Although Bangladesh has achieved much in the way of poverty reduction and human development, progress has been slower in some urban areas.
Issues such as slow-down of quality job growth, low levels of educational attainment (notably among the youth), and lack of social protection measures have taken the wind out of the proverbial urban reduction “sail.” As the country starts fresh in the new year, it is an opportune time to reflect on some of the key issues affecting urban poverty.
Despite the steady growth in Gross Domestic Product (GDP), successive Household Income and Expenditure Surveys (2005 to 2010 and 2010 to 2016) suggest that Given the accelerating rate of urbanization, it suggests that more people live in extreme poverty in 2016 than they did in 2010. With nearly 44% of the country’s population projected to be living in an urban setting by 2050, this issue is only likely to intensify.
Several factors may be driving this trend. Absence of education and skills dampen labor market participation and productivity. Among those who participate in the labor-force in urban areas, 19% of men and 28% of women are illiterate. For those who received at least some training, a recent study shows that only 51% of eighth-grade students met equivalent competency in the native language subject (Bangla). The figures were markedly lower for other subjects. Similar trends carry through to technical diploma and tertiary level institutes. As a result, many prospective employers report reluctance to hiring fresh graduates.
The Dhaka Metropolitan Area is the economic and political center of Bangladesh and has been the country’s engine of economic growth and job creation. This has contributed to Bangladesh having one of the fastest rates of urbanization in South Asia.
Today, more than one-third of Bangladesh’s urban population lives in Dhaka, one of the world’s most densely populated cities with 440 persons per hectare – denser than Mumbai (310), Hong Kong, and Karachi (both 270).
Dhaka is also one of the least livable cities in the world. It is ranked 137 on livability out of 140 cities, the lowest for any South Asian city surveyed. The low livability in Dhaka disproportionately affects vulnerable populations, such as the poor, women, and the elderly.
Disasters hit the poorest the hardest. Poor people are not only more vulnerable to climate-related shocks, but they also have fewer resources to prevent, cope with, and adapt to disasters. The poor tend to receive less support from family, community and financial systems, and even have less access to social safety nets, as a recent World Bank report explains.
Disasters tend to discriminate along generational and gender lines, as well. Several studies analyzing the impact of disasters have revealed that women and children have greater risks to their survival and recovery in the aftermath of natural disasters.
During the 2017 Hurricane Harvey in the U.S., many women—especially women of color—decided to not evacuate risk areas despite all the warnings. Why? All over the world, women and girls are overwhelmingly tasked, personally and professionally, with caring for children, the elderly, and people with disabilities. So, simple life-saving decisions, like discerning whether to evacuate a disaster area, can become a difficult choice.
Poverty and gender norms shape basic survival capabilities as well. For example, according to an Oxfam survey, four times as many women than men were killed in Indonesia, Sri Lanka, and India during the 2004 tsunami, because men were taught how to swim and climb trees at young ages, while women were not.
Mercy Corps reports that women and men tend to adopt different resilience strategies during droughts in the Sahel region of Africa—and reducing food intake is one of them. In South and Southeast Asia, 45% to 60% of women of reproductive age are below their normal weight, and 80% of pregnant women have iron deficiencies. During food shortages, women are more likely to suffer from malnutrition because they have specific nutritional needs while pregnant or breast feeding. Women also sometimes consume fewer calories to give priority to men and children.
While extreme poverty has diminished, however, the gap between the richest and poorest countries has increased dramatically. In 1776, when Adam Smith wrote The Wealth of Nations, the richest country in the world was approximately four times wealthier than the poorest. Today, the world’s richest country is more than 400 times richer than the poorest.
What separates them?
One answer is knowledge, diversification and the composition of exports, all areas in which foreign direct investment (FDI) has an important role to play.
FDI matters, but not all FDI is created equal
While FDI is important for economic growth, not all FDI is the same. One way to differentiate is by an investor’s motivations using a framework established by British economist John Dunning:
- Natural resource-seeking investment: Motivated by investor interest in accessing and exploiting natural resources.
