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“Moving Out of Low Poverty Trap: Investing at the Bottom of the Pyramid” A. Q. M. Golam Mawla General Manager, PKSF Dhaka, Bangladesh 29 October 2014 1.

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Presentation on theme: "“Moving Out of Low Poverty Trap: Investing at the Bottom of the Pyramid” A. Q. M. Golam Mawla General Manager, PKSF Dhaka, Bangladesh 29 October 2014 1."— Presentation transcript:

1 “Moving Out of Low Poverty Trap: Investing at the Bottom of the Pyramid” A. Q. M. Golam Mawla General Manager, PKSF Dhaka, Bangladesh 29 October /3/2015

2 Extreme Poverty (EP) in Bangladesh Poverty line 26% Very poor program (12.4%) Mainstream microfinance (540) Near poor 15 % above PL 26 % below PL Bottom 12.4% Schematic representation of different population segments for inclusive financing  food-energy intake: <1,805 Kcal per day   per capita income: < TK per month  Around 17.5 million extreme poor 5/3/2015

3 EP communities (in million) Dalit, & socially excluded communities (5.5) Tribal/ethnic communities (1.2) Tea garden labourers ( ) Beggars (0.7) Domestic help (0.42) Physically handicapped population (10.6%, WHO) Street children (tokai) Economically insolvent elderly people (appx 7% of total population) Extreme poor living in ‘haors’ (5.5) Extreme poor living in climate change vulnerable areas/Chars 3 5/3/2015  Insufficient economic opportunities  Poor access to public services & transfer  Vulnerable to external shocks  Face health and nutrition vulnerability  Gender inequity and marginalised group specific risks & vulnerabilities are also prominent  Extreme poverty is often chronic – it passes down from one generation to the next.

4 Occupational Distribution of extreme poor  Salient characteristics  Not homogeneous  Vulnerable, limited access to basic needs  Mostly unskilled  Highly dependent on day labor/wages (low-paid wage labor)  Often excluded from the society Occupational Distribution of 1 million participants of PKSF’s UPP programme 5/3/2015

5 Need to Address the Multidimensional Aspects of Poverty  “A condition characterized by severe deprivation of basic human needs,  “A condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services.” – UN, 1995  Multidimensional Poverty Index (MPI) of UNDP  Multidimensional Poverty Index (MPI) of UNDP measures not only income, but also basic needs and living standard  In Bangladesh, 58% population are MPI poor Dimensions+ Indicators  Dimensions+ Indicators  Income + Food poverty line  Health + Daily protein intake + Source of water for drinking, cooking, and daily work, etc.)  Education + Years of schooling + School attendance + School attendance  Living Standard + Type of toilet + Living space + Electricity, etc. + Electricity, etc.  Access to safety net + Cash/food for work + Cash/food for work + Elderly benefits/ allowances, etc 5/3/2015

6 Income poverty improved but nutritional status still remain alarming! 41% of children under age 5 are stunted, 41% of children under age 5 are stunted, 16% are wasted, and 16% are wasted, and 36% are underweight 36% are underweight 24% of w omen have BMI < % of w omen have BMI <18.5 6

7 Key drivers for EP eradication in Bangladesh Remittance inflow – Nearly 8 million migrant workers contributing $12.5 billion/year Remittance inflow – Nearly 8 million migrant workers contributing $12.5 billion/year Microfinance – As of 2011, million HHs availing US$ 5.83 billion as microcredit Microfinance – As of 2011, million HHs availing US$ 5.83 billion as microcredit Ready Made Garments (RMG) – Employ over 4.5 million worker mostly women and contribute 10.5% of GDP Ready Made Garments (RMG) – Employ over 4.5 million worker mostly women and contribute 10.5% of GDP Many fold increase in Agricultural production – Employ nearly 23 million people (nearly 48% of the employment) Many fold increase in Agricultural production – Employ nearly 23 million people (nearly 48% of the employment) Expansion of Social Safety Net Programme – Covering 9.04 million man month at a cost US$ 3.25 billion Expansion of Social Safety Net Programme – Covering 9.04 million man month at a cost US$ 3.25 billion Human capacity development – Education, Vocational & Skill Training, Woman empowerment Human capacity development – Education, Vocational & Skill Training, Woman empowerment 7

8 Related Issues  MDGs Achievements  Reducing poverty  Child mortality reduction (own UN award)  Attaining gender equality  Maternal Health improvement  Universal primary education  Post-2015 Sustainable Development Goals (SDGs)  Bangladesh resets its goal of ending extreme poverty by 2022  Targets to be middle income country (MIC) – reaching threshold per capita income of $1,130 – by /3/2015

