Priorities in the post Covid-19 era
The coronavirus (Covid-19) pandemic has caught almost every country off-guard, requiring painful adjustments to the new reality. Bangladesh is also not an exception. However, Bangladesh has relatively well-managed the acuteness of the pandemic, and its impacts on economy and society are less severe than many other economies, including developed ones in north America and Europe, and other neighbouring countries in South Asia.
A key factor behind the relatively less severe economic impacts in Bangladesh is the recovery of domestic consumption, fuelled partly by remittances from abroad. In addition, stimulus and social protection packages and pragmatism shown by the government in gradually loosening the lockdown and ensuring continuation of economic activities, have helped maintain a moderate pace of economic growth. The recent progress of the Covid-19 vaccine development raises hope that economic activities in major export destinations of Bangladesh will return to normal by mid to late 2021.
The experiences during the pandemic, however, give an opportunity to reflect on key development strategies and see how these can be recalibrated to deliver a more inclusive, resilient and sustainable future.
The pandemic highlighted significant inadequacies and inefficiencies in the healthcare sector and social protection schemes. Public healthcare spending in Bangladesh is among the lowest in the world and has resulted in severe under-investment in public healthcare facilities. In the post Covid-19 era, public expenditure in the health sector should be significantly increased. The introduction of a universal healthcare system will be a key priority. A leaner and more capable administrative structure of relevant agencies will help in effective management of the expanding health expenditure. A more efficient healthcare administration would also help with prudent utilisation of funds for various emergency projects taken during the pandemic.
There are about 125 social protection schemes currently managed by the government in Bangladesh. However, various temporary social support measures were introduced to fill the gaps in the face of prolonged lockdown. In a post Covid-19 era, the social protection schemes can be mainstreamed with increased budget allocation, wider coverage, better targeting, and strengthened administration and effective delivery to the beneficiaries using digital technologies.
Informal businesses faced severe challenges during Covid-19. Appropriate policy measures should be developed to encourage formalisation of the informal businesses, including easier access to finance and incentives for cottage, micro, small and medium enterprises to create employment opportunities and jobs.
Supply chain disruptions has created a desire among major trading economies to diversify their supply chains. In the post Covid-19 world, Bangladesh can capture such opportunities by focusing on improving the business climate, simplifying business regulations, and aggressively marketing its endowments such as more affordable skilled labour, strategic location and new economic zones. The pandemic has also highlighted the importance of e-commerce. Development of new startup ventures in e-commerce should be encouraged with appropriate policy and financial support for the seamless flow of commodities.
The pandemic has also exposed the inadequacies in the education sector to utilise technology for online education. Improving the delivery and quality of online education should be a key priority in the post Covid-19 era with particular attention to rural and lagging areas. Enhancing the quality of education at all levels starting from primary to tertiary level, and technical and vocational education and training (TVET) to improve skillsets of its workforce, should be pursued vigorously. A quality labour force with appropriate skills will be an essential conduit of a competitive and drastically changing business climate in the post pandemic era.
The pandemic has also outlined the need for quality infrastructure investments, particularly in urban areas. Developing smart public transport systems in large urban areas should be a key priority. Reliable, uninterrupted electricity supply and internet connectivity are prerequisites to provide essential services such as work from home, education, healthcare, food supply services, online businesses and social protection services. Adopting a national grid code, together with upgrading the transmission and distribution infrastructure and increasing the internet bandwidth through better digital infrastructure, should be key priorities. Increased focus should be directed towards clean water access and modern sewerage facilities in urban areas.
Reshaping rural areas as economic centres is an important lesson from the pandemic. Localisation of growth can facilitate equitable economic growth throughout the country. Launching of programmes such as One Village, One Product (OVOP) or One District, One Product (ODOP) could create local employment, strengthen rural ecology and rejuvenate local economies. Accelerated implementation of the government's "My Village My Town" programme will bring urban amenities to the doorsteps of rural dwellers.
Agriculture and rural non-farm sectors should be given more importance in light of the recent reverse migration caused by the pandemic as well as a risk of food scarcity. Modernisation of agriculture for increased productivity and developing robust supply chains for agricultural products should be key areas to focus on. Agricultural logistics systems should be strengthened to directly link the farmers and small agri-entrepreneurs to the consumers, curtailing the influence of the middlemen. Focus on research and development (R&D) in agricultural products can pave the way for increased food security and export potential.
The private sector will play an important role in the post-pandemic era. Prudent fiscal and monetary policies should be formulated so that they benefit the sectors that fit in the new norm after the pandemic. Enough liquidity should be provided to those sectors with proper regulatory reforms. Borrowings from international financial markets and multilateral institutions should be wisely planned so that the sectors with strong investment needs can be adequately supported. Reforms in the financial sector will be critical to enhance resilience of the economy.
Building economic resilience, diversifying trade and production networks, and enhancing business competitiveness and agility are at the core of economic recovery in the post pandemic era. Assessing economic vulnerabilities through risk assessments and preparing policy responses such as easier access to finance, incentives for new industries, trade agreements for deeper linkages to regional and international markets, and improved trade facilitation and international logistics can all help make the economy resilient to future shocks. Adopting agile management practices, connecting to digital platforms, digitalisation of value chains for enhanced quality, traceability and compliance are other actions that will help businesses compete, sustain and prosper in the new normal.
Although the pandemic is still on, and the second or third wave is raging in many countries and regions, the development of vaccines is progressing well and recently reported successes provide hope for the new year. As the world cast its sight towards a post Covid-19 era, Bangladesh needs to prepare for a new normal based on lessons from the pandemic. With relatively less fatalities and economic damage from the pandemic, Bangladesh is well positioned to move forward vigorously with reforms. The once in a century pandemic can open up once in a century opportunities for a young, resilient and vibrant nation like Bangladesh. Prioritisation and pragmatic policy shifts are the needs of the hour.
Manmohan Parkash is Country Director for Bangladesh, Asian Development Bank (ADB).