Social Protection in Bangladesh: Experience and barriers to expansion Presentation by Dr. Muhammad G. Sarwar Civil Service College, Dhaka 27 June 2011

Contents of Presentation Social Protection: historical context Social Protection: Bangladesh Context Social Protection in Bangladesh: graduation process Social Protection Policies and Strategies in Bangladesh Social Protection Programs Limitations of Social Protection Policies and programs Barriers to Extension of Social Protection in Bangladesh Affordability of Social Protection: concluding remarks

Social Protection: historical context The idea of Social protection came to highlight in western rich countries after the Great depression in 1930s and the Second World War. In developing countries, social protection has been evolved as a post-colonial policy measure. Universal Human right Article 22:‘Everyone as a member of society, has the right to social security…..’ Article 25: ‘… the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control’.

Social Protection Defined ILO defines social protection broadly covering all safeguards and guarantees against loss of income due to illness, old age, unemployment, or other hardship (ILO Website). World Bank defines social protection narrowly as public interventions oriented to human capital and social risk management to help individuals, households and communities better manage risk, and provide support to incapacitated poor (World Bank 1999, 2000). Bangladesh Government social protection policy is close to World Bank definition of social protection.

Social Protection: Bangladesh Context Pervasive poverty in early 1970s immediately after independence (around 75% of its population was below poverty line) Social protection issues came out as a prominent agenda while framing the state constitution of Bangladesh Bangladesh Constitution, Part II, Articles 15: ‘It shall be a fundamental responsibility of the State to attain, through planned economic growth, a constant increase of productive forces and a steady improvement in the material and cultural standard of living of the people, with a view to securing its citizens -

Social Protection: Bangladesh Context (contd.) (a) the provision of the basic necessities of life, including food, clothing, shelter, education and medical care; (b) the right to work, that is the right to guaranteed employment at a reasonable wage having regard to the quantity and quality of work; © the right to reasonable rest, recreation and leisure; and (d) the right to social security, that is to say, to public assistance in cases of undeserved want arising from unemployment, illness or disablement, or widowhood, or orphan hood or in old age, or in other such cases’.

Social Protection in Bangladesh: graduation process Early 1970s: the state was not in a position to provide social protection to its citizen due to the collapse of macro- economic management. NGOs like BRAC, Gonashasta, etc. grew up with assistance from external sources to delivery some kind of social protection to the hard core poor. Bangladesh economy deteriorated further by 1973 due to Arab-Israel war that led to global oil price rise that coincided with the devastating flood in 1973 causing famine in Bangladesh in Social protection intervention like Grameen Bank’s micro- credit and ‘Food for Work’ programme was introduced by the Government in that backdrop to protect the hungry people.

Social Protection in Bangladesh: graduation process (contd.) Bangladesh experienced devastating floods again in 1988 and But, due to inadequate rural infrastructure it faced hurdles in emergency delivery. Need for emergency delivery paved the way for formation of LGED (Local Government and Engineering Department) in 1989 to expand the network of rural road infrastructure. That contributed immensely in rural development and poverty reduction during the 1990’s – by facilitating service delivery in remote areas. After the 1998 flood in Bangladesh another social protection intervention VGF/VGD (Vulnerable Group Feeding/ Vulnerable Group Development) were introduced by the Government. In 2007/2008, the world economy experienced oil and food price shocks that led to global financial crisis. Food inflation shoot up more then 40 percent in Bangladesh in 2008 resulting increasing hunger and poverty. To tackle the deteriorating hunger and poverty situation Care Taker Government introduced the 100 days guaranteed employment program.

Social Protection Policies and Strategies in Bangladesh Social protection policies, strategies and programs in Bangladesh are centered on poverty reduction policies, strategies and programs (NSAPR II, ), and Sixth Five Year Plan ( ). Social Protection Policies and Strategies and Programs are implemented through ADPs 9

Social Protection Policies and Strategies in Bangladesh (contd.) Social Protection Focus Areas: – social safety net programmes; – food security; – disaster management; – micro-credit and – rural non-farm activities.

Social Safety Net Programs Social safety net is defined operationally to include all kinds of cash and kind transfers to the poor, all welfare activities, unemployment benefits for retrenched workers, subsidized health care, shelters for the homeless, and pension benefits, which prevent individuals from falling into poverty.

Social Safety Net Programs (contd.) Major goals of SSNPs are: – safety net interventions for the protection of poor people and the prevention of chronic poverty as well as transient poverty; – encourage NGOs, CBOs and the private sector to augment their role and contributions to expand the social safety net; and – increase coverage through increased budgetary allocation each year.

Food Security Food Security policies focus on: – ensure adequate and stable supply of safe and nutritious food; – enhance the purchasing power of the people for increased access to food; and – ensure adequate nutrition for all, especially women, children and persons with disabilities.

Food Security (contd.) Food Security programs include: – Open Market Sales (OMS); – FFW programme; – VGD programme; – VGF programme; – Test Relief (TR); – Gratuitous Relief (GR); – Food aid to CHT area people; – Food subsidy; and – Employment in char areas.

Disaster Management Disaster Management (DM) is prevention and protection of lives and properties from any kind of hazards with priority given to disaster risk management along with mitigation. Strategies for Disaster Management will focus on: – collective action of public sector, NGOs and community organizations to reduce the risk of disasters in the country, – increase the mitigation capacity of the community and NGOs, – promoting optimum coordination and best utilization of resources along with ensuring community participation, and – undertaking measures for dealing with disasters such as Tsunami and earthquake.

