Development challenges Bangladesh faces

Bangladesh: Educating Tomorrow’s Generation. Image credit: World Bank Group

Implementation of the Development challenges Bangladesh faces: Challenges and way forward

Shamsul Alam | January 25, 2018

Development of Bangladesh is about defying various odds ranging from frequent devastating disasters to managing the highly dense population and emerging as a development puzzle.

Social achievement in Bangladesh has superseded the economic one. Recognition from the international community following achievement of the Millennium Development Goals (MDGs), particularly in reducing under-5 mortality rate, women empowerment, and poverty reduction boosted the confidence of policymakers to effectively implement sustainable development agenda.

Bangladesh touched a milestone by attaining the status of a lower middle-income country in 2015. The economy achieved over 7.0 percent growth rate in 2016 breaking the trap of 6.0 percent growth stagnation for over one and a half decade. The per capita income in 2017 increased to US$ 1610 from US$ 1465 from the previous year.

Bangladesh has been able to reduce the poverty rate by 1.8 percent during the 2000-2005 period, by 1.7 percent between 2005 and 2010, and by 1.2 percent from 2010 to 2016 each year. In the last Household Income and Expenditure Survey (HIES) 2016 Report, the headcount poverty rate under the upper poverty line has been registered at 24.3 percent and for lower poverty line the rate is 12.9 percent although the income Gini coefficient slightly deteriorated from 0.45 to 0.48.

Significant progress on food security through efficient food delivery mechanism, improved rural infrastructure, liberalised agricultural input, output markets and integration of markets have not only contributed to revitalise the rural economy but also helped reduce inequality.

Progress has been made in improving Bangladesh’s life expectancy at birth (71.6 years in 2016).

Expanded programme on immunisation (EPI) coverage evaluation survey 2015 reveals that 82.5 percent children were fully vaccinated which was only 2.0 percent in 1985. The under-five mortality rate in Bangladesh declined from 212 deaths per thousand live births in 1982 to 36 deaths/1000 live births in 2015. The total fertility rate (TFR) also went down from 6.3 in 1975 to 4.3 in 1991 and finally to 2.1 (2015) (NIPORT, 2016).

Since 1990, the primary school enrolment increased 1.6 times from 11.9 million in 1990 to 19.07 million in 2015, of which 51 percent are girls. In the Global Gender Gap index 2017, Bangladesh ranked 47 out of 144 countries (WEF, 2017).

The Bangladesh economy is now poised for take-off. The main development strategy of the government is to accelerate Gross Domestic Product (GDP) growth underpinned by higher investment and manufacturing sector growth. The growth is targeted to be pro-poor and employment generation so that poverty rate can be sufficiently reduced. Amid this strategy, the country has been undergoing severe challenges.

CHALLENGES TO BE FACED: The first challenge will be to reap the demographic dividend. As of Labour Force Survey (BBS, 2017) 2015-16 data, 2.6 million persons aged 15 or above are still unemployed. This means growth falling short of absorbing a large proportion of employment.

Another major challenge remains in the area of investment climate. The government has a plan to establish 100 economic zones that require considerable investment in energy sector.

One of the grave concerns in term of our export is the concentration of export basket into few items which make exports vulnerable to change in global political and economic situation.

Given the fact that implementation of Sustanable Development Goals (SDGs) heavily relies on building strong institutions and ensuring governance, making this happen will be the ultimate challenge for Bangladesh.

BDF’S EIGHT THEMATIC AREAS: This year’s Bangladesh Development Forum (BDF) will cover eight thematic areas considered in the backdrop of recent development and perceived challenges. The recent damage in food production due to severe mid-year flood triggered soaring prices of staple food items. Further growth of agriculture is slowing down to below 3.0 percent. The agriculture sector is becoming increasingly vulnerable to climate change, which has short, medium and long-term implications for livelihood and food security of millions of people in Bangladesh. This thematic area is totally aligned with the Vision of Bangladesh Delta Plan 2100, which was prepared to “ensure long-term water and food security, economic growth and environmental sustainability while effectively coping with natural disasters, climate change, and other delta issues through robust, adaptive and integrated strategies, and equitable water governance.”

Despite some improvement in competitiveness and business environment, Bangladesh has to do a lot more to achieve the targeted foreign direct investment (FDI) and investment by private sector.

The education system in Bangladesh underwent a number of experiments in the last couple of decades, yet it calls for further reform in the area of providing quality education.

