Disparity, inequality slow down the rate of poverty reduction

The rate of poverty reduction in Bangladesh has declined in recent times despite a higher economic growth. A reason attributed to the decline is a high disparity in income and expenditure among several regions of the country. Another reason has been a rising level of inequality between urban and rural areas.

As a World Bank report reveals, in the period 2000-2016, Bangladesh halved its poverty rate, lifting more than 25 million of people out of poverty. In contrast, only 8 million people emerged free of poverty in the last six years, notes the report.

The development agency published the report, "Bangladesh Poverty Assessment", in Dhaka on Monday.

The report mentions rural areas as accounting for about 90 percent of poverty reduction in the country over the last six years, with the rate of poverty in urban area declining at a very moderate rate. Meanwhile, the number of people in extreme poverty has gone up in urban areas.

According to the report, a head count assessment of poverty in Bangladesh showed a reduction of poverty to 31.5 percent in 2010, which in 2000 had been 48.9 percent. The figure dropped to 24.5 in 2016.

The average decline in poverty reduction has been 1.2 percent in recent years, in contrast to the 1.72 percent over the previous decade.

The World Bank report notes that despite a decline in the rate of poverty reduction, Bangladesh has been experiencing a fall in fertility and child mortality rates, with the result that there have been improvements in nutrition and life expectancy, access to electricity, clean water and sanitation, education, and other areas of a non-monetary dimension.

Finance Minister AHM Mustafa Kamal, chief guest at the report launching event, in his remarks stated that considering poverty and hunger as threats to the economy, the government has been waging a battle to build a hunger-free country.

He also said that despite rising employment figures over the last 10 years, a lot of people are yet unemployed in Bangladesh.

The government has been laying emphasis on education and technology and deploying efforts to realize the objective of setting up 100 economic zones as ways of coping with the problems of unemployment and poverty, he added.

According to the World Bank report, poverty in Bangladesh is yet to be eradicated given that about one in four Bangladeshis still lives in poverty, and almost one half of the poor segment of society continue to live in extreme poverty and are unable to afford basic food.

The report points to new dimensions of regional poverty in Bangladesh, through noting that the tradition of the number of poor people growing in Rangpur division has been maintained. At the same time, poverty elevation in Rajshahi and Khulna division has been stagnant in recent years. The stagnation has in turn caused the western region of the country to be pushed backward.

On the other hand, poverty in Chattogram division is falling at a moderate rate and rapidly falling in Dhaka and Sylhet divisions, a sign of a significant regional disparity coming into the picture.

The World Bank reports that falling trends in private consumption are behind the sluggish rate in poverty reduction in the western parts of the country.

The report says that 74 percent of GDP were spent on private consumption in 2010. The figure has declined to only 69 percent at present. Even consumption among the bottom 40 percent of the poor segment has been going down.

Dr Shamsul Alam, Member, General Economic Division (GED) at the Planning Commission, commenting on the situation at the event, stated that the rate of reduction of poverty in recent years has been declining. He did not consider it unconventional.

The rate of employment generation has also not been rising in comparison with the robust growth of economy.

In her opening remarks at the launch of the report, Mercy Tembon, World Bank Country Director for Bangladesh, said that the progress Bangladesh has made in reducing poverty in the last decade has been remarkable.

Maria Eugenia Genoni, senior economist of the World Bank, presented the report at the event.

The World Bank has expressed grave concerns about rising poverty and unemployment in Bangladesh's urban regions.

In its report, the World Bank noted that while the population of Dhaka has been growing at the rate of 3.9 percent annually, the rise has not been matched by a growth in employment owing to a shifting of RMG units away from the city.

Besides, while as many as 300,000 people were employed in the textiles and garment industry in 2003, the figure was a vastly smaller 60,000 in 2010. The head count for the extreme poor, which was 7.7 percent in 2010 in the capital, rose to 8 percent in 2016.

We have to look for new drivers of growth: Hossain Zillur Rahman

Photo: Hossain Zillur Rahman

To maintain sustainable development, Bangladesh needs new drivers of economic growth.
 
As the quality of development is falling in recent years, current drivers of economic growth will not be effective any more.

Continued high growth is failing to create enough employment to reduce poverty at a satisfactory level. 

The apparel sector's contribution to employment is falling. Dependency on a single product may put the export earning at risk.

Expenditure on education has no proper return. Quality of government expenditure is also falling. 

To take the economy to a new height, the government needs to undertake financial and technical, and administrative reforms.

Need for reforms: Ahsan H Mansur

Photo: Ahsan H Mansur

To be an upper-middle-income country, Bangladesh must invest heavily in priority areas.

If the economy is reformed in the right way, there will be a desired investment climate. 

Bangladesh may lift its position to 170 next year from 176 this year in the Doing Business Index.

But the government has scopes to reform several acts and laws to make an investment-friendly environment and ensure transparency.