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08 Apr 2021 20:37:57

COVID wreaks financial havoc on 79pc households

COVID wreaks financial havoc on 79pc households
A file photo shows people buying food items in subsidized rate from a truck run by Trading Corporation of Bangladesh. -- The Business Post photo

Ibrahim Hossain Ovi

Seventy-nine per cent of households across Bangladesh faced financial hardship for the COVID-19 pandemic and 78.5 per cent of them were yet to recover from it, finds a survey.

The survey “Marginalised Communities in Bangladesh Dealing with Pandemic Fallouts Findings from a Household Survey’’ conducted by the Citizen’s Platform for SDGs, Bangladesh revealed the findings through a virtual briefing on Thursday.

The survey was conducted in February 2021 on 1,600 households across Bangladesh and covered 10 marginalised groups.

Marginalised groups experienced, on average, a 15.8 per cent drop in income while their expenditure declined by 8.1 per cent in February 2021 compared to March 2020.

Meanwhile, about 78.8 per cent of these households faced financial hardship due to the pandemic and 78.5 per cent of them did not recover.

They think it would take at least 13 months to recover. On the other hand, 85.9 per cent MSME is yet to recover and it would take at least 13 months to recover.

As per the survey findings, 80.6 per cent of people cut down food expenses to mitigate the impact of COVID-19 crisis, while 64.5 per cent cut down non-food expenses, 60.8 per cent took loan, 29.4 per cent took financial support from private and non-government sources and 26.4 per cent withdrew savings and, 23.5 per cent utilise government support

As a coping strategy to tackle the financial crisis, 20.8 per cent of the surveyed household people withdrew savings. Of them, 83.5 per cent withdrew from cash deposits, 15.6 20.8 per cent bank deposits and 9.3 per cent NGO deposits.
About 48 per cent of people took loans, of which 56 per cent from NGOs, 40.7 per cent from peer groups and 24.2 per cent from money lenders.

As per the survey report, 75 per cent of people still in need of financial and other support and 91.1 per cent of them need it for Micro and Small and Medium Enterprises.

Meanwhile, over 45 per cent of people did not receive any kind of support to tackle the financial hardship caused by the pandemic.

However, 37.3 per cent received government support, 21.9 per cent from NGOs, 12 per cent from family, friends and neighbours and 8.6 per cent from charities.

“The government should fully utilise the policy instruments at its disposal to support the distressed marginalised groups,” Estiaque Bari, senior analyst of the study team, said in his keynote presentation.

He suggested cash transfer, food assistance, credit with easy terms and targeted public works programmes to support the distressed people.

Economic packages need to be coupled with health-related and social cohesion promoting interventions, while the government needs to partner with the NGOs in tracing and delivering support inputs to the “left behind" groups, he added.

The fresh surge of COVID-19 and subsequent restrictions as policy response are likely to pose new challenges for recovery. These groups will need support to meet their recurrent expenditures, loan repayment and business restart investment, said Estiaque.

Call for Social Solidarity Fund

As the funds provided to the poor people were not enough, the Citizen's Platform SDGs, Bangladesh, a platform to contribute to the delivery of the SDGs, recommended forming a Social Solidarity Fund to support the distressed marginalised groups hit hard by the COVID-19 pandemic.

“The fund would be contributed by the government fiscal incentives, private donations, corporate organisation, individuals based on public-private partnership and with real-time digital reporting,” said convenor of the platform Debapriya Bhattacharya, also Distinguished Fellow of CPD.

“The impact of the pandemic on marginalised people is greater than the impact at the national level. COVID-19 influx came in a multidimensional manner. It impacts not only employment but also income and savings. Long term impact on malnutrition, violence and school dropout is also observed among the marginalised groups,’’ he said.

A mid-term national plan connecting local government, local administration and NGOs would help to remedy the situation, said the economist.

“As there is a possibility of falling in debt for the ongoing second wave of the COVID-19, the government should protect them from the debt trap through fiscal policy support,” said Mostafizur Rahman, another distinguished fellow at CPD.

He also suggested a long-term plan in the upcoming budget for the financial and social recovery of the people.