Disaster Management (contd.) Disaster Management will include: – improving the cyclone signal system to make it clear to common people and improving flood forecasting to be able to make forecasts 6-7 days ahead instead of 3-4 days as currently made; – strengthening coordination among the government agencies, NGOs and civil society institutions and coordination and management at grassroots level; – creation of a disaster relief fund to support victims of natural disasters; (iv) developing insurance system to cover disaster-related losses of property; – avoiding overlap in relief distribution and rehabilitation initiatives, – providing adequate health facilities for the disaster victims, quick transportation of the affected people and instant treatment of the injured people, and – improving capacity for adequate and quick response to emerging and potential disaster like sea-level rise, bird flu, etc.

Microcredit Challenges with regard to microcredit are: – prevalence of high interest rates, – vicious cycle of microcredit - the poor are borrowing from one microcredit organization to repay another; – microcredit programs have not been very successful in including the hardcore poor; – rate of graduation to above the poverty line among the microcredit borrowers is low, indicating persistent dependency on microcredit; – profitability of micro enterprises is small and often is not sustainable on a long-term basis because of saturation of markets for products that are traditionally produced by microcredit borrowers.

Rural Non-Farm Activities Objective for rural non-farm activities (RNFA) is to foster effective poverty reduction activities for women in particular. RNFA strategies focus on two broad areas: – improving the rural investment climate; and – supporting institutional framework.

Social Protection Programs/Projects Social Protection programs are being financed from both revenue and development budget (Annual Development Program). These social protection programs are grouped as: – Cash transfer, – Food Assistance, and – Social Empowerment programmes.

Social Protection Programs/Projects (contd.) 70 + programs / projects are being implemented by different ministries viz. – Ministry of Food and Disaster Management, – Ministry of Social Welfare, – Ministry of Women and Children Affairs, – Ministry of Agriculture, – Ministry of Fisheries and Livestock, – Ministry of Finance, – Ministry of Rural Development and Cooperatives, – Ministry of Primary and Mass Education, – Ministry of Education, – Ministry of Health and Family Planning, – Ministry of Environment and Forest, – Ministry of Youth and Sports, – Liberation War Affairs Ministry, – Chittagong Hill Tracts Affairs Ministry, and – Ministry of Commerce.

Cash Transfer Programs, FY 2010 Sl. Programs (Ministry) Coverage ml person/m Budget ml Taka 1Old age allowance (MoSW) Allowance for widowed, deserted & destitute Women (MoWCA) Allowance for financially insolvent disabled (MoSW) Maternity allowance for poor lactating mothers (MoWCA) Honorarium for insolvent & injured freedom fighters (MoFWA) Grants for residents in Govt. orphanages & other institutions ( MoSW) Grants for students in non-govt. orphanages (MoSW) General Relief Activities (MoFDM) Block allocation for disaster management1000.0

Cash Transfer Programs, FY 2010 (contd.) Sl. Programs (Ministry) Coverage ml person/m Budget ml Taka 10Non-Bengali rehabilitation program (MoFDM) Allowance for distressed cultural personalities (MoCA) Allowance for CHT beneficiaries Pension for retired govt. employees Stipend for disabled students & Grants for school for disables (MoSW) Housing Support (MoFDM) Agricultural rehabilitation (MoA)

Food Assistance programs, FY 2010 Sl. Programs (Ministry) Coverage ml person/m Budget ml Taka 17Subsidy on OMS (MoFDM) VGD (Vulnerable Group Development) Test Relief Food (MoFDM) Gratuitous Relief –Food (MoFDM) Food Assistance for CHT Food for Work (FfW) VGF (Vulnerable Group Feeding)

Micro-Credit Programs Sl. Programs (Ministry) Coverage ml person/m Budget ml Taka 24Fund for FKSF Social Development Foundation NGO Foundation Self-employment credit for Freedom Fighters

Social Empowerment program through ADP, FY 2010 Sl. Programs (Ministry) Coverage ml person/m Budget ml Taka 28Stipend for primary students School feeding program Stipend for drop-out students Char livelihood Housing Stipend for secondary & higher secondary students Maternal health voucher scheme (MoHFW) National Nutrition Program

Social Empowerment program through ADP, FY 2010 (contd.) Sl. Programs (Ministry) Coverage ml person/m Budget ml Taka 36Protection of Children at risk Empowerment of the poor Basic education for urban working children Participatory Rural Development Rural employment for creating public assets Rehabilitation for climate refugees

Limitations of Social Protection Policies and Programs Low coverage: Only fractions (less then 10 percent of the poor) of those who need social protection are covered and reach less then 5 million people (WB 2006). Inappropriate targeting: overlapping and inclusion of ineligible persons in Safety Net Program is common Leakage: leakage is more prevalent in in-kind programs than in cash programs

Barriers to Extension of Social Protection in Bangladesh Bangladesh needs a comprehensive universal social protection for its hard core poor citizens who are the bottom 20 percent of its population. Major barriers to prepare a universal social protection in Bangladesh are: – negative elite perception about Universal Minimum Social Protection for the hard core poor, especially among the policy makers in the Finance Ministry; and – limited capacity of the fiscal institutions in generating required resources and to administer Social Protection programs.

Affordability of Social Protection: concluding remarks A minimum universal social protection would generate faster economic growth and strengthen market economy by expanding domestic markets through injecting cash in the local economy Bangladesh economy has graduated to a stage when it can afford a minimum social protection for its hard core poor. Bangladesh currently spends around 4.5 percent of its GDP for social protection programs (2.5 percent of its GDP on Social Safety Net Programs, and another around 2.0 percent of GDP for primary health care and education).

Affordability of Social Protection: concluding remarks (contd.) If Bangladesh could increase social protection spending to another 1.5 percent of GDP, it can provide universal minimum social protection to its hard core poor. This additional spending for social protection would be possible by reprioritizing existing public spending, fiscal effort to generate additional domestic resources and with some additional assistance from the development partners.

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