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Social Safety Nets in Bangladesh: Shaikh S. Ahmed
Social Safety Nets in Bangladesh: Shaikh S. Ahmed
Social Safety Nets in Bangladesh: Shaikh S. Ahmed
Shaikh S. Ahmed
October 2007
I. INTRODUCTION
1. The objective of this paper is to address issues relating to social safety net programs in
Bangladesh. Although such programs have gained momentum in the country, at least the
following factors need to be addressed to improve the state of social safety nets:
a) The focus of the safety nets in Bangladesh needs to shift to new and emerging
challenges. These challenges include rapid urbanization, globalization, export orientation
and structural changes (e.g. layoffs, increase in prices, etc.). The national policy should
also emphasize programs for mitigating ex-ante risks, all in a financially sustainable way.
A well-designed policy for social protection programs should address various gaps
including safety nets for urban areas and link programs to human development.
d) While the Government of Bangladesh has been increasing spending in social safety
nets over time, these initiatives need to target the poorest regions and individuals
better. Though targeting efficiency is not performing very poor at present, this could
possibly improve if objective targeting criteria are mixed with community verification.
Better targeting mechanism could also help increase both coverage and level of benefits
for the poor.
2. Rest of the paper is organized into eight sections providing analysis in support of the
issues mentioned above. Section two discusses the state of poverty in Bangladesh and section
three provides an overview of the main social protection programs. Section four covers financial
allocations and related issue of regional disparities. Section five discusses performance of such
programs. Specific issues such as targeting, leakages and preference to cash over food are
covered in section six. Section seven highlights the need for better program administration.
Specific conclusions are drawn in the final section.
3. In recent years, there has been a substantial reduction in the number of people living
under both the upper and lower poverty lines. The national poverty rate has declined at a rate of
roughly one percentage point per annum over the last 15 years (see Table 1 below). Based on the
upper poverty line, 40% of the national population is poor, which amounts to about 56 million
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people. While this figure represents a considerable improvement over previous levels, it is
still extremely high by international standards and reflects the widespread poverty and
vulnerability in Bangladesh. It also draws attention to the fact that several Millennium
Development Goals (MDGs) are yet to be achieved.
4. With rural poverty remaining higher, the plight of the poor urban population is
often ignored. Based on the last four censuses, urban population in Bangladesh is growing, and
is expected to keep its pace in the future. According to the Population Census 2001, 23.1% of the
population was living in urban areas. 34.3% of the population of Dhaka is urban, followed by
Chittagong, Khulna, Rajshahi, Barisal and Sylhet. The total urban population in Dhaka is
currently around 12 million and is projected to grow to 20 million in 2020, making it the world’s
third largest city. Among the three divisions, where 20% or more of the population is urban,
the poverty situation remains uncomfortable. The average percentage of extreme (food)
poverty is 20% and overall poverty is 40% in these three cities. Khulna has the highest poverty
headcount. This is depicted in the following graph:
60
50
50 46
40
31
28
30
17
20
12
10
0
Extreme (food) Poverty Poverty
Spatial analysis, in a recent study of the World Bank (2007), shows an estimated 1,925 slums in
the Dhaka City Corporation area. Based on the LGED Survey of Slums (2005), among the
poorest quintile, only 9% of households have a sewage line and 27% obtain water through piped
supply. Furthermore, the study shows that only 43 of the slums are within 100 meters of a public
toilet. An estimated 7,600 households live in slums that are within 50 meters of the river and are
at frequent risk of being flooded.
5. The urban poor are substantially less educated, and have lower school attendance
rates than the non-poor. Only 40% of household heads among the poor have achieved more
than 5 years of schooling, and only 6% have had more than 10 years (HIES). In four sample
slums of the LGED study, more than half of the household members are under the age of 19
(56%). Literacy rates for workers aged 15 and older are only 52% among poor male workers and
33% for female workers. The recent DHS (2004) survey finds that, on average, 16.7% of poor
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children suffer severe stunting. Stunting occurs among 17.4% for rural poor children and 13.5%
for urban poor children. Nationally, 33.2% of women are malnourished, with 35.7% in rural and
24.6% urban localities. The urban situation aggravates when the lowest quintile of wealth is
considered. 30.6% of urban children of the lowest quintile suffer from severe stunting which is
higher than 24.9% of rural children who are severely stunted. In the lowest quintile, 46.2% of
rural women and 44.7% of urban women suffer malnutrition.
6. The urban poor are not specifically targeted by any of the existing social safety net
programs. In the Government’s policy matrix for poverty reduction, the issue of improving
living environments in slums is mentioned without any specific strategy or action plan. It is
globally observed that conditional cash transfers are useful in overcoming urban poverty. Safety
nets in Bangladesh may also have to ensure that the poor receive a basic minimum assistance but
can also graduate from poverty, using innovative approaches such as conditional cash transfers.
7. Bangladesh has a wide spectrum of social safety net programs. There are 30
specifically designed social safety net programs directly operated by the Government of
Bangladesh. In addition to these, there are 15 funds to provide further assistance to improve the
overall condition of the poor. Appendices A and B list these programs including their purposes,
targeting criteria, financing, nature of benefit and budgetary allocation. Among the existing 30
programs, there are 8 unconditional programs of which 4 are food transfers and 4 are cash
transfers. 2 of these food based programs are generally used in times of natural disasters or
seasonal downturns. There are also 10 conditional programs, comprising of 7 cash transfers and
3 food transfers. Bangladesh also has 5 credit schemes and 3 conditional subsidy programs in
addition to 4 funds. Several programs have been discontinued over time or replaced by newer
programs, e.g. the Women Support Center or the Rural Maintenance Program.
