The recent report from the World Bank is both devastating and unsurprising for analysts and experts who are well-versed in the situation in Bangladesh. Despite progress in reducing poverty in Bangladesh, about one in five non-poor households, or 20 per cent of Bangladeshi non-poor, is at risk of falling below the poverty line, according to a World Bank study [Daily Star (Bangladesh), December 8, 2024). So, why do we think nothing is surprising about the report?
Economists, development practitioners, and social scientists, both locally and internationally, along with the general population with limited purchasing power, were already aware of the ongoing issues. They understood that while the wealthy were becoming increasingly affluent, the poor were struggling to keep up, especially under the fifteen-year-long corrupt and unaccountable Hasina regime, which ended on August 5th.
The issue of bad debts in Bangladeshi banks has reached several hundred billion US dollars. The country owes nearly $100 billion to foreign donors and banks from the East and West. The Hasina Administration’s infrastructure development projects from 2009 to 2024 have been significantly overpriced. Given these circumstances, it’s unsurprising that Bangladesh is on the brink of total bankruptcy. The country faces a trade deficit with most of its international trading partners, and its annual budget relies on the expectation of receiving more loans from donor agencies. This reliance on foreign loans to balance the budget pushes more individuals once classified as non-poor into poverty.
Last but not least, loan defaulters are either super-rich or cronies of ruling party officials. The judiciary treats them with impunity. Since Bangladesh’s judiciary, police, and bureaucrats are all corrupt from top to bottom, few loan defaulters get punished. Impunity for the most corrupt, rich, and powerful will inevitably result in mass immiseration of people who will collectively bear the burden of stolen wealth by the rich and powerful. Consequently, a substantial portion of the population lives in poverty, which will likely increase.
The World Bank report likely came as a rude shock to domestic and international observers who believe Bangladesh has escaped the vicious cycle of poverty. Over the past forty years, the country has undergone significant societal and economic transformations. Notably, it has become a major apparel exporter, second only to China, and has emerged as one of the largest recipients of remittances globally. Bangladesh receives over $20 billion annually from over ten million unskilled workers in the Middle East, North America, Europe, and Southeast Asia. Donor agencies, including the World Bank, IMF, and ADB, as well as governments in developed countries and development practitioners, economists, philanthropists, politicians, and intellectuals from North America, Europe, Japan, and South Korea, have been actively promoting both local and international NGOs that focus on the overall development of the Third World, including Bangladesh. These groups have developed positive expectations regarding Bangladeshi NGOs like Grameen Bank, BRAC, and Proshika, particularly for their efforts in poverty alleviation and eradication through microcredit initiatives and various programmes to empower the country’s poor population, especially women. In contrast, if someone throws a spanner into the robust discourse of “NGOs eradicate poverty”, it’s a different story.
Donors have successfully convinced governments, civil societies, and international organizations such as the UN and the Nobel Foundation of the effectiveness of microcredit in alleviating and ultimately eradicating absolute poverty worldwide. This recognition culminated in the Nobel Foundation awarding Muhammad Yunus and Grameen Bank the Nobel Peace Prize in 2006. Meanwhile, Muhammad Yunus has advocated for decades that, thanks to his microcredit operations—often called “microfinance”—Bangladesh would be free from poverty by 2030. This ambitious goal is only five years away. Yunus confidently challenged sceptics, promising that if his target was not met by 2030, he would reward anyone who proved him wrong with a million US dollars. I have always been sceptical of this claim, and my doubts have only deepened with the recent observation from the World Bank. The report paints a dire picture for poverty-stricken Bangladesh, indicating that one in five Bangladeshi citizens who are currently not poor risks falling into poverty in the coming years.
Is there a way for countries like Bangladesh to escape the vicious cycle of poverty? Can they anticipate the day when poverty will be a thing of the past, as promised by Yunus, who envisions a world where poverty exists only in museums? If such a scenario is unrealistic, what steps should countries like Bangladesh take to alleviate poverty—recognizing that complete eradication may be an unattainable ideal—in the coming years? Should these countries focus on implementing good governance and rapid industrialization, similar to the approaches taken by Japan, South Korea, China, and India, rather than relying heavily on NGOs and their microcredit operations for substantial poverty alleviation?
Bangladesh faces a persistent issue of poor governance, which has resulted in widespread corruption across both public and private sectors. This situation has been exacerbated by ineffective planning and an education system primarily producing unproductive graduates since the country gained independence in 1971. These factors contribute to the ongoing problem of endemic and increasing poverty. This downward trend began in the 1980s with the initiation of various development and poverty-alleviation programs by NGOs, which were initially viewed as “successful” experiments.
We believe influential NGOs can undermine, weaken, and ultimately render government authority irrelevant and powerless. Ironically, countries with strong government institutions in the developed world have often been the leading promoters of NGOs, particularly those claiming to promote human rights and female empowerment. This includes organizations like Grameen Bank, BRAC, and PROSHIKA, which offer microcredit loans at exorbitantly high interest rates.
After more than four decades of NGO operations in Bangladesh, the consequences have been devastating. Contrary to their claims, microcredit does not reach the poorest among the poor. Instead, it has contributed to the impoverishment of many borrowers, trapping them in a vicious cycle of usurious interest rates that can be as high as 28 per cent. Let’s examine the core argument: only accountable and transparent governments can drive development and growth across all sectors of society in any country. Postcolonial nations like Bangladesh require accountable governance rather than unaccountable NGOs driven by foreign donors, often leading to corruption. These NGOs have been known to enrich and empower their operators and foreign backers rather than genuinely benefit the communities they serve.
We contend that the World Bank’s alert regarding the potential risk of 20 per cent of Bangladesh’s non-poor population descending into poverty is mainly attributable to the pervasive influence of unaccountable non-governmental organizations (NGOs), both large and small, within the political sphere. Additionally, other factors contribute to the looming threat of poverty, affecting this demographic shortly. We believe that the systematic neglect of modern education leads to a shortage of skilled entrepreneurs and employable graduates. This, combined with an unaccountable and corrupt autocracy marked by an excessively developed bureaucracy and military, a corrupt judiciary, and flawed financial institutions, hinders good governance, growth, and development, ultimately contributing to poverty.
Furthermore, when politicians, judges, police, bureaucrats, military officers, and even teachers operate more like contractors than as committed state and government members, the nation is destined to stagnate, leaving the general population poor and underdeveloped. Bangladesh falls into the states that possess all or most of the above attributes.