Technology and innovation remain one of the major drivers for sustained growth. Hence, the urgency of creating an environment for leapfrogging in ICT and promote growing penetration of ICT.

Inequality in Bangladesh has been on the rise across and within regions, in particular since the 1990s. Spending in the health sector in Bangladesh in global comparison is low. Both the rise of communicable and non-communicable diseases has put the policymakers in the dire challenge of delivering basic health services for all at an affordable cost.

Bangladesh aspires to be graduated from Least Developed Country status by 2024. But there is a need for a clear roadmap, cost assessment and coping up with measures in terms of trade in large part. Finally, there is an issue of financing SDGs up to 2030.

SEVENTH FYP BROAD DEVELOPMENT PRIORITIES: The 7th Plan centres on following three themes:

* GDP growth acceleration, employment generation, and rapid poverty reduction;

* A broad-based strategy of inclusiveness with a view to empowering every citizen to participate fully and benefit from the development process.

* A sustainable development pathway that is resilient to disaster and climate change entails the sustainable use of natural resources and successfully manages the inevitable urbanisation transition.

National priorities, according to the 7th Plan and SDGs intertwined, are as follows:

* Conducive macroeconomic environment to promote growth, supported by trade and private sector development

* Reduction in poverty and inequality across all groups and regions

* Increase in productive and decent employment opportunities for sustainable and inclusive growth

* Ensuring quality education for all to reduce poverty and increase economic growth

* Sustainable improvements in health including reproductive health, family planning, particularly of vulnerable group

* Ensuring availability of safe drinking water and sanitation for all

* Improving infrastructure for higher economic growth

* Ensuring sustainability in production, consumption, and use of energy and mineral resources

* Achieving gender equality and empowering all women and girls

* Preserving and preventing environment from degradation, ensuring climate change adaptation and mitigation and disaster management

* Increasing access to digital communication through telephone and broadband services

* Reducing urban poverty and improved living conditions through better city governance and service improvements

* Promoting inclusive, transparent, accountable and effective democratic governance system and ensuring justice for all

* Strengthening international cooperation and partnership for sustainable development

IMPLEMENTATION PROGRESS OF 7TH FYP: One of the major targets of the 7th Plan is to break out of the sphere of 6.0 percent growth rate and raise the annual average growth rate to 7.4 percent. The target has been achieved in the last two subsequent fiscal years.

Following are the areas where progress is above the target:

* GDP growth surpassed the target in the last two years reaching 7.28 percent in FY2017.

* Service sector registered a steady growth

* Public investment is filling the gap of private investment and well ahead of what is targeted.

* One of the major successes of this period is restricting inflation within 6.0 percent.

* Number of students in TVET (Technical and Vocational Education and Training) system increased significantly (14 per cent) however; there is still a strong need for increased participation from girls.

* Adult literacy rate (per cent) of 15+yrs old population reached 72.3 against the target 66.9.

* The improvement in Under-five Mortality Rate (per 1,000 live births) and Infant Mortality Rate (per 1,000 live births) is evident as they went down to 35 and 28 in 2016 against targets of 43 and 32 respectively.

* Total Fertility Rate (children per woman) has been reduced to 2.10 from the baseline 2.3 in 2014.

* Life expectancy at birth, total (years) is on the rise, reaching 71.6 in 2016.

* A large number of the population have access to sanitary latrines, which is 75 in 2016 compared to 64.2 in 2015.

In following areas the country is on track:

* Having a close look at sectoral performance, industry is experiencing double-digit growth as was targeted.

* Budget deficit maintained below 5.0 percent of GDP as targeted.

* Export and import performances are on track.

* Government spending on social protection has been increasing in line with the target.

* Net enrolment rate particularly for girls in primary education and lower secondary level is fully consistent with the target.

* Although net completion rate of primary education has increased from base year, it is marginally below the targeted rate.

* Percentage of urban and rural populations with access to safe drinking water is increasing but falls behind target.

* Eighty-seven percent of households now have access to electricity

Following areas need serious attention:

* Private investment has become a matter of concern. It was 22.99 percent in 2016 (77.54 percent of total investment) of GDP against the target 23.7 percent. In a similar trend, the fiscal year 2017 records private investment 23.10 percent (75.71 percent of total investment) of GDP against the target 23.9 percent of GDP. The share of private investment in 7th FYP is projected to be 77.27 percent of total investment.

* Major issue of sustaining the growth is having little buoyancy in private sector investment, falling behind the target.