10. Most of the programs are “ex-post” coping initiatives, with few being “ex-ante”
preventative programs. High impetus on ex-post programs represents a weak social safety
net policy in Bangladesh. This is because ex-post programs allow risks to occur, whereas
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efficient ex-ante policy calls for protection before risks appear. Most countries at Bangladesh’s
level of income do not have ex-ante programs given the small size of the formal sector and
limited administrative capacity. In general these programs are limited to the formal sector (civil
service pensions, etc.). However, the extensive coverage of microfinance in Bangladesh provides
an interesting base from which to explore ways of expanding coverage to the informal sector,
which the government is now planning. As new programs are needed to address ex-ante risk
management, focus could be given to various insurance policies, such as expanded pensions,
health insurance, unemployment insurance, catastrophic risk and natural calamities insurance,
etc.
11. Existing social safety net programs do not provide a sufficient basis to cope with the
magnitude of extreme poverty. Table 2 shows that on average, 39% of eligible households are
covered by different programs, therefore about 60% of eligible households are yet to benefit
from a suitable program. This is elaborated further in Table 3.
Table 2: Opinion of Respondents about the Number of Families under the Program and Number of Eligible
families by Program Type
No. of Families Under the
Program Type No. of Eligible families % Covered
Program
Asrayan 20 68.41 29.2
Housing 10 25.18 39.7
FEE 10 29.08 34.4
RMP 10 41.68 24.0
Old Age Allowance 10 24.87 40.2
Widowed Allowance 15 30.30 49.5
VGD 15 27.73 54.1
All Programs 90 247.25 39.1
Source: BIDS, Impact Evaluation of Social Safety Nets Initiatives, Final Report, April 2003.
12. Historically, expenditure for social safety net has been less than 1% of GDP till the
late 1990s. However, this spending has been increasing in recent years, taking advantage of
an annual economic growth of about 5%. Social safety net expenditure was 1.21% of GDP
during 2006-07 and about 1.60% of GDP for the 2007-08 fiscal year. There were only a few
programs until the mid-1990s, and these were designed only for income support, but from the
second half of the 1990s new program types have been initiated almost every year.
4
13. The Government of Bangladesh has increased budgetary allocation and identified
various types of vulnerability in striving to improve social safety net during the current
fiscal year. For the fiscal year 2007-08, a total of Taka 8,427.14 crore has been allocated. This
value constitutes of Taka 6,943.06 crore in the non-development budget and Taka 1,493.006
crore in the development budget, which are 14.38% of the non-development budget and 5.54%
of the development budget. The total value for social protection constitutes 10.58% of the total
budget which is 1.60% of GDP. Compared to the previous year, this is 0.40% point-to-point
increase. Such an increase in allocation is a direct outcome of the recent democratic form of
government in Bangladesh. The government has been reflecting on the political economy of the
country and various international conventions for about a decade where the issue for poverty
alleviation received special attention. The increasing and stable rate of economic growth and the
demand for equitable distribution has also played an important role in the budgetary increase for
social safety net.
14. Social safety net remains an important focus for the government. As a trend, though
almost all programs have been receiving incremental financial allocation, some of these
programs show phenomenal periodic progress with respect to coverage. Table 4 below provides
break down of a sample of major programs. There are increases in the size of benefits per
beneficiary as well. For example, depicted in the graph below, the coverage and benefit for the
Old Age Allowance has increased more than four times in 10 years. The value for such programs
however has not increased much in real terms. But the size of allowances for these programs is
small, for example Taka 220 or 30kg of wheat per person. This allowance does not reflect the
required minimum cost of living. If the wholesale price per kilogram of wheat is Taka 15
(FPMU, Oct 06), the value of a monthly amount of 30kg of VGD wheat per beneficiary is Taka
450. This is more than double the amount of any unconditional cash transfer program’s monthly
benefit. The government is moving away from this differential policy into a policy of more cash
transfer programs than food transfer programs. For example, Food For Education program (FFE)
has been completely discontinued and currently Cash For Education is in operation. Similarly the
Cash For Work is gradually replacing the Food For Work (FFW) program.
Test Relief (TR) 10,500 13,930 0 12,753 11,194 14,523 15,396 15,016 23,562 24,878 25,831 30,282
Gratuitous Relief (GR) 11,050 6,515 0 6,733 2,914 2,905 3,079 5,256 10,053 10,614 11,021 12,920
Vulnerable Group Feeding (VGF) 19,966 21,332 0 21,960 21,850 21,785 23,094 22,520 157,080 24,878 43,050 80,753
5
Food for Work (FFW) (Khabikha) 0 0 0 0 0 0 0 0 0 29,023 37,367 37,346
250 1,800,000
1,600,000
Allowance in Taka per
Beneficiary (Nominal
200 1,400,000
Total Number of
1,200,000
Beneficiary
and Real)
150
1,000,000
800,000
100
600,000
50 400,000
200,000
0 0
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Year
6
Chittagong 45.7 34.0 11.06 12.89 5.72 8.9
Khulna 45.1 45.7 9.58 11.03 4.23 7.1
Rajshahi 56.7 51.2 12.07 13.02 6.71 11.3
Sylhet 42.4 33.8 22.42 24.31 11.25 18.0
National 48.9 40.0 13.02 15.54 5.45 10.2
Source: BBS, Household Income and Expenditure Survey, 2000 and 2005.