9 Productivity  Productivity is an average measure of the efficiency of production - i.e. output per unit of input. The production performance can be measured as an average or an absolute income.  Productivity is a crucial factor in production performance of firms/ economic activities. Increased productivity helps raising living standards because more real income improves people's ability to purchase (i.e. higher purchasing power). Productivity growth also helps businesses to be more profitable. 9 5/3/2015

10 Low Productivity No/little marketable products No/Little income Extreme poverty Low investment /input No/little education No/little technical skill Low Human Capital Little productive assets Difficult and adequate access to financial resources Little risk coverage Low financial resources No/little access to land, water and other natural resources Little/no access to natural resources Vulnerable to climatic/man- made disaster High vulnerability Remote geographic location Poor market accessibility Subjected to social discrimination Little social capital Low Productivity Trap 5/3/2015

11 Strategies for Removing the Trap  Expanding Opportunities (i.e. promoting sustainable livelihoods)  Facilitating Empowerment (enhancing access to services)  Ensuring Protection (both covariant and idiosyncratic - need to be addressed) 11 5/3/2015

12  A livelihood is sustainable when it can cope with and recover from stresses and shocks, maintain or enhance its capabilities or assets, while not undermining the natural resource base  Livelihood strategies Reduced reliance on day-labour Creating ‘livelihood ladders’ Enhanced regular income from market-based IGAs  Livelihood outcome o More income & increased well-being o Reduced vulnerability & improved food security o More sustainable use of NR base  Key questions: What will be transforming structures and process? What will be role of government/private sector/MFIs? 12 Promoting Sustainable Livelihoods 5/3/2015

13  Technical know-how and demand-driven technical services  Appropriate financial services  Market linkage - quality assurance, knowledge on market demand  Potential areas of investment o Farming (Livestock) Goat (Black Bengal, Boer, Jamnapari) or sheep (Chotanagpur, Dmarah, Suffolk) farming : Buck center, Small breeding unit, Dairying (Fresian cross - at least 8 litter average milk) Beef (Crossbred bull calves, Pabna/shahiwal) o Land leased based farming specially in char area o High value commercial vegetable gardening o Off-farming- Small business, vocational trades, tailoring 13 Removing constraints of the bottom poor – Demand Side Issues 5/3/2015

14 Homestead Gardening Traditional vegetable garden Traditional gardens are scattered, seasonal Developed gardens produce vegetables throughout the year, produce more varieties of vegetables and are on fixed plot of land (bed system-Robi, Kharif-1, Kharif-2). Developed vegetable garden Investment  Total investment BDT 60-80/- per decimal/year.) Net profit  BDT /- decimal year.  Provide vegetable gm/person/day. Investment  Total investment BDT /- per decimal/year.) Net profit  BDT 2,350-2,600/- /dec/year.  Provide vegetable gm/person/day.

15 Small Scale nursery Investment/1decimal  Total investment (seed, tree/fruit sapling, fertilizer etc.) BDT 25,400/- per decimal/year.) Income  Income BDT 53,600/- per decimal land/year.

16 16 Native Shing/Magur, Tengra, Koi fish culture Magure/Shing culture/2decimal pond Investment  Total investment BDT 13,800/- per decimal pond/year (2 crops/year.) Net profit  BDT 18,200./- per decimal/year (2 harvest/year) Thai koi culture/2 decimal pond Investment  Total investment BDT 5,500/- per decimal pond/year (2 crops/year.) Net profit  BDT 8,500/- per decimal/year (2 crops/year)

17 Crab fattening pond Fish Culture (Crab fattening) Crab fattening bamboo made case Traditional method crab fattening- encircle earthen area (Pond/Gher)- Scientific method crab fattening -bamboo made floating case- Reference: M. Begum et. al 2009 Investment  Total investment BDT 45,800/- per decimal pond (20 crops/year.) Net profit  BDT 11,000/- per decimal pond (20 crops/year) Investment  Total investment BDT 2,64,770/- from 30 cage (40m2 area) within 12 crops (12 days/crop) Net profit  BDT 91,630/- from 30 cage (40m2 area) within 12 crops (12 days/crop)

18 Black Bengal Goat (BBG) rearing LIFT Intervention at WAVE a)Total HH (BBG rearer): 6382 b)Total goat: Traditional a)Non descriptive housing b)flock size: 1-2 doe c)No attention to health d)Small litter size (less than 2) e)High mortality Investment (yearly) Goat & treatment: 8000/ /- Income: Kid: 3500/-5500/- Net profit: 2500/-3500/-(2 cycle) Asset: Doe-5000/--6000/- Improved a)Maccha rearing b)flock size: 4 doe c)Regular vaccination & deworming d)Good litter size (2 or more than 2) e)Low mortality Investment (yearly) Housing, Goat, feed & treatment: 25000/ /- Income: Kid & doe- 42,000/ /- Net profit: 15000/ /- (2 cycle/year) Asset: Doe & house-17000/-19000/-

