Main reasons why the government’s recovery effort has fallen short | The Daily Star
12:00 AM, January 16, 2021 / LAST MODIFIED: 01:42 AM, January 16, 2021

Main reasons why the government’s recovery effort has fallen short

Bangladesh is no stranger to disaster management. Since independence it has dealt with numerous natural disasters as well as political unrest and overhauls. Despite these past experiences, the Covid-19 pandemic was something that it couldn't have prepared for—especially due to its global nature and scope—even though it can be argued that having a well-funded and better managed healthcare sector could have made a big difference. 

Unfortunately, Bangladesh is no stranger to corruption either, particularly during times of emergencies. In the first week of April, at the height of the pandemic, we saw a social media storm erupting over allegations of substandard masks being supplied to several state-run hospitals instead of N95 masks. Senior health ministry officials were heavily criticised for terming this a "mistake" without conducting proper investigations. Later on, a probe committee was formed as per the prime minister's order, which found, according to a report submitted by the committee on April 29, that the supplier JMI Hospital Requisite Manufacturing Ltd had delivered research-stage N95 labelled masks instead of the general mask demanded by the Central Medical Stores Depot (CMSD)—and that the masks were made from unauthorised imported material.

This was not a one off case of corruption concerning the healthcare sector that we've seen since the pandemic began. Nor has such corruption been restricted to the healthcare sector.

According to a Transparency International Bangladesh survey, the pandemic has not only exposed the widespread corruption in the healthcare sector, but has created new opportunities for corruption in the country. In the case of just one government relief programme, each affected family who were supposed to be the beneficiaries of the system had to pay an average bribe of Tk 220 to get cash assistance of Tk 2,500, according to its findings. Moreover, over 12 percent of beneficiaries for government cash assistance had been victims of irregularities and corruption, while 10 percent of Open Market Sales (OMS) card holders faced the same. Also in the list of beneficiaries, the names of around 3,000 government employees and 7,000 pensioners were found and around 300,000 names had been included more than once.

One of the government's first response to the economic hardship, especially for low income households, was to provide subsidised food under the OMS social security programme. On April 13, 2020, UCA news reported that law enforcers had arrested 29 people, mostly leaders of the ruling party and its associate organisations and officials of the Union Council, for allegedly stealing 4,167 sacks full of rice. Plenty of similar reports—and allegations of government crackdown on the press following their publication—have come out since the pandemic began.

All these misuses have not only hampered the government's effort to provide relief to the poor, but have protracted their misery. According to Selim Raihan, Executive Director of South Asian Network on Economic Modeling, "the crisis has forced poor-households to sacrifice prospects of better health, better education and a better life" in order to survive. The consequences of these trade-offs will be long-term and intergenerational. But more effective government support could have minimised these effects, leading to faster recovery.

On the business side of things, the disbursement of funds to small and medium enterprises has also been mired with inefficiencies. Till October 31, only 31.73 percent of the stimulus packages slated for them had been used, while 70.87 percent had been successfully given to big industries. Most of the small, cottage and small enterprises (CMSME) in the country have not been able to benefit from the stimulus package because of cumbersome and drawn-out banking procedures that required mortgage and collateral. However, it is particularly the enterprises that couldn't afford the required collateral that most needed urgent government assistance. Moreover, a large number of CMSMEs were unable to provide documents to banks, such as tax identification number certificate and trade licence, which is why the government should have used microfinance institution to disburse the loans to them, according to Zahid Hussain, a former lead economist at the World Bank.

The result of everything that has happened is that businesses are currently experiencing an uneven recovery, where larger firms are bouncing back strongly, while the smaller ones are still struggling. According to a Daily Star report, "large industrial and service sectors have made as much as 80-90 percent recovery compared to the pre-pandemic level", whereas small and medium enterprises have recovered only 30-40 percent. And this is leading to a K-shaped recovery, rather than the V-shaped recovery that was hoped for.

The way the government stimulus packages have been designed and distributed has also affected employment. According to a joint Centre for Policy Dialogue and Oxfam study titled, "Employment Implications of Stimulus Packages: Challenges for Recovery", the government's stimulus packages to fight the economic fallout of Covid-19 have reached just 8 percent of total employment of the country, whereas it could have reached 12 percent had they been fully implemented.

According to one senior research fellow of CPD, the "stimulus packages in Bangladesh had only limited employment impact", and it was "much lower compared to most other countries in the region". The stimulus package offered for the agriculture sector reached 2.7 lakh people against a probable target of restoring 9.6 lakh jobs. The stimulus package for SMEs reached only 1.3 lakh people employed in the sector, instead of a possible 4.4 lakh. And one of the main reasons for this was that these packages were not designed to give employers the incentive to sustain employment, which was clearly a big strategic mistake on the government's part.

In order to correct some of these mistakes, the focus of the debate on recovery has to shift from the single-minded pursuit of growth only, to how that recovery and growth can be achieved through greater inclusivity. Of all the government packages, the ones meant for the poorer sections of society or smaller businesses, have had the greatest design flaws, which shows the lack of comparative importance given to these sections.

But the resultant recovery that would come from this will be unsustainable and short lived. Hence, the government needs to include experts and other stakeholders in the recovery discussion and in its planning process, so that its own blind spots get identified and are addressed.

 

Eresh Omar Jamal is a member of the editorial team at The Daily Star. His Twitter handle is: @EreshOmarJamal

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