* Agriculture growth slowed down as expected but is slower than that is needed to buttress total growth rate.

* Remittance shows downward trend as it is recorded at 6.7 percent of GDP and 5.1 percent of GDP in 2016 and 2017 respectively against the target 8 percent of GDP in both the years.

* Bangladesh has one of the low tax-GDP ratios in the world. The last two years’ revenue performance is far below than expected. Nevertheless, the tax revenue in the last two years registered 17.9 percent and 26.6 percent increase respectively.

* Although, public investment has performed relatively well, the government spending has to be increased further.

* Percentage of schools that meet the Student-Teacher Ratio (STR) standard of 46:1 (percent) is just 61.8 against the benchmark 70.

* As alarming as it is, Maternal Mortality Ratio (per 100,000 live births) instead of increased to 178 in 2016 from baseline 170 in 2013.

* Serious attention is required for sluggish Contraceptive Prevalence Rate (percent) and birth delivery management.

 

 

Bangladesh’s journey towards the implementation of Sustainable Development Goals (SDGs) started by integrating SDGs into the 7th Five Year Plan (2016-2020). In this sense, Bangladesh can be called an early starter in the implementation of SDGs.

Compared to the Millennium Development Goals (MDGs), SDGs are much broader and all-encompassing development agenda. The public sector alone can not achieve its objectives. Considering this, the government of Bangladesh has adopted a ‘whole of society’ approach to implementation and attainment of the SDGs. The ‘Mapping of Ministries/Divisions by Targets in Implementation of SDGs Aligning with 7th FYP (2016-2020)’, a first formal document towards implementation of the SDGs, has been completed.

The government undertook a comprehensive study of data gap analysis for SDG monitoring. The study report titled ‘Data Gap Analysis for Sustainable Development Goals (SDGs): Bangladesh Perspective’, found that Bangladesh is facing a ‘considerable’ data gap for monitoring the SDGs as data of less than one-third of the indicators are readily available while two-thirds are either partially available or not available at all.

The General Economics Division (GED), the Planning Commission has also conducted a study on ‘SDG Financing Strategy: Bangladesh Perspective’ to assess resources need to implement SDGs and map out a financial strategy that would be required for successful implementation of the SDGs. The study provides a well-defined framework that outlines the goal and target-wise additional estimated cost at 2015-16 constant price. The 7th FYP extended growth scenario (7.0 percent plus) projects that the GDP growth rate would be at 9.0 percent by FY 2030.

The report estimates that an additional amount, over the current provision of investment related to SDGs by public sectors and external sources, would be US$ 928.48 billion at 2015-16 constant prices. This amount would be required for SDG implementation over the period of FY 2017-FY 2030, which is 19.75 percent of the accumulated GDP under the 7th FYP extended growth scenario. The annual average cost of SDGs would be US$ 66.32 billion (at constant prices) for this period.

A monitoring and evaluation framework for SDG implementation has also been finalised. This framework will have a web-based data repository system to facilitate data collection, analysis, progress tracking and reporting.

CHALLENGES AHEAD: Traditional sources of funding are insufficient to implement the SDGs. The government needs to find innovative ways of financing both from the public and the private sectors, development partners and ensure effective and efficient ways for utilisation. Moreover, the implementation of the 7th Plan requires a total investment of 34.4 percent of GDP by 2020, of which the private sector is expected to provide 26.6 percent of GDP.

Population momentum: Bangladesh’s population has been growing rapidly, going from just over 108 million in 1990 to 160 million in 2016. The population has been projected to grow to over 200 million by 2050. A large population together with high population growth requires a faster growth of agricultural production to ensure food and nutritional security. The growth rate of crop sector has been declining. The increase in agricultural production will inevitably put significant pressure on the environment and put pressure on resource availability for human development.

Unplanned urbanisation: Bangladesh has been experiencing a rapid increase in urban population. In 1990, 20 percent of the population lived in urban areas. This increased to 35 percent in 2016 and it is expected to overtake the share of rural population approximately in 2040. The rapid migration to urban areas and the inadequate infrastructure and access to open space to meet the growing demand are serious problems for the country.

Natural disasters and climate change: Bangladesh experiences frequent natural disasters. These can lead to deaths, damage to infrastructure and economic assets, and have a negative impact on the livelihood of people, particularly the ones living in poverty. Bangladesh is considered one of the most climate-vulnerable countries, the 5th of the most hazard-prone countries of the world.

