Poverty Reduction in Bangladesh

Compiled from the Speeches of one of

the Former Presidents, FBCCI

Bangladesh is one of the most densely populated countries in the world. Nearly 80 percent of the people live in the Rural areas and the majority of the rural people remain unemployed for and under employment some months of the year. More than half of the rural people are landless or nearly so and another 25 percent find it difficult to ensure subsistence from their cultivable land and need to seek supplementary sources of income. About three-fourths of the rural households are dependent totally or partially on the market economy, for their livelihood.

In the sixties, the percentage of the poor was around 25. During the last three decades, it has jumped to over 60%. A recent BIDS study shows the condition of the absolute poor in the country, by and large, has remain static. Poverty is the condition that is said to exist when people lack the means to satisfy their needs.

To determine the elements of the basic needs, the same can be defined narrowly as “those necessary for survival” & broadly as “those reflecting the prevailing standards of living in the communities”. The first criterion would cover those near the border line of starvation, the second would the people whose nutrition, housing & clothing, though sufficient to maintain life, do not measure up to those of the population as a whole. Poverty is associated with poor health, low level of education, inability or unwillingness to participate in society. Whatever definition one uses, authorities & laymen equally agree that the effects of poverty are harmful to individuals & to the society.

Poverty may be classified as:

1. Cyclical Poverty
2. Collective Poverty
3. Case Poverty

Land is the main productive asset in rural areas; it represents both economic and social status. According to the agricultural census 1983/1984, about 56.5 percent of the rural households are effectively landless with 8.7 percent owning neither homesteads or cultivable land, 19.6 percent having homesteads but no cultivable land and 28.2 percent owning homestead and upto 0.2 ha of land. Landlessness is increasing rapidly as a result of population growth, river erosion and various other social and economic factors.

In the backdrop of the prevailing rural scenario, the prime needs for rural development in Bangladesh are productive employment and income generating programs in both farm and non-farm sectors along with the development of agriculture and basic infrastructure in the rural areas. The primary vehicles for the promotion of such rural development will be local level institutions within the principle of participatory development as far as possible.

ROLE OF BUSINESS COMMUNITY IN POVERTY REDUCTION

Agriculture remains the largest sector of the economy occupying three-fifth of the employed labor force and producing nearly half of the economy’s output. The role of Business Community is vital in expansion of almost all the above-mentioned sectors in any country or society. The business community can bring out technical revolution, new and modern techniques can increase productivity by reducing cost and getting more output or performance.

Poverty is a multi-dimensional phenomenon whose dimension is by no means reducible to any single indicator. Poverty alleviation calls for multi-dimensional approach, such as nutrition, health and sanitation, housing, education, personal security etc. For Poverty Reduction, macro-economic policies for development and technological development strategies have to be appropriate for our socio-economic background, general level of technical skill, and our goals of developing rural Bangladesh. Businessmen, as a prime profession, who are relentlessly making contribution towards national growth and creation of new resources, seek for their legitimate role in poverty reduction efforts. This role lies in the linkage between the approach, strategy and program for poverty reduction and the scope of professionals and businessmen.

By their very position with respect to production process and relations, the businessmen contribute directly to economic growth. Nevertheless, through continuous R & D activities, we business counterparts have to play an indispensable role within the framework of formulation of strategies for technological development for poverty reduction as well as converting the principles of science, acquired knowledge and experience to develop local technology. All the above activities that contribute to poverty reduction dependent on investments of business entrepreneurs. Thus, businessmen can play a major role in poverty reduction of the country through promotion of small and medium sized industries, which can directly create employment opportunities as well as help poverty reduction by contribution to the growth of the economy.

GOVERNMENT OBJECTIVES AND STRATEGY FOR RURAL DEVELOPMENT

Poverty is the most pressing problem in the rural areas of Bangladesh. A rural development plan must continue to effectively address the poverty problem. For this, the plan has to pursue an employment-led growth policy. The focus of the policy would be to promote greater opportunities for the rural poor for productive employment in both farm and non-farm sectors of the economy.

