Poverty doubles to 42%; 28.5% Bangladeshis extremely poor: survey

Published 24 Jan,2021 via The Financial Express - Upper poverty rate in Bangladesh almost doubled to 42 per cent in December 2020 from 21.6 per cent in 2018 for Covid-19, according to a latest household survey.

Lower or extreme poverty rate also increased in the meantime from 9.4 per cent in 2018 to 28.5 per cent in 2020, it showed.

The survey, conducted by the South Asian Network on Economic Modeling (SANEM), was published on Saturday.

Following the start of the pandemic in late March 2020, average per-capita spending in extreme poor households decreased by 45 per cent in 2020.

Such expenditure in non-poor and non-vulnerable families increased by 6.0 per cent.

The findings were unveiled at a webinar titled 'Covid-19 Fallout on Poverty and Livelihoods in Bangladesh: Findings from SANEM's Nationwide Survey (November-December 2020)' hosted by SANEM.

Prof Dr MM Akash, chairman of economics department at Dhaka University, Centre for Policy Dialogue executive director Dr Fahmida Khatun and former World Bank economist Dr Zahid Hussain spoke as panellists.

SANEM executive director Dr Selim Raihan made a keynote presentation at the programme.

He said the survey analysed the pandemic's impact on income, expenditure, employment, education, health and social safety-net coverage of the respondents.

Citing that the poverty rate has increased, Dr Raihan said the upper poverty rates in rural and urban areas were 45.3 per cent and 35.4 per cent respectively.

Besides, the lower poverty rate was 33.2 per cent in rural areas and 19 per cent in urban areas, he added.

Dr Raihan said poverty rates-both upper and lower-increased most in Mymensingh, Rajshahi and Rangpur divisions than other divisions.

According to the survey, average per-capita expenditure in extreme poor households decreased by 45 per cent to Tk 1,731 in 2020 from Tk 3,178 in 2018.

However, such expenditure in non-poor and non-vulnerable families increased by 6.0 per cent from Tk 4,753 to Tk 5,027.

Revealing findings on the job market, Dr Raihan said at least 8.6-per cent respondents lost work during the pandemic and could not find a new one to date.

Income of 55.9 per cent decreased during the period despite having jobs and that of 17.3 per cent remains unchanged.

Dr Raihan, also an economics professor at Dhaka University, said despite a record remittance inflow in the past six months, the respondents made a mixed bag.

Around 82.1-per cent households claimed they received less remittance from abroad and 64 per cent received less remittance from within the country compared to what they received before Covid-19.

"A possible explanation for this paradox is that a substantial amount of remittance was received through informal channels prior to the pandemic and since these channels had been blocked, households received less money compared to before."

About record remittance and its impact on micro level, Dr Hussain said most remittances came from countries like the US, the UK, Singapore and Saudi Arabia, not from Middle-Eastern countries.

Citing a collapse in hundi market, he said expatriates in Middle-Eastern countries used to send money via hundi. As such channels were blocked, many now remit through formal platforms.

"Conversion of remittance transfer from informal to formal channels has increased dollar's liquidity in the local foreign-currency market which helped lower interest rates and enhanced the banking sector's lending ability."

Dr Akash said there remains a question as to whether the jump in poverty rates and backward mobility induced by Covid-19 is temporary or long-lasting.

"To understand whether the crisis will persist, it's important to figure out the key areas which have been most negatively impacted and whether it's possible to replenish the economic losses through short-term initiatives."

On the paradox in remittance earnings, he provided three possible explanations: the micro-macro mismatch in remittance is either for a hundi market collapse, the festival effect or repatriation of workers with long-term savings.

Ms Khatun said the survey reaffirms the reality that the pandemic has caused depletion in income and savings and loss in employment opportunities for a significant proportion of the population.

"It can be expected that much of the milestones in socioeconomic development and poverty alleviation accomplished over the years are at risk of reversal due to Covid-19 crisis," she stated.

Pointing to accelerated technological integration in industries during the pandemic, Ms Khatun said technology may replace many jobs in the coming days, especially low-skilled ones, to further create risk in employment generation initiatives.

According to the survey, households adopted strategies to cope with income loss during the pandemic: 48.72 per cent resorted to borrowing, 32.4 per cent relied on savings, 27.33 per cent cut cost on non-food items, and 27.02 per cent changed their dietary patterns.

Again, 16.67-per cent households resorted to donations from friends and relatives.

To mitigate virus impact on different sectors, SANEM suggested addressing Covid-19 crisis, increasing safety-net coverage like direct cash transfer to poor people, price stability, fighting corruption and job creation.

SANEM, in collaboration with the general economic division under the Planning Commission, conducted a nationwide survey in 2018 covering 10,500 households.

For the survey, SANEM approached the same set of respondents for telephone interviews with 5,577 households from all eight divisions and 64 districts.

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