Utilisation of resources: Availability of resources does not necessarily guarantee success in SDGs. Efficient and effective use of resources can be more instrumental than just having adequate resources. In this connection, it is important to assess what resources are needed, how resources are used and for whom the resources should be used.

Skill development and quality education: Around 13 million 15-29 aged young population is not in education, employment, and training, according to Labour Force Survey (LFS) 2015-16, which suggests that a large number of the young population remains unutilised. If they can be trained up and provided with education and employment, the scenario will be totally different. This will have a long-term consequence in per capita income, growth, poverty, and health outcome. Further, improving quality of education in recent times poses a big concern.

Competitiveness: In spite of all the above challenges, Bangladesh for the first time was placed in the top 100 (99 out of 137 countries) in 2017 in the World Economic Forum’s Global Competitiveness Report. But corruption still remains the major obstacle to doing business in the country. Bangladesh has to keep up the momentum of on-going reforms to make smoother business climate reducing transaction cost substantially. The realisation of One-stop Service Act-2017 will be a landmark step in attracting investment from abroad.

Governance challenges: Bangladesh has made notable progress in governance indicators. There are, however, scopes for much improvement. The governance issue is particularly critical in the use of public resources, the service delivery of institutions, transports, law enforcement, judiciary, land administration, tax, and customs, as they are deemed corrupt service-providers in Bangladesh. Digitalisation can be an effective tool to address these governance challenges.

Taming inequality and regional disparity: The declining share of bottom 5 percent income (the share of national income was 0.78 percent in 2010 and 0.23 percent in 2016) and increasing share of top 5 percent income means that unless inequality issues are rightly addressed, the country will have to face bitter experience of social unrest, marginalisation to a greater degree in the forthcoming days. Further, poverty is severely intense in some districts and the disparity is widespread. Kurigram has a population with 70.8 percent under the upper poverty line, followed by Dinajpur with 64.3 percent and Bandarban with 63.2 percent respectively while the incidence of poverty in Narayanganj is just 2.6 percent. A national average of below poverty is 22.37 per cent in 2017 as projected in the 7th FYP.

WAY FORWARD: Bangladesh witnessed that investment in girls’ education, immunisation, primary education, family planning and basic health services in the 1980s and 1990s yielded positive outcome recognised in the MDG era. The government has to continue its effort in human development particularly in basic health services, ensure quality education; training and skill development as the optimal goal of development of creating a knowledge-based society.

Bangladesh has to pay attention to overcoming infrastructure, transport and communication gaps to harness growth and deliver what an upper middle-income country looks like. Fast-track projects are such kind of efforts which deserve to be continued.

The next big concern of Bangladesh will be to ensure quality education. The Labour Force Survey (LFS) 2015-16 suggests unemployment rate is the highest for those with tertiary education, which is staggeringly 9.0 per cent. We have very low budgetary support for research that is well below 1.0 percent of GDP

It is undeniable that the country saw a rise in female participation in the labour force over the last decade; yet the participation rate is just 36 percent, well below the global average of 49 percent.

DIVERSIFICATION OF EXPORT: The export basket of Bangladesh is concentrated to a few number of items, which should draw the substantial attention of the policymakers. The government has been providing incentives to infant industries over a long period. The business community must understand that incentives from the government cannot be for good. They also have to look for improving their own competitiveness.

There is a growing evidence of partnership that can propel shared prosperity. Apart from benefiting from regional building blocks, the government must continue to seek G2G initiatives from a new destination. The G2G initiative is likely to gear up establishing targeted economic zones. The Policy for Implementing PPP Projects through Government to Government (G2G) Partnership, 2017 is an on-time effort made by the government. The government will need to promote Business-to-Business Initiative in terms of manpower recruits.

In conclusion, the implementation of the 7th Plan, SDGs and the Bangladesh Delta Plan 2100, in larger part will rely on a combination of three factors, namely resource mobilisation, improving governance and forging cooperation among all parties. The resource flow should reflect the effort of the government, commitment of development partners and the responsibility of the private sector. Any deviation from this combination might jeopardise unlocking of the development potential of Bangladesh, strategised succinctly in the 7th Plan documents.

Prof. Shamsul Alam is Senior Secretary, General Economics Division, Planning Commission. The article is adapted from the paper he presented on Wednesday at the Keynote Session of the January 17-18 Bangladesh Development Forum. The second part of the article will be published on Saturday.

sabau47@yahoo.com

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