daily Independent, Dhaka, February 24, 2001

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