Towards shock-responsive urban social protection in Bangladesh

In the next national budget, Bangladesh must prioritize urban social protection, expansion of open market systems and a shock-responsive urban social security system to address the climate crisis

May 08, 2022, 11:00 a.m.

Last modification: 08 May 2022, 20:16

Sarah Amena Khan. TBS Sketch


Sarah Amena Khan. TBS Sketch

Covid-19 has forced Bangladesh to take a long hard look at its urban poverty situation and the fragmented social welfare system that has let city dwellers down. While Bangladesh focused on addressing the impacts, especially in low-income urban communities, the measures were often temporary and difficult to administer. Now the challenges are mounting even as the economy recovers and the country embarks on a path to a post-Covid recovery phase.

Urban areas were already emerging as the new frontier of poverty when the crisis worsened due to the pandemic. And the ripple effects on unemployment, income and food insecurity have already been widely documented.

Among the main issues, headline inflation (point to point) notably increased to 6.22% in March 2022 from 5.47% a year ago. Non-food inflation has driven the general trend in recent months, with transport, clothing, furniture and furnishings seeing price increases. A spike in food inflation since February 2022 is now influencing the trend.

These increases are partly linked to more expensive imports of energy and essential goods driven by the Covid-induced spikes in global prices and transport costs. Domestic fuel, gas and transport price adjustments, as well as weak market surveillance of key commodity prices, have further aggravated the situation.

Global uncertainty due to the ongoing crisis between Ukraine and Russia, the resurgence of Covid in China as well as its zero-Covid policy and lockdown and other developments are also impacting global trade and chains. supply. This could further affect inflationary trends in Bangladesh. Overall, inflation is likely to continue to rise, according to the Bangladesh Bank.

As a result, low-income households – especially the poorest urban households – who have already borne the brunt of Covid-19, are likely to face further diminishing financial power. Lower middle income households may also face food insecurity. Given all this, Bangladesh cannot afford to lose sight of social protection (including urban social protection), especially in the upcoming national budget. Open Market Vending (OMS) programs in urban areas should be continued and expanded as part of ongoing government efforts.

Beyond these immediate concerns, Bangladesh needs to invest in a shock-responsive urban social protection system that can respond to the country’s climate crisis. Bangladesh has already experienced rapid urbanization in step with economic growth.

Urban areas are already emerging as the new frontier of poverty. Photo: Mumit M/TBS

Urban areas are already emerging as the new frontier of poverty.  Photo: Mumit M/TBS

Urban areas are already emerging as the new frontier of poverty. Photo: Mumit M/TBS

At the same time, more frequent and intense weather-related disasters are displacing rural populations to urban areas such as Dhaka. Studies estimate that one in seven people will likely be displaced by climate change by 2050. Additionally, major coastal cities such as Dhaka and Chattogram could also become less hospitable. According to a 2018 World Bank study on internal climate migration in South Asia, these cities are highly vulnerable to sea level rise, the effects of storm surges and heavy flooding. Covid-19 has already exposed the flaws in Bangladesh’s urban welfare system. This underscores why investments need to be made now that include cities beyond Dhaka and Chattogram.

Bangladesh already has the blueprint for transition to such a system – the long-term national social security strategy and action plan. This includes expanding social assistance coverage and introducing social insurance programs in urban areas. Some forms of social assistance programs for children, the elderly and people with disabilities are already being considered as part of ongoing reforms.

However, simply extending or duplicating rural welfare programs will not address the distinct vulnerabilities of people living in urban areas. They face higher living costs, multiple aspects of deprivation and more insecure employment opportunities.

Social protection reforms focusing on employment policies and social insurance are also key priorities alongside social safety nets, as highlighted in Bangladesh’s 8th Five-Year Plan. As noted earlier, the pandemic has disproportionately affected vulnerable urban households. Adults working in these households are likely to be self-employed, informally employed, or in unprotected, low-income formal sectors. They need help to protect their incomes and jobs, especially in crisis contexts. Here, the gender needs of women require serious attention.

Taking note, Bangladesh plans to introduce social insurance schemes (e.g. unemployment insurance schemes) for formal and informal workers under a pilot national social insurance scheme under the national social security strategy. However, the benefits are more likely to flow to formally employed workers who can afford to help invest in their own security compared to those working in the informal economy.

Given the new realities and drawing on international experience, Bangladesh can explore how to introduce and expand affordable social insurance schemes to all working adults, helping to reduce their insecurity. .

Here, partnerships will be key to designing and implementing such urban-specific and shock-responsive programs, especially during emergencies. Bangladesh can benefit from the partnerships established between the Local Government Division and development actors working on urban poverty. For example, UNDP’s Urban Poor Communities Livelihood Improvement Project (LIUPCP) is one of the country’s largest urban poverty reduction initiatives.

Similarly, the role of non-governmental organizations (NGOs) can be critical in piloting small-scale programs to better understand what works for vulnerable urban households. Partnerships with insurance industry players in Bangladesh will also be crucial moving forward.

Sarah Amena Khan is a development practitioner.

Warning: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.

Joel C. Hicks