The papers presented each year at the BIDS Almanac, a flagship event and publication of the Bangladesh Institute of Development Studies, provide arguably the most comprehensive overview of the most pressing issues facing the country as it relates to poverty reduction, which despite all the progres we have made remains the number one priority facing any government and the public at large. The 2023 edition was held this past week, and as is the case every year, it came out with some startling new insights, some of which were completely new, while others served to provide the meat of empirical research to suspicions doing the rounds from before.
Possibly the most interesting and headline-grabbing finding revealed by BIDS this year was that income inequality between the rich and poor is increasing - that may not sound particularly novel to some, but it was interesting to learn just how much that has been exacerbated by the COVID-19 pandemic, from which we like to believe Bangladesh escaped mostly unscathed, just looking at the number of deaths or affected by disease. But around the world, research is emerging to reflect some of the long-term effects on lives and economies, and Bangladesh is no different in this regard.
BIDS research showed the rich became richer in Bangladesh as their income increased by 64 percent during the pandemic period, i.e. between 2019 and 2022. The same study showed the income of higher middle-income groups increased by 25.5 percent, while it was 8.8 percent for lower middle-income groups and 10.2 percent for the poor and 16 percent for the ultra-poor. Yet the more staggering statistic was perhaps that 51 percent of the people living below the poverty line in cities, meaning urban poverty, are 'new poor', which is to say they were pushed below the poverty line as a result of the pandemic. Director general of BIDS, Dr Binayak Sen, disclosed this information himself during his opening speech of the conference. Since social security measures tend to be more limited in the cities, more attention needs to be paid in this area, said the BIDS director general.
It was also learned that in the post-Covid period, entrepreneurship has played a huge role in reducing poverty. Those who had some savings, used it for self-employment. Furthermore, integration of digital technologies, especially mobile financial services (MFS), have helped reduce poverty. BIDS conducted a survey on 2,046 households for this study. The report said that in 2019, before the Covid-19 pandemic, the rate of self-employment among the poor population was 33.6 percent. In 2022, post-Covid, the rate increased to 38.6 percent.
The rate of MFS use meanwhile, doubled. Although this has not translated into a similar increase in the number of bank accounts, we may still view this as an improvement when it comes to the issue of financial inclusion, one of the overarching aims of economic policy under the present government.
The Almanac also included an interesting study on the impact of the war in Ukraine on the Bangladesh economy. The researchers analysed several issues, including petroleum, fertiliser, food price hikes and exchange rate devaluation in Bangladesh brought about by the war, to conclude that poor families mostly dependent on agriculture in the country's rural areas are the worst-affected. The economic crisis precipitated by the war has pushed an estimated 3 million people in Bangladesh into poverty, while the national welfare has been reduced by 2 percent.
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