Before the covid-19 pandemic hit in 2020, Bangladesh’s poverty rate was 20.5% and its extreme poverty rate was 10.5%. The country was one of the best poverty reducers in the world, thanks to planned policy implementation. Like all countries, however, its progress on this indicator halted with covid-19. Nevertheless, it was able to return to its previous pace of development in a few days, thanks to the swift steps of its policy-makers.

For example, the budget for 2022–2023 includes programmes to strengthen health, investment, production, employment, human resources and the social safety net. The aim was to overcome the crisis caused by the covid-19 pandemic and jumpstart the country’s development momentum.

On the one hand, Bangladesh has been pursuing multifaceted development initiatives to transform the structure of the economy. Since 2010, it has continually enlarged to reduce poverty and inequality. The broader aim is to fuel an inclusive growth agenda.

 

A right, an investment

Social protection is legally mandated in Bangladesh and was embedded in Article 15(d) of the country’s Constitution on its creation in 1972. The issue is central to Bangladesh’s ‘leave no one behind’ policy. The country’s different programmes for social protection are progressively benefiting its poorer households.

Social protection is legally mandated in Bangladesh and was embedded in Article 15(d) of the country’s Constitution on its creation in 1972.

Social protection is also the cornerstone of Bangladesh’s signature National Social Security Strategy (NSSS) of 2015, which includes a very important provision, for a social insurance scheme. This covers sickness, maternity pay and protection, old-age pensions, workplace accidents and unemployment benefits for workers in the formal economy.

Social safety net programmes already cover 29% of Bangladeshi households. Investment in these has increased eight-fold since 2008.[1] Bangladesh’s government has already implemented the five-year long NSSS Action Plan 2016–2021 and has started work on the NSSS Action Plan 2021–2026.

In 2022, Bangladesh had 115 social protection programmes under 39 ministries, centred primarily around food distribution and cash transfers. The social protection initiatives adopted over the years have covered a wide range of beneficiaries. Bangladesh was also quick to react with a stimulus package to cushion the shock in response to the huge challenge of covid-19 in 2020. The lion’s share of this stimulus was geared towards social protection.

Coverage of social protection

Bangladesh’s annual spending on social protection amounts to 2.6% of gross domestic product (GDP) and 16.8% of its budget, if we take 2021–2022 figures. In the 2010s, Bangladesh expanded its coverage of social protection so that it now reaches three in every ten households in the country.

A gender rights activist posing for a photo in downtown Dhaka, Bangladesh, November, 2020 | Photo by Mahmud Hossain Opu.

A very interesting development has happened between 2020 and 2022: three programmes under the Bangladeshi government’s Department of Social Services have introduced an online self-registration system to 262 poverty-stricken sub-districts (locally known as upazilas).[2] These three programmes are allowances for widowed, deserted or destitute women; allowances for the financially insolvent; and a disabled and old-age allowance.

Bangladesh’s social security allowance for elders now covers 5.7 million beneficiaries across rural and urban areas, which is about 50% of the elderly population.

Bangladesh’s social security allowance for elders now covers 5.7 million beneficiaries across rural and urban areas, or about 50% of the elderly population. This number has increased rapidly, from 4.4 million in 2018. The allowance for the insolvent disabled has increased by 13%. Allowances for widowed, deserted or destitute women benefit 2.5 million women. About a million people receive a disability allowance. The numbers speak for themselves: just these three social safety net programmes reach over nine million people!

Poor targeting

Bangladesh’s social security policy has issues with regard to targeting of beneficiaries. The key to improving social protection schemes lies in use of a quality national household database. The main criticism of the country’s social protection policy relates to beneficiary selection. Several studies have shown that a huge number of eligible people have no access to social security.

To address this problem of weak targeting, Bangladesh’s government is developing a comprehensive database of all households (known as the National Household Database) and a selection method based on proxy means testing. These steps will improve the selection of the poor and thereby reduce exclusion and inclusion errors. Moreover, to improve service delivery, the Government to Person (G2P) initiative and mobile financial services should be scaled up. Piloting of this has already yielded successful results.

Most allowances, such as old-age, maternity and disabled allowances, are digitally transferred as mobile money directly to the recipients. This needs to be paired with increased allocations for staffing, capacity-building and better tools, which will enhance social security implementation at the grassroots level.

A pension for all

In 2022, Bangladesh declared that it would adopt a universal pension scheme. This is a welcome and timely move. Bangladesh’s oldest political party, the Awami League, which is currently leading the government, committed to such a scheme in its 2008 election campaign. The party has continued to rule since then, and, to translate its pledge into action, the government has been working to set up the universal pension since 2017. Now, five years later, the aspiration to support the country’s senior citizens has been inculcated in different government documents.

All working Bangladeshis between the ages of 18 and 50 will be entitled to receive the pension. Bangladeshis working abroad will also be able to take part. However, public sector employees will be considered in a later phase, because they are already covered by the government’s pension scheme. All qualified citizens can open a pension account based on the information provided in their government-issued national identity cards., popularly known as NIDs. In the first phase of the policy, opt-in will be optional. Later, the government plans to make participation compulsory.

A tweaking prescription

Analysis of successful social security schemes in different countries, such as the Philippines, presents some key lessons for Bangladesh.

  • Conditional cash transfer (CCT) programmes make up the majority of effective social safety schemes. The finest examples of how to implement CCTs for the urban poor in a developing country like Bangladesh come from the success of the CCT programmes in Brazil, Ghana and the Philippines, among other developing nations.
  • Strict adherence to the CCTs’ linked requirements can assist beneficiary households’ efforts to reduce poverty and develop their human capital. Bangladesh can create CCTs with specific criteria on the health, nutrition and education of women and children living in urban slums.

Bangladesh needs to adopt an innovative and inclusive urban sector policy, aligned with its social security policy.

  • A compliance verification system connected to the digital database (or management information system – MIS) can smartly track households receiving health and education grants. The Philippines is a great teacher in this regard. Additionally, a grievance redress system can be integrated into the MIS to respond to complaints from both beneficiaries and non-beneficiaries.
  • Small social protection programmes can be merged into a large one to avoid coordination issues. Merging small CCTs into a flagship CCT can be piloted in urban Bangladesh.
  • Bangladesh needs to adopt an innovative and inclusive urban sector policy, aligned with its social security policy.[3] Urban poverty is largely understudied and neglected by policy-makers. This step will help address issues related to urban poverty.
  • There is a need to encourage Bangladeshis to invest in their own social security. This can be done via the social insurance system at a reduced cost. The purpose is to protect against the dangers of unemployment, accidents, life-threatening illness and loss of a breadwinner.

Last words

Bangladesh should be applauded for its efforts in making social protection a right and not a charity. Social protection is also seen as an investment. Only a sound social security system will fight poverty in the right way and propel real progress.

 

[1] Compared with the allocation made in the budget for 2008–2009.

[2] 112 in 2020–2021 and 150 in 2021–2022.

[3] The provisions in Bangladesh’s NSSS needs to be looked into while formulating an urban sector policy.

 

Photo ©️ Mahmud Hossain Opu

Mehrin Karim is Research Officer for the Social Security Policy Support Programme at the United Nations Development Programme. She is an economist. She has been a senior researcher at the Policy Research Institute. She specialises in social protection, development economics, education and climate change. She pursued her graduate studies in economics at the State University of New York at Buffalo, USA.