16. This discrepancy is further visible in Tables 6 through Table 8 below. There is significant
variation in participation among the 6 divisions. From among the poorest 10% of households,
about 41% participants are in Sylhet followed by another 28% from Chittagong. Nationally, this
accounts for about 21% of the people in the lowest decile.
Table 6: Participation by Division and Wealth Status in the Targeted Programs by Income Group
Lowest Lowest
Division Quintile 2 Quintile 3 Quintile 4 Quintile 5 Total
Quintile Decile
Barisal 14.6 7.3 4.9 5.6 0.9 7.7 14.8
Chittagong 21.7 11.2 7.6 8.1 2.7 8.9 27.5
Dhaka 19.5 15.8 13.6 8.3 2.9 10.2 19.2
Khulna 11.0 8.7 5.4 5.9 3.2 7.1 15.0
Rajshahi 21.5 12.9 8.0 5.3 2.0 11.3 22.9
Sylhet 31.4 24.8 24.9 12.6 5.2 18.0 40.8
Total 19.1 13.1 10.0 7.4 2.8 10.2 20.7
Source: BBS, Household Income and Expenditure Survey, 2005.
17. Out of 13.02% of households receiving social safety net benefits, 15.54% are rural
households followed by 5.45% urban households. Sylhet receives the largest share of benefits by
24.31% for rural beneficiaries and 11.25% for urban beneficiaries. In contrast, Khulna receives
the lowest by 11.03% and 4.23% respectively for rural and urban households. This is elaborated
in Table 7:
Table 7: Distribution of Households Receiving Benefits from Social Safety Net Programs, 2005
% of Households Receiving Benefit
Division
Total Rural Urban
Barisal 13.34 14.79 5.00
Chittagong 11.06 12.89 5.72
Dhaka 14.27 19.98 4.94
Khulna 9.58 11.03 4.23
Rajshahi 12.07 13.02 6.71
Sylhet 22.42 24.31 11.25
National 13.02 15.54 5.45
Source: BBS, Preliminary Report on Household Income and Expenditure Survey, 2005.
18. The highest number of beneficiaries is in the VGF program which is 33.34% of the total
– Sylhet having the greatest number of VGF beneficiaries. This is followed by the VGD program
which provides assistance to 17.11% households, with Dhaka having the most VGD
beneficiaries (see Table 8 below). This data indicates that programs have certain political
dimensions when Table 7 is also taken into consideration.
7
Program Total Barisal Chittagong Dhaka Khulna Rajshahi Sylhet
VGD 17.11 16.38 9.89 23.12 12.80 16.83 8.83
IFS 0.32 0.00 0.00 0.00 3.72 0.00 0.00
FFW/CFW 0.24 1.14 0.58 0.23 0.00 0.00 0.00
TR 10.50 1.56 27.68 6.15 16.24 7.44 9.64
VGF 33.34 16.81 30.34 30.61 17.95 41.53 55.61
GR 0.58 1.14 3.48 0.00 0.00 0.00 0.00
FFE/CFE 8.40 33.06 1.16 12.78 13.32 0.00 0.00
RMP 0.11 0.00 0.81 0.00 0.00 0.00 0.00
Old Age 15.91 25.36 14.33 10.84 20.82 24.35 8.43
FF 0.72 0.00 0.58 1.01 0.93 0.75 0.00
Other 11.24 12.68 14.89 13.67 6.80 3.86 16.05
% All HH 13.02 13.34 11.06 14.27 9.58 12.07 22.42
Source: BBS, Preliminary Report on Household Income and Expenditure Survey, 2005.
20. Programs other than education look at income poverty and target the poor, e.g. VGD,
VGF, Old Age Allowance, etc. In the case of educational programs, however, the targeting
system sets performance as its main criteria. For example, in the PESP program, school
attendance is a condition for receiving the stipend. Therefore, children from hardcore poor
households face severe difficulties in participating in the program. Such issues challenge the
effectiveness of current targeting mechanisms.
21. The Government acknowledges that all targeted programs do not reach the
hardcore poor. Microfinance programs are examples in this case. It is also that a large part of
the total budget allocation is termed as social safety net. But if we separate out the values of 8
microfinance and loans and 4 funds from Appendix A and 15 funds in Appendix B, the size of
direct social safety net allocation drops significantly.
22. Generally, targeting mechanisms are homogeneous among all programs where
benefits are transferred to individual beneficiaries. The basic targeting methodology starts
with a general guideline prepared by the implementing ministry. A certain quota is allocated in
the guideline, which includes the total number of beneficiaries, the number of beneficiaries per
union, and the amount of transfer per beneficiary. The quota also caps the number of male and
female beneficiaries per union or ward. The guideline mentions certain targeting criteria
according to the theme of the program. Usually these criteria include income level, asset and
household structure, and demographic features. Based on such criteria, union parishads, in
consultation with other local agencies and community, identify beneficiaries.
23. Three sets of targeting criteria are presented in the following Table 9. None of these
targeting approaches require that all the criteria have to be fulfilled by an individual, but in case
of most selected beneficiaries, only one of these criteria can be observed. Surveys have shown
fulfillment of all criteria by an individual beneficiary is rare. Table 10 shows three programs
along with their beneficiary selection criteria and number of sample complying with the given
criteria.
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Table 9: Comparative Selection Criteria
IGVGD PESP RMP
Criteria: 1. Destitute woman headed family 1. Must be a permanent woman
1. Households with not more than 15 (destitute means widowed, resident of the union.
acres of land. separated from husband and 2. Must be either destitute, widowed,
2. Monthly household income less divorced). divorced, separated from husband
than Tk. 300 2. Principal occupation of the (not less than one year), who are
3. Dependent upon seasonal wage household head is day-labor. household head but does not have
employment. 3. Family of low income alternative means of income.
