Economists call for reallocation of resources for poorest people

Experts and economists have urged the government to reform social security programmes, targeting both the urban and rural population and to reallocate resources for the country's poorest people.

At a virtual publication ceremony of a report titled "Bangladesh Social Protection Public Expenditure Review," organised by the World Bank's Dhaka office on Thursday, speakers recommended allocating significant resources for children to build a strong base of human capital. They also called for ensuring universal social protection measures, notably old age allowance and pension for all.

The report said social protection programmes remain central to sustainable development policy and are progressively benefitting the poorer households, but improvements in targeting of beneficiaries can further reduce poverty.

Reallocating existing transfers to the poorest could reduce poverty from 36% to 12% and extreme poverty from 22% to 4% among the beneficiaries, as noted in the report.

The existing pattern of the allocation will reduce poverty among beneficiaries by 2 percentage points considering both the upper poverty and extreme poverty.

If one could reallocate all the transfers that went to beneficiaries in the top 80% of the distribution to current beneficiaries in the bottom 20%, amounts received by the bottom quintile beneficiaries would be Tk750 per month – four times the current allocation – which would reduce their poverty.

The World Bank found more deprivation among urban people from the social safety net programmes.

About 11% of people from the urban areas have come under the programmes, but the poverty rate in these areas is 18.9%. On the other hand, 35.7% of rural people have been covered by the programmes, but the poverty rate there is 26.4%.  

The programmes failed to cover all of the poor in urban areas, while coverage in rural areas is above the poverty rate. The report also found deprivation in allocation considering age and region.

Using a social registry, such as the National Household Database, can improve targeting of both programmes and households at a reduced cost, the report explained.

Aline Coudouel, lead Economist of the World Bank, and Mostafa Amir Sabbih, social protection specialist at the World Bank, presented a keynote paper over the report at the event.

Aline Coudouel said investing in early childhood helps a child grow healthier and be more productive in adult life and thus break the cycle of poverty across generations.

Although children aged under five are about 9% of the total population, they have received only 1.6% of the total age-bound allocation for social protection.

She also said people aged above 60 are receiving 72% of the pie, but their proportion is about 8% of the population.

"The country has taken innovative programmes, reflecting the life cycle approach. As patterns of risk change in different phases of life, the life cycle approach needs to encompass support from pregnant mothers to old age, persons with disabilities, as well as from households facing shocks to those in chronic poverty," she added.

Dandan Chen, World Bank operations manager for Bangladesh and Bhutan, said Bangladesh has expanded its coverage of social protection programmes in the last decade, and it reached three in every 10 households in the country.

"The Covid-19 pandemic has accentuated the need for a more robust, efficient, and adaptive social protection system. Going forward, well-targeted and less fragmented social protection programmes that consider demographic change, unplanned urbanisation, labour market vulnerability, and frequent shocks will help the country continue with its success of poverty reduction," she added.

Dr Hossain Zillur Rahman, chairperson of Brac, said the child poverty issue has remained deprived of due importance for a long time. The government has already been engaged with child benefit activities with the stipends, but the amount of per capita allocation is not significant. Per capita allocation for the students should be doubled or tripled immediately.

He recommended the government come out of implementing token programmes for social protection and introduce some universal programmes for all.

He identified urban poverty as an emerging concern and urged the government to emphasise job protection and primary healthcare as the prime need.

Dr Binayak Sen, director general of Bangladesh Institute of Development Studies, also recommended universal social protection considering the vulnerability of people. He said the poverty rate has almost tripled considering the $3.2 poverty line rather than the $1.9 poverty line. It indicates that a large number of people are facing the vulnerability of becoming poor.

Nazma Mobarek, additional secretary of the Finance Division, said the number of beneficiaries of the social security programmes has doubled compared to the fiscal year 2008-09 and the allocation has also increased in terms of taka, percentage of GDP and the national budget.

"The government has the intention to strengthen human capital, that is why the allocation for the wellbeing of the children has been increased," she said.

Dipak Chakraborty, project director of Income Support Program for the Poorest (ISPP) and additional secretary of the Local Government Division, said ISPP with the support of the World Bank has been playing a significant role in increasing awareness and service delivery regarding maternity and child health.

He said about 23 ministries are implementing a large number of programmes related to social security. Effective cooperation is needed here.

Koen Everaert, team leader of Food and Nutrition Security and Sustainable Development, European Union, emphasised improving coordination, universalisation of the coverage, decent targeting, and evaluating performance.

Mostafa Amir Sabbih said Bangladesh spent about 2.6% of GDP in social protection in FY2020, which is in line with that of countries with similar income levels.

According to the report, some risk groups remain underserved. In particular, there are gaps regarding programming for early years and the economic inclusion of poor and vulnerable youths and adults.

Spending will be more effective if the allocations are aligned with the share of the poor in different categories and with the different functions undertaken in the programmes, the report said.

To boost the quality and efficiency of service delivery, Government to Person (G2P) and mobile financial services should be scaled up. The report noted that it takes about two months to transfer funds from the treasury to the beneficiary. The G2P scheme can cut processing time to 10 days.

This also needs to be paired with increased allocations for staffing, capacity-building training, including digital literacy, and improved equipment, which will facilitate enhanced implementation of programmes at the local level.