Appropriate strategies and effective policies for rural development are needed for the realization of the objectives. For the development of rural economy, the Government formulated the strategy of Rural Development Projects on addressing the following:

• Development of physical infrastructure including roads and markets.
• Irrigated agriculture, drainage and minor flood control works.
• Production and Employment Program (PEP)
• Keeping alleviation of rural poverty as the end in view, the objectives of the Rural Development Institution (RDI) sector under FFYP are to:
• Reduce rural poverty by means of increasing gainful employment and income opportunities on a sustained basis through expansion of the productive sectors;
• Develop rural institutions;
• Improve technology and skills for productive activities and ensure better access for the rural poor to the means of production;
• Facilitate agricultural development through institutional support and expansion of irrigation;
• Improve basic physical infrastructure (Roads, markets) in the rural areas;
• Promote participation of women in rural development

For rapid poverty reduction, the Government’s priority is to develop the rural areas where most of the poor people live. This requires accelerated growth of agriculture and the rural non farm sector. A rapid agricultural growth will sustain high growth with better capacity to reduce poverty through enhancing rural wages, creating synergies for diversifying the rural economy, and enabling the supply of low-cost food to improve nutritional status and food security of the people.

Encouraging agricultural growth requires various policies ranging from new technology to credit for small farmers. The past growth in agriculture was helped by new high yielding variety (HYV) technology, particularly in rice, in which both the state and the market played important roles. The Government would continue its pro-active role in key public goods in agriculture particularly in improving the ability of the farmers to adopt new technology and providing appropriate mix of incentives to pursue profitable operations.

The recent growth of agriculture was greatly influenced by macroeconomic and sector specific policy changes. Reforms in trade and exchange reate policies created favourable incentive structures and dismantling of state interventions, market-oriented reforms and reduced regulations favoured growth in agricultural production and productivity. The reforms led to faster growth in minor irrigation, increased the supply of fertilizer and seeds, helped in wider adoption of high yielding varieties (HYVs), and encluraged the farmers to go for more rational input use and production decisions. The Government’s priority would be to intensify efforts such that positive achievements are expanded and the constraints limiting their potential are resolved.

PROPOSED STRATEGY FOR IMPLEMENTATION OF RURAL INFRAST-TRUCTURE DEVELOPMENT ACTIVITIES AND ROLE OF BUSINESS COMMUNITY

In the process of construction and maintenance activities of rural infrastructures, the following strategies may be followed by the engineers and business community:

• Directly involve the landless groups / people in construction and maintenance of rural infrastructure in the form of Labour Contracting Society (LCS) which has already been experimented in various RD projects.
• Ensure that landless groups of poor men and women get maximum employment opportunity under the contractors and they are paid fair wage.
• Ensure wider participation of rural infrastructure and keep certain activities reserved for the destitute women.
• Impart skill development training to the rural poor involved with construction and maintenance of rural infrastructure for further development of their competence.

PARTICIPATORY MODEL: EMPOWERING THE POOR

Participatory development model calls for empowering the poor, to recognize their inalienable right to decide their own destiny and their access to education, health, sanitation, housing, employment and credit facilities. To ensure these rights there should be structured or institutionalized arrangement at the grass root level. These necessitate building and strengthening of local bodies like counties, municipalities, union etc. with elected representatives in all tiers. Development cannot be thrust from above. Development must originate from those for which it is essentially meant. This means that there should be first of all firm political commitment for poverty alleviation. Politics and development are inter-related. Politics of development and production is the main pillar for building effective bridges with the masses. Proper political and social atmosphere is the sine qua non for development. This will generate mass awareness for development at the lowest level and will thereby ensure social justice.

The participatory development model presupposes the working people as the main component of all development activities. Under this model, human being is not the problem, rather they are the keys to problem solution. Sustainable and meaning full development only takes place through the optimum utilization of human creativity and productivity. The Peoples Republic of China achieved tremendous progress by following this model. Mexico, under President Salinas, was also deriving rich dividends in the same way. In an interview with Readers Digest (August 1992 issue) President Salinas explained the inherent philosophy of his solidarity program which aims at alleviating poverty. He said- “Trust the people. In the past we relied on the central government to determine what the poorest people needed. Now we have reversed this process. No longer will official in Mexico City decide the needs of the people in the rural areas. Local, democratically elected committee, how to use some of the proceeds of the privatization and savings from debt re-negotiation to have running water and electricity, to builds schools and clinics and to pave roads. All of these decisions that people, not bureaucrats are taking today.