4. Women of reproductive (18-49) professionals (such as: fishing, 3. Must be between 18-35 years of age.
age. pottery, blacksmithing, weaving, 4. Those women who have higher
5. Day labor or temporary worker. and cobbling). number of dependent will be given
6. Lack of productive assets. 4. Landless or households that own priority (dependant means children
0.50 acres of land (marginal or less than twelve years of age,
Prerequisites for selection: share-cropper). disabled children and husband and
1. VGD member must be a dependant parents).
permanent resident of the area. 5. Must have the physical and mental
2. Women of reproductive age. capacity to do laborious works.
3. Not associated with any NGO. 6. Those who have been working for
4. Did not get VGD card before. the RMP for less than one years and
5. One card for one family. never been fired and capable of
satisfying the above criteria will be
Priorities: automatically selected.
1. Female-headed household. 7. Not a member of VGD or any other
2. Those who are mentally and targeted program.
physically capable of undertaking
IGA activities.
Source: Project Proposal, Income Source: Project Summery, Stipend for Source: Road Maintenance Management
Generation for Vulnerable Group Primary Education Project, 2002-2003 Training Manual, RMP, Care-Bangladesh,
Development Program (IGVGD), January Financial Year, Department of Primary and December 2001, Third Edition, Third Reprint,
2003 – December 2004, BRAC. Mass Education, Government of the June 2003 (Bangla Version). Note: This
People’s Republic of Bangladesh, July 2002 program has recently been replaced by a
(Bangla Version). similar program named REOPA.
5. Day labor or temporary worker 13.70 2. Principal occupation is day-labor. 7.7 Separated 26.10
6. Lack of productive assets 80.00 3. Family of low income professions 22.20 Household head 86.30
4. Landless or owns 0.50 acre of land 86.40 3. Must be between 18-35 years. 29.10
9
2. Mentally and physically capable of
80.00
undertaking IGA activities.
Source: Ahmed S.S. (2005), Delivery Mechanism of Cash Transfer Programs to the Poor in Bangladesh, Social
Protection Discussion Paper 0520, The World Bank.
24. Criteria used for targeting are useful. It is observed that 84% of beneficiaries do not
own any land. At the same time 93% non-beneficiaries do not own any land. The proportion of
beneficiaries having no land varies form 58% to 98 for Housing Fund and VGD respectively.
Therefore, only landholding is not a sufficient criterion, especially in reaching the hardcore poor.
This is presented in Table 11.
Table 11: Success of Safety Nets Programs in Targeting the Poor: Land Base Assessment
% of Households % of Households
% of Households Mean size of land
with landownership with landownership
Type of Program with land (decimals)
above 0.01 acre above 0.50 acre
Project Control Project Control Project Control Project Control
Asrayan 73.8 97.5 - - - - 1.3 1.3
Housing 58.3 63.3 28.3 26.7 8.3 3.3 21.5 12.4
FEE 73.3 93.3 21.7 3.3 11.7 - 19.4 .8
RMP 95.0 100.0 2.4 - 1.7 - 1.6 -
Old Age Allowance 93.3 92.6 4.4 3.8 - 1.9 1.6 1.9
Widowed Allowance 93.3 98.1 5.6 - - - 1.6 .1
VGD 98.3 100.0 1.7 - - - .7 -
All Programs 84.4 92.9 8.4 4.0 2.6 0.7 6.0 1.9
Source: BIDS, Impact Evaluation of Social Safety Nets Initiatives, Final Report, April 2003.
25. Bangladesh’s safety net programs tend to be modestly pro-poor with an average of
34% of beneficiaries in the first quintiles, and 60% of beneficiaries up to the second
quintiles, according to the HIES, 2005. However this is not very impressive by international
standards, and as such, improving targeting mechanisms is the foremost challenge for the
government’s growing social protection initiatives.
26. The outreach of social protection programs is far below the requirement in
Bangladesh. According to the HIES survey, a total of 13% of households are beneficiaries in
one of the many social protection programs. This is further manifested in Table 12. From among
the poorest 10% of households, about 23% participate in some form of safety net program.
Locality-wise, this is 26% rural households, 19% urban households, and 7% metropolitan
households.
Table 12: Share of Households participating in at least one SSNP by Location, Program and Wealth Status
Rural Urban Metropolitan Total
Non- Non- Non- Non-
Targeted Pension Total Targeted Pension Total Targeted Pension Total Targeted Pension Total
Targeted Targeted Targeted Targeted
Lowest
2.4 16.9 4.5 23.8 2.0 15.0 2.2 19.2 2.8 3.8 - 6.6 2.3 15.7 3.6 21.6
Quintile
2nd
3.1 12.8 2.3 18.2 1.8 6.3 1.8 9.8 1.0 - 1.9 2.9 2.7 10.6 2.2 15.4
Quintile
3rd
4.3 8.9 2.6 15.8 1.3 6.9 1.3 9.5 0.6 1.9 1.3 3.8 3.3 7.9 2.2 13.4
Quintile
4th
2.7 6.9 2.4 12.0 1.7 3.0 2.1 6.8 1.5 1.0 1.0 3.4 2.3 5.3 2.2 9.8
Quintile
Top
2.6 3.5 1.1 7.3 0.7 1.3 0.1 2.2 0.3 - - 0.3 1.6 2.2 0.6 4.4
Quintile
Total 3.1 10.0 2.6 15.7 1.4 5.9 1.3 8.6 1.0 1.0 0.7 2.7 2.4 8.1 2.1 12.6
Lowest
2.7 17.3 5.8 25.8 1.9 14.7 2.7 19.4 1.8 7.1 - 8.9 2.4 16.0 4.6 23.1
10%
Source: BBS, Household Income and Expenditure Survey, 2005.