- Market-seeking investment: Motivated by investor interest in serving domestic or regional markets.
- Strategic asset-seeking investment: Motivated by investor interest in acquiring strategic assets (brands, human capital, distribution networks, etc.) that will enable a firm to compete in a given market. Takes place through mergers and acquisitions.
- Efficiency-seeking investment: FDI that comes into a country seeking to benefit from factors that enable it to compete in international markets.
This last category – efficiency-seeking FDI – is particularly important for countries looking to integrate into the global economy and move up the value chain.
The text below originally appeared in The Daily Star as part of the SACOSAN VI Supplement. The Daily Star is an English newspaper of Bangladesh.
The 6th South Asian Conference on Sanitation (SACOSAN VI) is a historic milestone for South Asian governments. The conference reflects the efforts South Asia has made towards safe sanitation for all, but importantly, it signals the Region’s commitment to shift from the Millennium Development Goals (MDGs) to the more challenging platform of the Sustainable Development Goals (SDGs). This shift will require even greater leadership from the governments, more sustained partnership from the development community, and greater grass-root innovation. SACOSAN VI is the right moment for South Asia to concretely signal its commitment towards achieving SDG 6 – the Water and Sanitation Goals.
Each year, Bangladesh spends around $10 billion of its national budget on public procurement to build and maintain schools, roads, power plants and others. Public funds can be used effectively for the people only when the procurement system is transparent and efficient. In the last few years, the country has shifted away from traditional procurement standards – paperwork and long processing time – and rolled e-GP, a new electronic government procurement system.
- Open Governance; Open Data; Public Finance Management; Public Procurement; Information and Communication Technology; Public Integrity and Openness Practice; Transformational Engagements; Data Analytics; Private Sector Development; Citizen Participation
- Accountable Governance
- Public Sector and Governance
- Information and Communication Technologies
- South Asia
Dolly owns and runs “Lovely Fashion,” a tailoring shop in Tongi near Dhaka, the capital of Bangladesh. She is in her mid-twenties and earns around BDT 12,000 (USD 150) a month. “I work hard. I can support my family to live with dignity in the society,” says Dolly. “Finally I have peace of mind and financial independence.”
“Does the solar home system work? Do you really get better lights? Or, is it just a big fuss?’ I have been asking solar home systems households in rural Bangladesh these basic questions for the past five years as part of my implementation review missions for the Rural Electrification and Renewable Energy Development program, which has installed over 2.8 million solar home systems since 2002. This has so far contributed to a 9% increase in access to electricity in Bangladesh.
When I heard the news last autumn that 15-year-old Malala Yousafzai of Pakistan had been shot simply for standing up for her right as a girl to get an education, I was horrified.
It also reminded me how lucky I was.
When I was offered a rare scholarship to study abroad, it wasn’t acceptable for me, as a young married Indonesian woman, to live apart from my husband. My mother laid out two options: Either he would join me, which meant giving up his job, or I had to decline the offer.
I know it was her way to advocate for my husband to support me, which he did without hesitation. We both went to the United States to complete our master’s degrees. I combined it with a doctorate in economics, and we had our first child, a daughter, while we both were graduate students.
With spectacular growth of microfinance institutions (MFIs) in Bangladesh, there is a growing concern that borrowers might be borrowing from multiple sources and more than they are able to repay, and hence, they are trapped in poverty and debt. Microfinance programs, operating in Bangladesh for more than two decades, have reached more than 10 million households in 2008, nearly half the rural population, with an annual disbursement close to US$1.8 billion and an outstanding balance of US$1.5 billion. Multiple program membership has increased over the years: it was nonexistent in 1991/92, 11.9 percent in 1998/99 and 36 percent in 2010/11.
However, a recent study shows that increased borrowing, even from multiple sources, has not lowered loan recovery rates.
Also, another recent study observes that microcredit borrowers are not necessarily trapped in poverty and debt. This study analyzes data from a long panel survey over a 20-year period, and finds that although many participants have been with microcredit programs for many years they are not necessarily trapped in debt as the accrued assets due to borrowing outweigh accumulated debt for many borrowers.