In Bangladesh, where we will be able to empower and trust the people and not depend on the bureaucrats in the capital city, a breakthrough can definitely be achieved in the prevailing poverty situation i.e., our development initiative should be target-oriented. The Bangladesh Economics Association in its 10th Biennial Conference has, therefor, called for national consensus by effectively involving the government, the opposition, industrialists, businessmen, volunteers (NGOs), the peasants and the workers. The Association was of the opinion that national participation in the country’s development process was minimal. It was some sort of a dictate from the bureaucracy-oriented government as per the prescription of donor countries and agencies. Poverty alleviation will continue to remain elusive if this process persists. Union councils, Thana councils and Zila councils should be so constituted with people’s representatives that they are able to function as independent decision-making agencies without bothering for dilatory approval. When this can be done, projects will no longer remain unimplemented.

POLICY FOR POVERTY REDUCTION

To remove poverty the following policy outlines needed to be implemented on top priority basis and without any further delay: –

1. Re introduction of farm subsidies to the extent of at least 50% of the value of the products.
2. Strong price support as in Thailand.
3. Refixation of the prices of agricultural inputs and ensuring their easy and cheap availability to the farmers.
4. Mechanization and modernization of agriculture through intensive research and extension programs for increasing yields.
5. Setting up of agro-industries like food and fruit processing plants, Agro- machinery factories, extension of irrigation facilities, rural electrification etc.
6. Change of cropping pattern, switching over to more profitable produce like vegetables, fruits, livestock, poultry, fisheries etc.
7. Development of basic infrastructure likes road highways and transport.
8. Skill development among farmers through education, healthcare, family planning, training and easy access to information through radio, TV, cinema, telephone etc. as in South East Asian countries Japan and South Korea.
9. Setting up of raw materials related industries in the rural areas, which will galvanize rural economy.
10. Formation of rural co-operatives, restructuring and reorganizing credit facilities and arranging better marketing of agricultural produce.
11. Forming agri-food consortia with the SAARC countries to gain comparative advantage and better bargaining clout in the international market.

The measure noted above fall within the category of targeted development. Since most of the poor live in the rural area. Unless agriculture is developed their condition will not improve.

APPROACHES TO POVERTY REDUCTION: The poverty reduction program includes:

1. Poverty reduction through enforcing higher investment in social sector.
2. Poverty reduction through fostering an accelerated sustainable growth process.
3. Poverty reduction through promoting targeted income and employment generating programs designed for the vulnerable segment of rural poor.

The Engineers are the key element for the timely execution of all development programs of physical infra- structure, setting up of new industries of small & medium scale, ensuring protection against natural diseases etc. But for the context of poverty alleviation, 40% of the rural & urban families should be the target of all national & local poverty alleviation efforts. Poverty alleviation programs must be based on the smallest social units in rural areas i.e., Communities, Upo- Zilas, Unions & Paras.

Small-scale rural food industries such as Bakeries can employ 10-15 woman of the village; lozenge/toffee-making unit may employ 20 workers. Private fish-tank can be developed, and a few poor persons can be benefited from fishing. The government “beel-area” borrow-pit may be developed into large/small fish tank. The landless population may be given the opportunity to get good and regular income from fishing, Duck rearing,

Growing banana trees, pineapple and vegetable on the banks of the tank. A large number of poor families may use the unused land near the house from ½ decimal to 1 decimal size can grow vegetables 3-4 times a year. This may be a good source of earning. Intensive scheme for rearing cattle, cows, goats are to be undertaken for a protein source.

Productivity of the small land holding of the poor can be doubled or tripled through manual irrigation by “treadle pump” or hard pump ensuring multiple cropping, better inputs and technology; the technology for holding the high yielding variety of grain for long term storage is still unknown to our farmer. Small-scale storage bins & new technology for storage will help the poor to store their product till market prices are advantageous.

Business communities will work hand in hand with the Engineers in developing the following improvements, which will promote the rural areas & strengthen the local economy.