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27. About 34% of beneficiaries in all safety nets programs come from the lowest quintile. In
fact, other than Cash for Education and Freedom Fighters’ Allowance where these programs
concentrate more on the second and third quintiles, more than one-third of the beneficiaries
belong to the lowest quintile. A total of 59% of beneficiaries belong to the lowest two quintiles,
whereas nearly 21% of beneficiaries are in the top two quintiles. Therefore, targeting efficiency
is modest by international standards, as presented in Table 13 below:
28. People from the lowest quintile have higher participation. This is presented in Table
14. One-third of beneficiaries surveyed by HIES 2005 were VGF beneficiaries. More than 50%
of beneficiaries belong to the bottom two quintiles. At the same time the top two quintiles have
about 20% of the beneficiaries.
Table 14: Performance of Programs in Targeting Poor Households
Lowest 2nd 3rd 4th Top
Program
Quintile Quintile Quintile Quintile Quintile
VGD 31.7 29.1 19.4 14.3 5.5
TR 38.9 22.2 18.9 13.3 6.7
VGF 36.1 25.0 20.7 13.0 5.2
Old Age Pension 31.9 20.0 21.1 20.5 6.5
Total (targeted) 34.2 24.6 20.0 15.3 6.0
Total (non-targeted) 30.9 23.8 21.6 16.2 7.5
Source: BBS, Household Income and Expenditure Survey, 2005.
29. As observed above, the targeting efficiency has mixed indication. In a recent World
Bank technical note (2007b) it is observed that the performance of Bangladesh’s current
community-based beneficiary selection system can be enhanced in combination with the
proxy means test (PMT). Simulations show that the estimated PMT can predict the poor with
good accuracy and that the proposed combination of community-based screening and selection
and PMT could greatly outperform the targeting efficiency of the country’s current programs. In
scaling-up this new targeting system, the note also recommends the use of geographical targeting
in which allocations to local areas are made in proportion to the estimated number of poor
households in that area.
29. This mixed methods approach works in three steps: (1) nominations by ward committee
members; (2) PMT ranking and selection; and (3) community approval of final lists and appeals.
In urban areas, because of the weaker local knowledge, a slightly different process is needed. In
this case, PMT will be enhanced with local accountability mechanisms. A simple pre-application
screening is also proposed to limit the number of applications that need to be processed. The
process would also have three steps: (1) local outreach; (2) data collection for PMT and ranking
of applicants; and (3) approval of final lists by ward members.
11
30. Table 19 shows the efficiency of the PMT selection criteria by itself, which never was
introduced in the country, and a mixed approach where current community-based criteria and
PMT is jointly introduced. It is observed that its little better to when PMT alone is used. But the
pure PMT simulation is a somewhat unrealistic benchmark because in practice many poor never
apply and are therefore not assessed by the PMT, even in countries with much higher coverage
than Bangladesh. Therefore, outreach campaigns and geographic targeting are needed calling for
a mixed targeting approach.
Table 19: Simulated Distribution of Beneficiaries: PMT and Mixed Methods (at 10% cutoff)
Rural Urban
Ward comm. nomination based on firm
Decile Ward comm. nomination based on firm
PMT PMT criteria (3 rooms or less; one fan or less in
criteria (no electricity; < 0.5 acre of land;
alone alone house; household head has primary
4 rooms or less) followed by PMT
education or below) followed by PMT
1 40.2 39.0 53.3 49.7
2 66.0 63.5 78.7 75.0
3 81.9 80.5 88.3 86.9
4 90.4 89.5 95.3 93.8
5 94.2 93.2 98.3 98.2
6 97.6 96.6 99.7 99.5
7 99.3 98.7 100.0 99.7
8 99.8 99.5 100.0 99.8
9 100.0 99.8 100.0 100.0
10 100.0 100.0 100.0 100.0
Households
10.0 10.0 10.0 10.0
Covered (%)
31. There is mixed evidence of leakage from food and cash transfer programs. The
VGD, VGF and the FFE accounted for 40% of all food transfer programs in 1999. Analyses
pointed to high levels of leakage from the system. This is presented in the following Table 15:
Table 15: Estimates of Leakage from VGD, VGF and FFE
Survey estimate as
2000 HIES-based Program off-take
95% Confidence % of total program
survey estimates for FY 1999-2000
Program interval for estimate allocation (confidence
(metric tons) (metric tons)
intervals)
VGD 99,978 [72,894, 127,061] 216,675 [34%–59%]
VGF 70,760 [44,251, 97,267] 149,138 [30%–65%]
FFE 49,951 [27,192, 72,710] 285,973 [10%–25%]
Source: World Bank (2002(c)); Program Off-take: Bangladesh Food Grain Digest, World Food Program, Dhaka, Bangladesh.
32. Similarly, leakages in the FFW program have been estimated to be 26% (World Bank,
2003). Ahmed (2004) also shows fairly high levels of leakage from the VGD and the PESP, a
cash transfer program depending on the criteria used (Table 16). A PERC report (GoB, 2003)
shows that a large part of the budgetary allocations for the Female Secondary Stipend program
(about 20-40%) do not reach the beneficiaries and are perhaps appropriated by the schools and
other intermediaries.
