Ending Extreme Poverty in Bangladesh: Actions Needed in the Context of the Seventh Five Year Plan of Bangladesh Binayak Sen, BIDS Zulfiqar Ali, EEP/Shiree Presentation prepared for the conference on Towards Sustained Eradication of Extreme Poverty in Bangladesh NEC Conference Room, Planning Commission 8-9 April 2015

Ending Extreme Poverty: Can We Do IT?** Extreme poverty (as per the national extreme poverty line or “lower poverty line”) decreased quite dramatically in both rural and urban areas: from 44% in 1991/92 to 21% in The rate of extreme poverty reduction has been faster in the decade of 2000s compared to the 1990s: 1.8% in the 1990s compared to 4.8% in the 2000s. Not only there is a declining trend in extreme poverty but also the “structure of poverty” has undergone evolution: The proportionate share of extreme poor in total poor at the national level has diminished with time. The poorest are now better equipped in human development: improvements have been noted in the areas of literacy, infant and child mortality, and reproductive health services. Spatially poorest areas have also exhibited significant progress with significant targeted programs and political voices in these areas. 2 Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April 2015

Trends in Extreme Poverty Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April

Poor-Rich Ratio in Education Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April

Poor-Rich Ratio in Infant Mortality and Under Five Mortality Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April

Is Growth Enough for “Zero Extreme Poverty”?** The projected figures are encouraging, but… Projections based on historically observed “Growth Elasticity of Extreme Poverty Reduction” suggest that Bangladesh would reduce its extreme poverty to 4.5% percent by 2021 under a constant real GDP growth scenario of 7 percent per year (the likely realistic target for the Seventh Plan). This however still leaves a population of 7.45 million in extreme poverty! To reach near the elimination of extreme poverty, Bangladesh should eventually realize higher level of real GDP growth rate above 7 percent. 6 Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April 2015

Extreme Poverty under Different Growth Scenario Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April

Spatial Dimensions of Extreme Poverty Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April

Contd…. Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April

HOWEVER, Growth Conditions themselves Can Change: Three Caveats in Extreme Poverty Projections (1)The net growth elasticities are based on past trends on inequality of consumption expenditure observed between (which has been very favorable) and it is further assumed that it will exhibit similar pattern until 2021! This may be unrealistic due to growing (a) urbanization, (b) skill differences, and (c) governance risks. (2)Net growth elasticities also implicitly assume that pressures of downward sliding down the extreme poverty ladder would not aggravate during the next decade. This assumes that there would not be further deterioration of health, governance and environmental risks (or the “falling propensity” remains the same) (3)For the extreme poverty projections, growth elasticities statistically treat all extreme poor groups equally. This disregards the varying contexts for social reproduction of diverse category of extreme poor groups. Some extreme poor are socially more marginalized than others and hence may be more difficult to address. (4)Even though the extreme poverty gap index is only 3% (as per the lower poverty line), it is not easy to eradicate because of complex heterogeneity of the group (apart from imperfect targeting problem) 10 Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April 2015

SO, We Need Additional Interventions to Achieve Zero Extreme Poverty?** Need “Mini-Big Push” by way of nationally replicating successful pilots of livelihood interventions. This pillar is to lift them out of extreme poverty. Need “major re-orientation of public services” especially health, education, transport and justice to meet the needs of the extreme poor (it will also benefit other poverty groups). This pillar is needed to prevent fall into extreme poverty. Need “major re-casting of existing social protection programs” to ensure better transfer and vulnerability reduction for the extreme poor. This pillar is needed to reduce the pressing need of the present and immediate vulnerability. 11 Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April 2015

A Case for Mini Big-Push Mini big-push through replication of micro successes in eradicating extreme poverty: – there were quite a few such programs that have been successful in lifting the beneficiary households from extreme poverty. – the size of the needed transfer is reckoned to be around US dollar per beneficiary spread over about 2 years of program intervention. – the total costs of such replication will not exceed 2-3% of GDP annually - this amount of money, if properly executed, can lift an extremely poor household from severe poverty. – HOWEVER, GoB buy-in and increased involvement as well as linking them with other GoB institutions and services are important to make them more effective and sustainable. 12 Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April 2015

Contd. Substantive and Inclusive Social Protection Schemes to Support Extreme Poverty Reduction: – Current allocation is claimed to be in the range of 2.2% of GDP, which in reality is about 0.77% for “core social protection programs”, and would be even less for the extreme poor (when purged from confounding influences) – further injection of money for the core social protection programs is required. – Currently, the SP programs are marked by extreme tokenism of monthly transfer per beneficiary (not exceeding 2-3 days of farm labor wage). This needs to change. – Renewed emphasis on the social protection along life-cycle approach is a welcome move, but it needs to ensure that it is not sidelining the extreme and chronic poverty agenda. – There should be a meeting of minds in the dialogue between extreme poverty reduction and social protection strategies. 13 Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April 2015

Contd. Addressing the Growing Human Development Needs of the Extreme Poor: – There are areas of deprived pockets in overall progress in human development that tended to bypass in the past the extreme and chronic poor. – As income of the extreme and chronic poor grows, their demand for human development needs will also increase - this relates to the demand for education, especially quality education; the same holds for the quality of the curative health care as well. Equal access to educational opportunities is crucial for inter- generational mobility for the extreme poor. – Some of the human development targets require social actions and cannot be addressed by policy alone; making breakthroughs in these areas require longer time and creation of innovative norms- changing institutional interventions - high prevalence of dowry, for instance, leads to early marriage thereby influencing high maternal and child malnutrition, etc. 14 Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April 2015

Is Middle Income a Panacea? Reaching Middle Income is possible and feasible in Bangladesh before poverty or extreme poverty eradication However, it may sideline the policy emphasis on poverty eradication (the problem of “growing amnesia”) India, Pakistan and Nigeria—all are Middle Income Countries with persistent poverty and social MDG/ SDG problems Hence, policy emphasis should be “Reaching Middle Income with Zero Extreme Poverty” 15 Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April 2015

Final Points Need to tie in with Seventh FYP, Vision 2021, SDGs, and the NSSS. Ensure needs of EP recognized in policy and practice and EP ends by Role of DPs in rolling Policy Dialogue: signal to Planning, Finance that DPs will actively support GoB EP policy and practice in Five Year Plan and ADPs. A Permanent Secretariat for Extreme Poverty Eradication in GED supported by DPs. 16 Binayak Sen and Zulfiqar Ali Extreme Poverty Conference, 8-9 April 2015