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The Financial Express

Reducing poverty: Effective plan imperative


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Reducing poverty: Effective plan imperative

More than half of Bangladesh's poor households will live in urban areas very soon even though 8 in 10 poor currently live in rural areas, according to the latest report of the World Bank.

Very little poverty reduction occurred in urban areas between 2010 and 2016 and the share of urban people living in extreme poverty remained the same, found the report.

The finding is rather perplexing given the tremendous pace of economic growth in recent times.

About one in four Bangladeshis still live in poverty, while almost half of those live in extreme poverty and are unable to afford a basic food consumption basket.

Using the international poverty line, a measure that allows comparison with poverty levels in other countries, the rate of poverty in Bangladesh is relatively high by regional standards, the report said.

In Bangladesh 14.8 per cent of the population live in poverty, bested only by India in the South Asian Association for Economic Cooperation (Saarc) region. Some 21.2 per cent of the population still live under the international poverty line in the neighbouring country.

Only 0.8 per cent of the population live below the international poverty line in Sri Lanka and 3.9 percent in Pakistan, according to the study.

 Bangladesh has an inspiring story of reducing poverty and advancing development, said Mercy Tembon, the WB's country director for Bangladesh and Bhutan.

Furthermore, more than half of the population in Bangladesh can be considered vulnerable to poverty, as their levels of consumption are close to the poverty threshold -- a proclamation that the finance minister strongly disputes.

 There is no chance for those who have come out of poverty to fall back into it -- we have taken plenty of measures, a high official in Bangladesh said.

There has been little growth in the share of the Bangladeshi labour force engaged in industry, and this has limited the amount of poverty reduction derived from the country's industrial growth, the report said.

The slowdown in job creation in the garments and textiles sector is partly responsible for the diminishing rates of Female Labour Force Participation [FLFP].

Between 2005 and 2010, overall labour force participation in urban areas increased because of a substantial rise in FLFP. The expansion of the garment sector was an important force in raising FLFP as 80 percent of the employees are female.

But between 2010 and 2016 FLFP declined about 4 percentage points.

The stagnation in poverty reduction in services is also concerning given that around 44 per cent of the urban poor are part of households primarily engaged in the sector, the report said.

However, tackling urban poverty is very critical, according to the analysts. The urban poor may be better off than their rural counterparts in terms of income but worse off in key social indicators.

Many poor urban households live in slums, facing poor housing, insecurity and overcrowding. Experts recommended rolling out health safety net programmes for urban poor.

People are at the risk of falling into poverty for lack of healthcare. Therefore, urban health safety net has become important, say the analysts. Social protection for the urban poor is a relatively under-focused area in policy discussions, they said.

On the flip side, rural Bangladesh spearheaded poverty reduction from 2010 to 2016, accounting for about 90 per cent of the drop in poverty. And industry and services, not agriculture, mostly led the poverty cuts.

 This reflects the slower growth in agriculture during this period but also the fact that agriculture growth was less poverty reducing compared to the past and other sectors.

Meanwhile, the Western divisions did not see the same gains as the East between 2010 and 2016. Since 2010, poverty has risen in Rangpur division, the historically poorer northwest of the country; it has stagnated in Rajshahi and Khulna in the West.

The East and central Bangladesh have fared much better: poverty has fallen moderately in Chittagong and declined rapidly in Barisal, Dhaka and Sylhet.

As the country is facing new and re-emerging frontiers of poverty reduction, specifically tackling urban poverty and poverty in the West, approaches that uncover effective traditional and new solutions must be embraced, the Washington-based multilateral lender said.

In the past, relatively straightforward measures like the introduction of high-yielding rice varieties could kick-start a process of welfare improvement. But now, more sophisticated policies are needed to reduce poverty over a sustained period and in a more complex economy.

Continuing Bangladesh's practices of innovative policy experimentation and learning from other countries' experiences of similar economic and development transformation is important to tackle some of the challenges presented.

Poverty rate in Bangladesh fell by 1.3 percentage points to 20.5 per cent in the fiscal year (FY) 2018-19, according to a recent report.. In the previous FY2018, the poverty rate was estimated at 21.8 per cent by the Bangladesh Bureau of Statistics (BBS).

The country's planning minister told the media that extreme poverty rate in Bangladesh also dropped to 10.5 per cent in the FY 2019 from 11.3 per cent in the previous FY2018.

The estimation was done based on the economic growth rate and its impact on the poverty situation in the country. The Household Income and Expenditure Survey (HIES) 2016 of the BBS estimated Bangladesh's poverty rate at 24.3 per cent among its total population and the extreme poverty rate at 12.9 per cent.

But the fact remains, although Bangladesh has halved poverty rate since 2000, still one-fifth of the country's population are poor. Moreover, some 20 million people are living in extreme poverty

.In the wake of the rising number of slums inhabited by poor and extreme poor people, the cities need more anti-poverty schemes to eradicate urban poverty alongside eliminating other poverty-related social problems like child marriage and drug addiction, as those are on the rise.

Public representatives and others concerned need to think about ways and means on how to formulate a joint action plan to free the poor and extreme poor communities from the vicious cycle of poverty and hunger.

However, a study puts Bangladesh ahead of India and China in poverty reduction scorecard. It made remarkable progress in reducing the number of chronically food insecure citizens -- from 40 million to 20 million -- over the last decade. But still, Bangladesh has quite a big number of hungry people.

Bangladesh is trying to address the issue of hunger with its available resources and in the last two decades it has succeeded to some extent to improve the health of the under-five children. There is a need for increasing investment in sustainable agricultural development to address the country's poverty situation.

Sustained poverty reduction will necessitate coordinated multi-sectoral actions. Investments to raise agricultural productivity and growth in the demand for salaried work in the manufacturing and service sectors are crucial for maintaining growth in labour income.

Safety net programmes need to be better-timed to adequately address short-term needs, better targeted to ensure that benefits are primarily received by the poor, and better tailored to meet the specific needs of the poor.

Formulation of an effective plan of action has become an urgent need for freeing the poor and extreme poor communities and slum dwellers in the cities from poverty and hunger.

 

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