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Table 16: Comparative Leakage from Different Programs
Leakage VGD PESP RMP
A. Losses due to delivery of amount less than stipulated and 0.17 0.23 0.02
other unauthorized expenses (per taka)
B. Losses due to beneficiaries not meeting…
(i)…at least one targeting criteria 0.00 0.11 0.00
(ii)…at least three targeting criteria 0.61 0.98 0.00
Total Losses….
…A + B (i) 0.17 0.34 0.02
…A + B (ii) 0.78 1.22 0.02
Source: Ahmed S.S. (2005), Delivery Mechanism of Cash Transfer Programs to the Poor in Bangladesh, Social
Protection Discussion Paper 0520, The World Bank.
33. Not all studies agree with these numbers representing leakage. Ahmed, Del Ninno and
Chowdhury’s evaluation of the FFE program (in Dorosh, Del Ninno and Shahabuddin, 2004),
shows that the total leakage from the FFE program was significantly lower – in the range of 16-
20%; Tietjens (2003) estimates that the leakage in the Female Secondary Stipend program is
between 10-12%; and similarly, Del Ninno, Smith and Roy (in Dorosh, Del Ninno and
Shahabuddin, 2004) show that leakages from the VGF declined during, and in the aftermath, of
the 1998 floods.
34. Leakages from programs show a strong correlation with the number of
intermediaries in the transfer process. While different data sources point to varying estimates
of leakage, the prevalence of this problem cannot be ignored. VGD and other food transfer
programs depend on the public food distribution system, with food being loaded and unloaded at
a number of points before finally being delivered to beneficiaries. PESP also involves a large
number of intermediaries involved in selecting students, disbursing stipends and monitoring the
program. Initial evaluations suggest that it has leakage of over 20%. A distinguishing
characteristic of the RMP, which has an estimated leakage of less than 5%, is that it appears to
have few intermediaries, or at least none that are able to intervene in the cash payment process at
any point.
35. The delivery of social assistance programs could be outsourced to agents operating
at the local level. There are two factors to consider when outsourcing. First, the organization
would have to be provided with resources – some form of management fee to cover the cost of
their involvement. Second, an agent would need a secure contract with clear performance
criteria and performance measuring procedures in place. Since in all cases where cash is
transferred, a nationalized commercial bank or a specialized bank is used as delivery mechanism,
efficiency of outsourcing can be higher.
36. The cost of delivering cash is cheaper than the cost of delivering food to the
beneficiary. A recent study by Ahmed et al. (2007) finds that the cost of delivering Taka 1.00
worth of food is, on an average, Taka 0.20. The cost of delivering Taka 1.00 in cash benefit,
however, is virtually zero.
13
Cost of Delivery
0.30
0.25
0.20
Paisa
0.15
0.10
0.05
0
Rice Flour All food Cash
Benefit
37. The HIES 2005 survey also found that beneficiaries prefer cash over kind. This is
irrespective of the income group or program type. About 75% of total beneficiaries from all
groups and 68% of the bottom quintile prefer cash over kind. This is presented in Table 17.
38. Beneficiaries consider cash assistance very helpful. As shown in Table 18 below,
61.4% of the beneficiaries from the lowest decile perceive the programs are very helpful even
though the size of the benefit covers only a part of the average household consumption.
Table 18: Participants’ Perception of the Assistance received through Targeted Programs
Very Moderately Not
Quintile Helpful
Helpful Helpful Helpful
Lowest Quintile 58.5 34.9 6.5 0.1
2nd Quintile 59.2 32.7 7.3 0.7
3rd Quintile 59.9 29.7 9.7 0.7
4th Quintile 65.0 25.7 7.3 2.0
Top Quintile 52.9 31.6 15.5 -
Total 59.6 31.7 8.0 0.7
Lowest 10% 61.4 32.4 6.1 0.2
Source: BBS, Household Income and Expenditure Survey, 2005.
39. Safety net programs in Bangladesh are administered by numerous agencies, including
many arms of government, non-governmental organizations, as well as international bilateral and
multilateral partners. While the involvement of a number of agencies in social protection
provides a high visibility for this sector, it may also become a hurdle when there is a need
to coordinate and navigate through many different agencies to achieve an objective or
undertake a task. This issue is evident from the chart below, which shows the complication in
completing the entire process of offering the VGD social safety net program.
14
VGD Funds Flow
40. It is evident from the above discussion that there are regional disparities, failures to
address urban poverty, inappropriate targeting mechanisms and substantial leakages in the
current social protection programs in Bangladesh. The primary cause is the overall
implementation strategy. Almost everything related to social safety net programs is designed
by the central government and there is virtually no connectivity with the local governments
in relation to decision making in these processes.
42. Decentralizing program implementation can be highly rewarding. One of the oldest
rural local government institutions in Bangladesh is the union parishad. The parishad is elected
by the local people from among the local people. There are about 4,500 unions throughout the
country. Similarly, municipalities and city corporations elect ward commissioners. There are 6
15
city corporations and 225 municipalities in the country. Elected officials intimately know their
respective locality and tend to be more innovative. These local representatives can better identify
poor local people, assess their needs to help them overcome their poverty, and closely monitor
the execution of programs. Therefore, devolving the administration of social protection programs
to local government could improve service delivery and social accountability.
