Safety net shift may cut poverty by 24%: WB

Reallocating existing transfers under the social protection programmes to the poorest could reduce poverty from 36 per cent to 12 per cent in Bangladesh, a new World Bank report has said.

Published during a webinar on Thursday, the report titled “Bangladesh Social Protection Public Expenditure Review” said Bangladesh’s social protection programmes are mostly focused in rural areas.

It said about 11 per cent of people in urban areas are covered by social protection while 19 per cent of urban population is poor. Almost one in five of the urban population is living in poverty and half of the households are at risk of falling into poverty, it said.

On the other hand, social protection coverage in rural areas is higher than the poverty rate, with programmes reaching 36 per cent of people while 26 per cent lives in poverty. Citing the Multiple Indicator Cluster Survey (MICS) 2019, the report said 49 per cent to 66 per cent of the beneficiaries of allowance and food support programmes are not poor.

“There is a need for rebalancing geographic allocations between rural and urban areas. Using a social registry, such as the National Household Database, can improve targeting of both programmes and households at a reduced cost,” said a press release issued by the World Bank.

“Over the last decades, Bangladesh expanded its coverage of social protection programmes that now reach three in every 10 households in the country,” said Dandan Chen, World Bank operations manager for Bangladesh and Bhutan.

She said the Covid-19 pandemic had accentuated the need for a more robust, efficient, and adaptive social protection system.

Going forward, well-targeted and less fragmented social protection programmes that consider the demographic change, unplanned urbanisation, labour market vulnerability, and frequent shocks will help the country continue with its success of poverty reduction, she added.

The World Bank said the pace of poverty reduction had slowed down and the country could further reduce poverty by improving targeting of the social protection programmes.

Some programmes do not have vulnerability or economic criteria. For others, some beneficiaries do not meet the existing criteria because they are hard to verify or obsolete.

Some risk groups remain underserved, in particular there are gaps in programming for early years and for the economic inclusion of poor and vulnerable youth and adults. In every eight poor persons, one is a young child. Yet, the poor young children receive only 1.6 per cent of social protection expenditures.

“Investing in early childhood helps a child grow healthier and be more productive in adult life and thus breaks the cycle of poverty across generations,” said Aline Coudouel, World Bank lead economist and a co-author of the report.

She said Bangladesh had taken innovative programmes, reflecting the life-cycle approach.

As patterns of risk change in different phases of life, the life-cycle approach needs to encompass support from pregnant mothers to old age, persons with disabilities, as well as from households facing shocks to those in chronic poverty, she added.

In the fiscal year 2019-20, Bangladesh spent about 2.6 per cent of its GDP on social protection, which was in line with countries with similar income levels.

But most programmes only transferred cash and missed the opportunity to promote behavioural change.

Besides, multiple agencies implement numerous interventions, affecting coordination and efficiency. The Cabinet Committee on Social Protection plays a limited role.

Administrative steps limit the ability of administrators and implementers to engage with communities as well as implement and supervise programmes.

On average, it takes about two months to transfer funds of different social protection programmes from the treasury to beneficiaries, in part because of the multiplicity of steps.

Such delays can lead to substantial costs for the government. For example, lost interest can represent up to 2 per cent of the programme budget. Budgeting is largely top-down and mostly incremental.

The report recommended defining the criteria to identify households that are not poor in normal times but are vulnerable to shocks.

Other recommendations included cutting red tape whenever possible, using technology to pre-fill forms, training local staff having limited IT skills, and using union digital centres (UDCs) to digitise beneficiary data and strengthen the management information system.