What is at stake in a cashless Bangladesh? One must bear in mind what Bangladesh presently is. Apart from its tigers, tea, and beach-replete tourist havens, it is a country whose economic climb owes immensely to those low-wage workers who, on the domestic front, are on pace to earn up to $50 billion annual income by 2021, and, on the external front, remit over $15 billion annually, to give both politicians and business the spunk they need to shine.
Imagine a cashless moment for them. Digitalised RMG wages would feed precisely into the kind of reforms the Accord/Alliance seeks for the country's ready-made garment (RMG) factories. They would enhance transparency; we would applaud keeping our part of those same reform deals; and western RMG buyers would not have to impose new sanctions. On the other hand, digitalised RMG wages could haunt Bangladesh Garment Manufacturers and Exporters Association (BMGEA) members: grudging as they have been with the post-Tazreen and post-Rana Plaza factory/labour reforms, they may find, particularly, wage transparency, pulling the rug from beneath their feet, and with it, Bangladesh's competitive global position.
Remitters, too, may want to go underground should they be forced into digitally receiving, then remitting, what they earn abroad. For a start, their own employers, much like our own RMG factory-owners, may oppose any such movement tooth and nail. Even if they consent, the migrant workers may gulp in abandoning the Hundi remittance medium, some regressing deeper into underground media.
The Hundi system, a legacy of the Mughal era, and reportedly valued over $250 million annually, is regarded by the country's 2012 Anti-Money Laundering Act as money laundering. The Bangladesh Bank has, accordingly, set up the Bangladesh Financial Intelligence Unit, still conceding its inability to entirely eliminate such transactions. Not only is the volume of this cash too high to net in any cashless programme, but the succulent message it emits to other migrants may further deter future controls.
Added to these, as was observed in the last series article about India, we have our own rickshaw-pullers, baby-taxi drivers, reckless 'wild-west' bus drivers and conductors, not to mention menial household staff, peasants, and plenty of other 'gypsy' labourers. They constitute a huge chunk of the total population, and would quite likely demand many other incentives, much as Narendra Modi's government has given in India, to get them on board. In other words, if we must go cashless, as may eventually be inevitable, there remain formidable obstacles to first dissolve. That decision cannot be made by bankers and financiers, as in India. Without a social discourse, the country could easily take the wrong trajectory.
Nevertheless, there is a lot to learn from India. "Our roots are common," observed Arun Jaitley, the visiting Indian Finance Minister, about the subject in his Hotel Sonargaon, October 04, 2017, address. But he also added, "a lot of challenges are common" too. We, too, can take a bite out of crime, corruption, and terrorism, as he observed of India's attempt, while also expanding our tax-paying base. Surely he had these promises in mind when eloquently describing India's cashless journey while opening 12 cashless visa application centres across Bangladesh.
He might also keep in mind Bangladesh's growing India wariness in pitching India's successes to Bangladeshis. Bangladesh already has a lopsided trade relationship that shows no structural changes for the foreseeable future. It feels hemmed in by border fences wherever Bangladeshi soil meets India's. Indian television programmes and services dominate Bangladeshi households, just as Tata trucks rule the roadways. If, on top of these, cashless visa application services also start pegging fees to Indian financial institutions, paying the relevant interest-rate and so forth, then the entire cashless enterprise may not only not produce optimum results, but also antagonise already stalled relations further.
A cashless society carries its merits, as observed in two prior series articles. Yet, we must stop at the water's edge if it funnels our resources away to India through innovative Indian institutional levers, at least until the playing-field becomes more even.
Bangladesh does have a campaign underway to expand and broaden its tax-base. That is a necessity. The trick lies in seducing our remitters with incentives to abandon the Hundi system, and channel their transfers legally, safely, and hassle-free through the embassy. Since many of them go through a layer of middle-men, not just in the travel, but also in remitting, the embassy might provide a better fret-free cashless service plus an incentive, for example, through high interest-yielding bonds. Government Eid bonuses could be designed for high-level remitters, again using cashless options.
Above all, the BGMEA iceberg is one only the government can dissolve. Concessions from electricity subsidies to expedited export shipments could induce breakthroughs in registering RMG wages: cashless alternatives like a housing subsidy or medical treatment could help keep the monetary emolument globally competitive, and therefore, transparently.
As evident, there is not only more homework to do but also mind-changing campaigns to undergo before any cashless initiative blossoms into a national characteristic. There is no magic in turning to a cashless economy, but the convenience is consistent with the upward climb into a middle-income society, and reflective of the country beginning to bury its past inter-personal, inter-party, intra-social suspicions. Trusting each of our next-door neighbours is the first step towards a cashless society; but once taken, how many successive steps remain will depend, in part, on trusting the country's neighbours. We are not starving on either front, but much more work remains.
Dr. Imtiaz A. Hussain is Professor & Head of the newly-built Department of Global Studies & Governance at Independent University, Bangladesh.