43. From the analysis presented above, the following findings emerged:
A regime shift in the safety net system towards emerging dimensions is needed. At
present, too many safety net programs are in operation at present. The origin of the main
programs relates to food shortages during the early stages of the economy. However, the
economy has changed significantly over the course of time including the nation in the
recent period becoming near food sufficient and achieving higher rates of economic
growth.
New approaches to urban safety nets and safety ladders are needed. For example,
school enrollment rates in metropolitan areas for the poorest quintiles are worse than
those in rural areas. Little has also been done for the poor children, and new dimensions
for protecting poor children require immediate attention.
Bangladesh is poised to gradually move from social safety net programs only to
social security programs as well. This is because of opportunities emanating from
continuing economic growth and increasingly positive democratic political environment.
Every effort should be made now to ensure smooth unfolding of a comprehensive social
protection system in Bangladesh.
16
Appendix A
Bangladesh Safety Net Programs: Objective and Beneficiary Selection Criteria
17
Financed by and Nature of Benefit/ Budget Allocation
Name of the Program Purpose Targeting Criteria Implementing Planned Coverage/ 2007-08 [06-07]
Ministry Delivery Mechanism Taka in Crores
infrastructure 3. Women headed MLGD the ADP allocation.
household where women MSW
are widowed, deserted, MWR
and destitute
4. Day labor or temporary
workers
5. People with income
less than Tk. 300 per
month
1. Employment generation
5-6KGs of wheat per
10. Test Relief (Rural for the poverty stricken GOB
1. Generally a location is day for a month
Infrastructure people in rainy season DPs
targeted where poverty is during rainy season/ ?
Maintenance 2. Developing and /
relatively severe 1,700,000/
Program) (TR) maintaining rural MFDM
Union parishod
infrastructure
1. Supporting backward Employment for a
11. Food Support for
CHT GOB/ month/ 153.00 (0.75 MT)
Chittagong Hill ?
2. Infrastructure MCHT 800,000 person/ [137.00]
Tracts
Development Union Parishod
CONDITIONAL TRANSFERS: CASH
1. Children from female
headed households where
head of the household is
widowed, deserted and
1. Increasing number of
destitute
primary school enrolments
2. Children from
from poor family
households where head of
2. Increasing school
12. Primary Education the households are day GOB Tk. 100 -125/
attendance and reducing
Stipend Project labors / 5,500,000 students/ 500.00 [468.00]
dropouts
(PESP) 3. Family of low income MPME Bank
3. Increasing primary
professionals (like:
school completion rate
fishing, pottery,
4. Reducing child labor and
blacksmith, weaving, and
poverty
cobbling)
4. Landless or households
that own not more than .5
acres of land
1. Increasing student GOB
1. All unmarried girl Tk. 300 -720 and
13. Female Secondary enrolments at secondary DFID
students studying in other cash benefits/
School Assistance schools / 232.48 [267.51]
recognized institutions at 3,000,000 students/
Program (FSSAP) 2. Reducing the incidence DSHE
secondary level Bank
of under age marriage MOE
1. Households les than .3
acres of land
2. Female headed
households where head of
the household aged
14. Rural 1. Empowerment of women
between 18-35 years GOB
Employment 2. Maintaining Rural Tk. 80/
3. Widowed or separated EU
Opportunities for Infrastructure 24,000 women/ ?
at least one year with /
Public Assets 3. Operating in 387 union Bank
priority to those with MLGD
(REOPA) parishads.
more dependents
4. Households with no
other income and not
participating in other
targeted programs
15. Capitation Grant GOB
for the Orphan ? ? / Tk. 600 per month/ 30.20 (19.00)
Students MSW
Primary level Tk. 200
and Secondary Level
16. Stipend for GOB
Tk.300 and Higher
Students with ? ? / 5.00
Secondary level Tk.
Disabilities MSW
400 and University
Level Tk. 600/
1. Ensure safe motherhood
17. Maternity
2. Better health and Tk. 300/
Allowance for the GOB/
nutrition of mothers and ? 45,000 mothers/ 17.00
Poor Lactating MWCA
safe birth and sound
Mothers
upbringing of infants.
18. Protection for the Developing most vulnerable 1. Street children with or GOB Education and Shelter
?
Children at Risk children (floating and without family UNICEF and Job placement/
18
Financed by and Nature of Benefit/ Budget Allocation
Name of the Program Purpose Targeting Criteria Implementing Planned Coverage/ 2007-08 [06-07]
Ministry Delivery Mechanism Taka in Crores
(PCAR) homeless) / XX/
MSW
FUND
Loans Tk. 5,000-
19. Fund for 1. Help mitigate suffering 25000 for max 2 years
GOB
Mitigation of Risk of disaster victims 1. Disaster and calamity with 5% service
/ 35.00 [30.00]
of Natural 2. Provide loans to set up victims charge/
MFDM
Disaster small business Changes yearly/
Bank
20. Emergency Fund 1. Help mitigate sufferings
GOB
for Mitigating of disaster victims 1. Disaster and calamity Depends on actual 30.00 [24.30]
/
Risk of Natural 2. Provide emergency victims need and necessity 100.00 [100.00]
MFDM
Disaster by Relief help to disaster victims
GOB
1. Rural poor, low income
/
21. Fund for Housing To mitigate housing and homeless family
Housing Fund Loans up to Tk.
for the Distressed problem of the homeless, 2 .Households affected by
Management Unit 20,000/ ?
(Grihayan poor and other low income natural disaster and fire
Bangladesh Bank
Tahabil) groups 3. Capable of paying 5%
NGO
flat interest rate
MLGD
1. Assisting acid burnt
women and disabled
22. Fund for through provisioning of
Credit up to Tk.
