Better Targeting of Social Protection Programs Can Significantly Reduce Poverty in Bangladesh
DHAKA, September 16, 2021 – Social protection programs remain at the heart of Bangladesh’s sustainable development policy and gradually benefit the poorest households. By improving the targeting of social protection programs, the country can further reduce poverty. Reallocating existing transfers to the poorest could reduce poverty from 36% to 12%, according to a new World Bank report released today.
The report titled ‘Review of Public Spending on Social Protection in Bangladesh‘ reflects Bangladesh’s continued investment in social protection and how it can improve its existing framework, including the planning, design, programming and implementation of various social protection programs and projects.
The report notes that social protection programs are mainly concentrated in rural areas. But, with nearly 1 in 5 of the urban population living in poverty and half of households at risk of falling into poverty, there is a need to rebalance geographic allocations between rural and urban areas. About 11 percent of the inhabitants of urban areas are covered by social protection while 19 percent of the urban population is poor. Coverage in rural areas exceeds the poverty rate, with programs reaching 36 percent of the population, while 26 percent live in poverty. Using a social registry, such as the National Household Database, can improve targeting of programs and households at reduced cost.
“Over the past decades, Bangladesh has extended its coverage of social protection programs which now reach three out of ten households in the country,” noted Dandan Chen, Director of World Bank Operations for Bangladesh and Bhutan. “The COVID-19 pandemic has heightened the need for a more robust, efficient and adaptive social protection system. In the future, well-targeted and less fragmented social protection programs that take into account demographic change, unplanned urbanization, vulnerable labor market and frequent shocks will help the country to continue its success in poverty reduction.
In FY20, Bangladesh spent around 2.6% of its GDP on social protection, which corresponds to countries with similar income levels. However, some at-risk groups remain underserved, in particular there are gaps in programs for early childhood and for the economic inclusion of poor and vulnerable youth and adults. For example, out of eight poor, one is a young child. Yet young poor children receive only 1.6 percent of social protection spending. Spending will be more efficient if allocations are aligned with the share of poor people across different categories, and with the different functions performed by programs.
“Investing in early childhood helps a child grow up healthier and be more productive into adulthood and thus break the cycle of poverty across generations. ” noted Aline Coudouel, Chief Economist of the World Bank and co-author of the report. “The country has adopted innovative programs, reflecting the life cycle approach. As risk patterns change in different phases of life, the life cycle approach should encompass supporting pregnant women in old age, people with disabilities, as well as households facing shocks. to those who live in chronic poverty. “
To improve the quality and efficiency of service delivery, government-to-person (G2P) services and mobile financial services need to be scaled up. It takes about two months to transfer the funds from the treasury to the recipient. G2P scheme can reduce processing time to 10 days.
This should also be combined with increased allocations for staff, training in capacity building, including digital literacy, and upgrading of equipment, which will facilitate improved program implementation at the local level.