19 Buck Service Centre Feature: a)Maccha housing b)flock size: 4 buck c)Regular vaccination & deworming d)Natural Insemination once daily e)Ensure trabis f)Natural Insemination (NI)charge-100/- Investment (yearly): Housing, Buck, feed & treatment: 50000/ /- Income: NI charge- 1,00,000/--1,10,000/- Net profit: 45000/ /- (3500/--4000/- monthly) Asset: Buck & house-28,000/-30,000/-

20 Vermicompost Production (semi-commercial) Feature: a)Produced by the worm (cow dung, kitchen waste) b)Improves soil organic matter (5%) content c)Improves germination rate, crop’s growth & yield Toward new technology Investment (yearly): 1. Rings (10 no’s): 2500/- 2. Vermin (20000 no’s): 20000/- 3. Cow dung (12000kg): (self) 4. Sac, sieve, net: 1700/- Total: 24,200/- Income: Vermicompost (4800kg) & Vermin (80000 no’s): 1,37,600/- Net profit: /- (8 batch/year) i.e. or 9450/- monthly PRIME Intervention No. of farm established: (Small & semi-commercial) Total investment: 42.8 million Total Production: ton/year Income: 173 million (except vermin)

21 Quail (layer) Production Feature: a)Need Low Investment b)Starts laying at six to seven weeks of age c)Laying 280 to 295 eggs/year. Investment: Cage, Quail, feed & other: 48,000/- Income: Egg, Quail & other: 67,000/- Net profit: 16,000/--18,000/- (one year) Asset: cage & equipment- 5,000/- Rabbit Production Feature: a)Short gestation period (30-32 days) b)Give birth 6-8 time per year c)Addressing the tribe Investment: Cage, rabbit, feed & other: 23,000/- Income: Rabbit: 31,500/- Net return: 7000/--8000/- (7 kitting/year) Asset: Rabbit, cage & equipment- 8,000/-

22 Off-farm Activities Basket making Mat making Investment  Total investment 20, BDT (training, equipments, cloth etc.) Income  Income 2, , BDT/month Investment  Total investment 5, BDT (training, materials etc.) Income  Monthly income 3, , BDT/month

23 Off-farm Activities Omanian cap Investment  Total investment 3, BDT (Training, cloth, thread etc) Income  Monthly income 2, , BDT (4 cap/month)

24 24 Off-farm Activities Tailoring Stitching Investment  Total investment 25, BDT (training-6months, machine, cloth, etc.) Income  Monthly income 2, , BDT Investment  Total investment 8, BDT (training) Income  Monthly income 2, , BDT

25 Mobile Servicing Hosiery Vocational Activities Investment  Total investment 8, BDT (training) Income  Monthly income 6, , BDT Investment  Total investment 70, BDT (training, machine, equipments, computer etc.) Income  Monthly income 10, , BDT

26 Electrical Vocational Activities Mechanic Investment  Total investment 30,500/-BDT (training, equipments etc.) Income  Monthly income 6, BDT Investment  Total investment 22, BDT (training) income  Monthly income 6, , BDT

27 Education Program ENRICH Total Centres Total Students- 86,745 Each SK has on the average 26 students per centre. 53% of students are girls. Low cost: Cost/Centre/Year-Tk. 26,250/- Ultra-poor and poor students are achieved good results in their school exam. % of dropped-out: 7% High appreciation from the society

28  Living remains no more a daily struggle  Attaining qualitative economic security. It’s a result of many small qualitative changes in livelihoods  New livelihood strategies have to contribute in increasing the purchasing power of the households  Considering heterogeneity, need further stratification within the extreme poor  Expanding economic opportunities to create ‘livelihood ladders’  Promoting high earning livelihood strategy  Identifying and exploiting new income generating activities and making markets work for the extreme poor  Growth of homestead economy as a source of cash income  Acquiring new skill to enhance the scale of operation 28 Moving Forward 5/3/2015

29 Mind-set of development agencies yet to be re-oriented toward addressing the bottom poor. Besides, they are not technically and financially equipped to address the bottom poor issues. Furthermore, they do not have sufficient trained staff to handle the issues of bottom poor. Absence of targeted, long-term, flexible programme for the bottom-poor Both government and non-government agencies are shying away from the poor of vulnerable disaster prone areas. 29 Removing constraints of the bottom poor – Supply Side Issues 5/3/2015

30 30 Conclusion  PKSF attempts to expand growth-oriented market- based activities for the poorest  Multidimensional aspect of poverty must be addressed  Making sufficient investment for enhancing human and social capital  A more focused and programmatic approach has to be undertaken  Expanding employment opportunities in both formal and informal sector is crucial  Identify and expand market linkages for the poor 5/3/2015

31 31 Thanks 5/3/2015


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