Tackling Coronavirus Induced Poverty Escalation: Insights From Khaddo Bandhob Program in Bangladesh
This piece was co-authored with Dr. Shyamal Chowdhury, Associate Professor, School of Economics, University of Sydney and Dr. Shahidur Rashid, Director for South Asia, IFPRI. The article was also published on the IFPRI South Asia Blog.
To date, the coronavirus pandemic has infected about 3.5 million and killed about 250 thousand people worldwide. It has also changed how we live, interact, and work. While new infections and deaths are slowing down in Europe and North America, the pandemic is rapidly expanding to poorer countries of Asia and Africa. With health systems rapidly preparing for care management of those infected, several countries in South Asia have adopted the lockdown approach to curtail the spread of virus. Though this approach might appear to serve the best interest of countries in containing the spread of the virus in the long-term, several unintended consequences may unfold in the interim.
Lockdown and poverty
According to a new report released by the World Food Program (WFP), about 265 million people in low and middle-income countries will face starvation by the end of 2020 due to the coronavirus induced lockdowns. Bangladesh is not an exception. The nation is now confronted with a monumental challenge of saving lives and protecting livelihoods.
Prior to the pandemic, the country was faring exceptionally well. With a GDP growth rate of 7.5-8%, it was one of the fastest growing economies in the world. High economic growth resulted in improvement in many welfare indicators, including rapid reduction in poverty. According to the Household Income and Expenditure Survey (HIES), the rate of extreme poverty declined from 17.6% in 2010 to 12.9% in 2016 (or 22.1 million people) in the country. However, a recent BRAC study that poverty has gone up by as much as 60% due to pandemic-induced financial distress, implying that a staggering 13 million additional Bangladeshis have slipped into extreme poverty since the lockdown in late March. These are indeed disturbing numbers.
The Khaddo Bandob program
But the good news is that the country has several existing, well-executed food-based safety-net programs for the rural poor. The largest program — called Khaddo Bandob (food friendly) — was launched in September 2016, targeting five million ultra-poor rural households. The objective of this program has been to help achieve Sustainable Development Goal (SDG)-1 (no poverty) and SDG-2 (zero hunger) through food assistance and nutritional support to the rural poor. The program provides 30 kg of subsidized rice (at 10 taka/kg or $0.11/kg) per month to eligible poor households during the lean months before the two major harvests, i.e. pre-Boro harvest (March-April) and pre-Aman harvest season (September-November). The program rationale is simple: protecting the extreme poor during lean seasons when job opportunities go down and essential commodity prices go up, putting poor households at risk of seasonal hunger and starvation. Understandably, this is an expensive program, requiring a large subsidy that amounts to BDT 26 billion (over US$ 300 million) per year.
The program appears to have performed successfully given its objectives and operational effectiveness. According to a forthcoming report of the International Food Policy Research Institute (IFPRI) and University of Sydney survey, around 85% of the targeted beneficiaries are ultra-poor. It was also found that the program has suffered only 12% leakages so far. This is remarkably a better performance than other food-based programs in Bangladesh (e.g., the Rural Rationing Program in the early 1990s, which had leakage of 70%) or elsewhere in developing countries, including India. (e.g., Public Distribution System (PDS), where leakage was about 50%).
Protecting the New Poor: Recommendations
We argue that findings from Khaddo Bandhob study are of particular importance in the context of COVID-19 response, especially the Prime Minister’s decision to issue five million new ‘ration cards’ to protect the section of the population that has slipped into poverty due to the lockdown. Based on the emerging evidence on poverty escalation, we propose that the government takes the following into consideration:
Expanding food-based safety net programs: First, with the lockdown and the resultant disrupted supply chain, expanding food-based safety net programs is a step in the right direction for protecting the new poor as well as for being on track with SDG-2. A recent survey by BRAC Institute of Governance and Development (BIGD) and Power and Participation Research Centre (PPRC) showed that 32% rural households have reduced their food intake due to the pandemic-induced economic shock. The cost of excluding the neediest at this moment will be very high, and hence, all necessary measures should be taken to identify and protect the new poor. Equally important is the reality that the Prime Minister’s expansion plan will be expensive, and puts immense pressure on the country’s strategic food reserve. Therefore, the new program should have a clear gradual exit strategy as the country approaches normalcy.
More focus on new migrant workers: Second, a very large number of migrant workers have left cities. For instance, the National Telecom Monitoring Centre reported that about 10 million mobile phone subscribers, representing about half of city’s population left the capital city Dhaka, following Prime Minister’s announcement of general holiday on March 26, 2020. The same is likely to be true for other cities and urban centres. A large part of this massive exodus are migrant workers who have either lost their jobs or have been furloughed. In preparing the new ration cards, greater attention should be paid to this section of the population by incorporating them into beneficiary selection criteria.
Inclusion of remote households: Third, remoteness continues to matter in making social programs efficient. The IFPRI-University of Sydney study shows that remote and poorer locations suffer the most from exclusion error, which means that the households that are in most need do not get these benefits. In regions less than 100 km from Dhaka, the exclusion error is about 16%. It increases to 22% for beneficiaries living between 100-200 km from Dhaka, and it reaches 38% for beneficiaries residing 200 km and further from Dhaka. Moreover, leakage percentage is higher when it comes to remote areas. Government of Bangladesh must take these remote households into consideration while issuing new cards and ensure coordinated efforts to reduce leakage and improve operational efficiency.
Inclusion of households with school children: Finally, according to WFP, 2.9 million students in government primary schools are missing out on mid-day meal programs, which provide students of poor regions with free meals on school days. This lockdown situation may create huge nutritional deficiency and inadequate food intake. The Prime Minister’s scale-up plan should account for this new reality by targeting households with elementary school children.
Although the health system of the country is suffering, judicious program expansion can ensure food security along with keeping the country on track for SDG-2. In doing so, the design considerations need to be taken seriously to ensure that leakages are minimized, livelihoods are protected, and productivity of the nations’ labour force is not depleted.