It says the main challenge of ending extreme poverty is to pick up the economic growth to 8.8% with more inclusive approach.
Bangladesh has the potential to end extreme poverty by 2030 if it takes firm steps to make growth more inclusive, according to new World Bank reports published yesterday.
The country has done an impressive job in reducing poverty over the last decades. Under the new $1.90 poverty line based on 2011 purchasing power, 28 million or 18.5% of Bangladeshis lived in extreme poverty in 2010.
More than 16 million people in Bangladesh graduated from extreme poverty between 2000 and 2010.
The two new reports, the Bangladesh Development Update and Poverty and Shared Prosperity 2016: Taking on Inequality, find that Bangladesh is making sustained progress in poverty reduction and increasing opportunities.
However, the reports show that the country is currently the 64th poorest out of the 154 countries and much remains to be done.
Achieving the goal of reducing extreme poverty to less than 3% of Bangladeshis by 2030 will require economic growth becoming more inclusive with the poorest 40% of society receiving greater benefits from development.
The World Bank reports said several studies find that access to electricity boosts household incomes by expanding labour supply and fostering a shift from farm labour to formal employment.
Electrification can also generate additional household income by making small home-based businesses economically viable or more productive, said the reports, adding Bangladesh has progressive pricing schemes that offer lower prices to households that consume only small amounts of electricity.
“The fruit of Bangladesh’s development experience in innovations such as conditional cash transfers, gender equity in education, and successful family planning is being reflected in its notable reduction of poverty and improvement in the lives of its citizens,” said Qimiao Fan, the World Bank’s Country Director for Bangladesh, Bhutan, and Nepal.
“As a steadfast partner with Bangladesh since 1972, we are committed to supporting the country in increasing shared prosperity to overcome extreme poverty and other development challenges within a generation.”
The development update stresses increasing resilience to security, financial, and trade shocks along with weaker than expected global trade and growth.
To move to the next level and realize its goals of becoming a middle income country by 2021 and overcoming extreme poverty by 2030, the country needs to sustain its economic and remittances growth, create more and better jobs, focus on energy and transportation infrastructure, and make progress on improving the quality of health and education.
“Bangladesh needs to continue creating enough jobs to employ the 2 million young people who enter the job market every year. This requires boosting productivity and foreign and domestic investment by reforming business regulations, reducing infrastructure and energy deficiencies, while enhancing financial efficiency,” said Zahid Hussain, Lead Economist and Author of the Bangladesh Development Update.
“The country could also increase its resources to make much-needed investments and become a leader in environmentally sustainable development through a well designed and implemented carbon tax.”
Lead Economist of the World Banks Dhaka office Zahid Hussain, in a presentation in Dhaka today, said the extreme poverty reduced due to the purchasing power of taka relative to US$ was stronger than previously estimated.
He, however, projected a poor prospect in reducing extreme poverty below 3% (SDG-1) with the current poverty reduction and economic growth trends in the country.
He said the GDP growth needs to pick up to 8.8% annually with a focus on more inclusive growth.
The World Bank’s latest Bangladesh Development Update projected a GDP growth of 6.8% in the current fiscal year – lower than Bangladesh’s target of 7.2%.
It also estimated that the GDP growth would be lower at 6.2% in the next FY2018 as the consumption would fall further with a declining remittance inflow.