Rehabilitation of interest free credit and skill
GOB 10,000 and training/
Acid Burnt training 1. Provision of facilities
/ 5930/ 10.00 (5.00)
Women and the 2. Creating opportunities for generally based upon case
MSW Bank
Physically acid burnt and disabled
Handicapped women for income
generating activities
3. Raising social awareness
CONDITIONAL: CREDIT
23. Vocational Vocational Training
Training and Self- 1. Reduce poverty among and Loans from Tk.
1. Insolvent freedom
employment insolvent freedom fighters GOB 5000 - 250,000/
fighters and their
Program for and their dependents / Initial pool 25000 27.50 (18.20)
dependents from all 64
Injured Freedom 2. Re-install social dignity MFFA persons/
districts
Fighters and their of the freedom fighters Bank
Dependents
Promoting the local
organizations, leadership 1. Disadvantaged rural Micro-credit and
and participation of rural population including GOB training and non-
24. 13. Rural Social
people especially the children, women / formal education/ ?
Services
disadvantaged groups in unemployed youth and MSW XX/
planning and execution of landless persons Bank and NGO
group specific programs
1. Employing women in
Micro-credit and
gainful economic activities GOB
25. Rural Mothers 1. Rural women of age training/
2. Educating women in / ?
Center group (15-49) XX/
various aspects of social life MSW
Bank and NGO
including health
1. Mobilizing
disadvantaged urban people
to solve their immediate Micro-credit and
26. Urban Community GOB
problems through group 1. Disadvantaged urban training/
Development / ?
efforts people XX/
Program MSW
2. Facilitating income Bank and NGO
generating activities
through training, credit etc.
27. 16. Capacity
1. Providing alternative
Building, Poverty
livelihood for socially
Alleviation and
disadvantaged women and GOB Microcredit and
Sustainable 1. Socially disadvantaged
their children through UNDP training/
Livelihood of the women and their children ?
vocational and skill / XX/
Socially in selected locations
development training MSW Bank and NGO
Disadvantaged
2. Reintegrate SDWs into
Women and their
mainstream society
Children
CONDITIONAL: SUBSIDY
28. Fertilizer and To provide subsidy to
GOB/
Electricity various fertilizer import ? ? 1141.00 [1500.00]
MA
Subsidy related trade gap
19
Financed by and Nature of Benefit/ Budget Allocation
Name of the Program Purpose Targeting Criteria Implementing Planned Coverage/ 2007-08 [06-07]
Ministry Delivery Mechanism Taka in Crores
29. Subsidy for
Marginal Farmers GOB/
? ? ? 750.00
to cope with the MA
Fuel Price Hike
For special groups and
30. Food Subsidy ? ? ? 740.00 [699.00]
OMS operations
Appendix B
Funds Earmarked as Social Protection
Operating Agency
Fund Purpose Finance
/Source of Fund
World Bank /
1. Fund for Agricultural Research Endowment Fund for Agricultural Research Ministry of 350.00
Agriculture
2. Fund for Skills Development Training for the For the retrenched garment industry workers. In Ministry of Trade
20.00
Garments’ Industry Workers consultations with the labor welfare organizations. and Industries
Representatives of garment industries, labor
3. Fund for Labor Welfare organizations, and ministry coordinates the fund to 25.00
provide welfare to the garment workers
To provide finance and training to the natural
4. Fund for Coping Risks Relating to Natural Calamities calamity affected poor people so that they do not fall ? 35.00 [30.00]
poorer
10 [Total 54.00
5. Special Fund for Self-retired/ Retrenched Labor and during the last
? ?
Employees to Provide Re-training and Re-employment three fiscal
years]
Nationwide 252 NGOs in 373 Upazila of 64 districts. Finance Division,
6. Fund for Housing for the Homeless 50.00
175,000 beneficiaries Bangladesh Bank
1. Marginalized poor living in geographically
disadvantaged areas and seasonally unemployed
peoples living in specific areas:
To provide employment opportunities for the
marginalized poor in some specific poverty pockets
7. Fund for Reduction of Temporary Employment 2. To provide income support to people living in GOB / MSW 50.00
geographically disadvantaged areas
3. To overcome seasonal unemployment in those
areas
20
References:
Ahmed S.S. (2005), Delivery Mechanism of Cash Transfer Programs to the Poor in Bangladesh, Social Protection
Discussion Paper 0520, The World Bank
Ahmed A. U., Agnes R. Quisumbing, and John F. Hoddinott (2007), Relative Efficacy of Food and Cash Transfers
in Improving Food Security and Livelihood of the Ultra-Poor In Bangladesh, International Food Policy Research
Institute
World Bank (2007), Dhaka: Improving Living Conditions for the Urban Poor, Report No. 35824 - BD
BIDS, Impact Evaluation of Social Safety Nets Initiatives, Final Report, April 2003
Project Proposal, Income Generation for Vulnerable Group Development Program (IGVGD), January 2003 –
December 2004, BRAC
Project Summery, Stipend for Primary Education Project, 2002-2003 Financial Year, Department of Primary and
Mass Education, Government of the People’s Republic of Bangladesh, July 2002 (Bangla Version)
Road Maintenance Management Training Manual, RMP, Care-Bangladesh, December 2001, Third Edition, Third
Reprint, June 2003 (Bangla Version)
World Bank (2002); Program Off-take: Bangladesh Food Grain Digest, World Food Program, Dhaka, Bangladesh
21