Researchers of South Asian Network on Economic Modelling (Sanem) has identified three factors on which the success of the government announced stimulus packages and social protection programmes hinge on.
These are – effectively identifying the vulnerable people and determining the nature and duration of support, ensuring that the genuinely affected industries and poor and vulnerable people receive support and introducing a Monitoring and Evaluation (M&E) mechanism to ensure efficiency, transparency and accountability in the distribution mechanism.
A Sanem research team, led by its Executive Director Dr Selim Raihan, have assessed the poverty impacts of the coronavirus pandemic in Bangladesh, says a press release.
In addition to 34 million existing poor, in case of uplifting the poverty line income by 1.25 times, there are another 36 million people who are ‘non-poor’ but can be categorised as the vulnerable population, Sanem said.
Using the latest Household Income and Expenditure Survey (HIES) data of Bangladesh Bureau of Statistics (BBS), the researchers have run simulations which reveal that with a negative income shock of 25 percent, the overall poverty rate will be 40.9 percent, which means another 20.4 percent population will fall into poverty.
The key findings of the research also included poverty impact of any income shock can differ depending on the people engaged in various economic activities.
Simulation results suggest that most of the newly poor in Bangladesh will be concentrated in economic activities like crop, animal and fishing production (43 percent), different manufacturing activities including RMG (16 percent), retail trade (11 percent), transport activities (10 percent), and construction activities (7 percent).
Given that the majority of these people are employed in informal activities (85 percent of the employed), any employment shock is feared to have severe implications on the overall level of poverty of the country.
Given the geographical dynamics of poverty in Bangladesh, a negative income shock on poverty rates will vary across the regions.
Forty districts will experience the rise in the percentage of poverty more than the national average. For example, in Rangamati, there will be an additional 30.9 percent people falling into poverty.
In the same fashion, other major affected districts with higher percentages (than the national average of 20.4 percent) of additional people falling into poverty will be Mymensingh (30.2 percent), Sunamganj (28.7 percent), Cox’s Bazar (27.5 percent), Nilphamari (27.2 percent), Narail (27.1 percent), Chottogram (26.9 percent), Netrokona (25.9 percent), Chuadanga (25.8 percent), Sherpur (25.6 percent), Barguna (25.5 percent), and Shariatpur (25.3 percent), among others.
The estimated impact is found to be lower for Dhaka, Narayanganj, Gazipur, Munshiganj, Brahmanbaria and Narshingdi.
“However, since the initial hot spots of infections are concentrated in many of these areas with a high density of population, in reality, fall in income of households in these regions can be much higher than our assumption of 25 percent income shock,” the press release said.
Also, the higher concentration of small-scale trading activities, which can be heavily hit by the shutdown, may result in much more depressing impacts than the aforementioned estimations, it said.