1. Mechanized crop drying and releasing/reclaiming the drying yard especially at the mill premises for production.
2. Improved and appropriate technology for seed production, storage, holding the fishing upto 24 hours of marketing, simple irrigation and harvesting tools (produced by BARRI) and so forth.
3. Use of solar energy and other non-conventional energy sources.
4. Country boat mechanization & improvement of the mechanized country boat.
5. Setting up of light engineering industry and strengthening the existing.
6. Rapid expansion of the cottage industry.
7. Development of small industries at the rural level.

Out of the above tasks the effective of improvement of country boat mechanization, light engineering industries and treadle pump is given below:

After mid 1980’s the situation in country boat sector changed dramatically. Mechanization has taken place on large scale with the help of imported low-cost diesel engine for irrigation almost in an indigenous fashion by the boatmen themselves without any assistance from outside. This change gives the boatmen increased financial benefit.

The gross income has almost doubled after mechanization. On the other hand, contrary to believe, there had not been any major unemployment as a result of mechanization. In fact, there has generated additional activities due to mechanization.

The engineering section of Bangladesh Small and Cottage industries Corporation with its engineering decision took some equal credit projects in Dhaka area in 1985 for the strengthening of the efficiency, productivity of these industries. There were some training components in the program also. Out of total credit amount of Tk. 50 million, Tk. 37.30 million given to 173 industrial units of Dholaikhali (Dhaka) area & Tk. 6.6 million to 55 industrial units of Zinjira (Suburb) area. The loan was given purchase of new machinery & as an operational capital.

The decision about which economic activities, can be undertaken will depend on the physical resources available in a local area, the ability of those implementing the poverty alleviation projects to mobilize local society for these activities, market for small industry products and the like. Always the local context must determine what activities are viable and are most economical to promote. Program taken they do not suit the local context.

Finally, we can state that, the Businessmen can play tremendous role in poverty reduction in situation that is characterized by the following factors:

-strong political will,

-adequate appreciation of engineers’ & business community’s role

-ensuring Engineers & business community of unfettered opportunity to contribute

-favorable policy framework

-necessary resources allocation

-strict accountability

We are striving earnestly to make FBCCI into a more dynamic, internationally counted, truly representative & powerful organization of the private sector. But the challenges are enormous. The country is currently undergoing an unstable situation. The social conditions are in a deplorable condition. Level of erosion of social capital & corruption in society are beyond belief. Infrastructure is inadequate. Over-centralization of power as well as absence of rule of law & of human rights have taken toll on transparency, accountability & obligation of responsibility. On the other hand, interdependence, interaction & interfacing of new technologies, globalization of culture & economics is posing unprecedented threat to our daily lives, our trade & commerce as well as our means of production.

To face the challenges & play its proper role, the private sector needs a conducive environment & a level playing field. But the reality is opposite. Taking advantage of political unrest, gross social in-discipline, anti-social activities & anarchic tendencies have assumed immense proportions. Dishonest people are questioning honest people, corrupt people are putting the righteous & the dedicated people on the dock. Plunderers of national wealth are undermining those who are involved in creating wealth for the nation. Ignorant & uneducated people are throwing the gauntlet at knowledgeable & qualified society.

If this situation continues, then the philosophical fundamentals constituting the Republic will become defunct & the country may become unfit to govern.

Nevertheless, FBCCI as the vanguard of the private sector & the apex body of business organizations will continue to do its utmost, along with other civil society organizations to remove all obstacles standing in the way of economic growth & productivity. In doing so, it will be guided by a moral philosophy in promoting trade & commerce in line with sustainable socioeconomic development.

We firmly believe that by our combined efforts, brisk vigor & dynamism will enable us to return to the nation’s economy. Investment will increase. Wealth will rise. Employment opportunity will be created. Climate will change so that individual members of the society may be able to utilize their knowledge & skills in production & nation building mission. In effect, social disturbance will die down. Poverty reduction will only be possible then.

Poverty Reduction in Bangladesh: Poverty Reduction in Bangladesh: Poverty Reduction in Bangladesh: Poverty Reduction in Bangladesh

Developing Bangladesh          Md. Joynal Abdin            Read More…