BWFF3033 FINANCIAL MARKET & INSTITUTION FIRST SEMESTER

SESSION 2022/2023 (A221) 

TOPIC : POVERTY RATE (INDEX) BY BANGLADESH

PREPARED FOR : DR SABRI BIN NAYAN

PREPARED BY :

NAME DIANA SOFEA BINTI MAHADI

MATRIC NUMBER 284378

GROUP F

SEQUENCE NUMBER 45

SUBMISSION DATE : 4 DECEMBER 2022

1.0 INTRODUCTION

The proportion of people in a certain age group whose income is below the poverty line is

calculated as half the median family income of the entire population which is known as the

poverty rate. Furthermore, it is accessible by age category, including children, people of working

age, and the elderly. Meanwhile, multidimensional poverty is when a poor individual may

experience several negative factors at once, such as poor health or hunger, a lack of clean water

or power, low work quality, or inadequate education. In this context, the study is going to

investigate the multidimensional energy poverty in Bangladesh.

When households spend over 10% of their earnings on overall power usage to sustain the

right level of heating, they are said to be in energy poverty (DECC, 2015). Based on the most

recent three waves of the Household Income and Expenditure Survey (HIES) from 2005, 2010,

and 2016, this study seeks to determine the prevalence and severity of multidimensional energy

poverty which link with household health and education level in Bangladesh. In order to achieve

this, we first determine the multidimensional energy poverty index (MEPI) for Bangladesh. The

results show that MEPI has been declining over time, with respective values of 53.79, 43.51, and

36.33% in the years 2005, 2010, and 2016.

It's indeed true that gas is almost the only mineral resource Bangladesh has. However, the

combined potential of land, water, and human labour are enormous. Based on the World Energy

Outlook (2019), there are 770 million people who lack access to electricity. Furthermore, 2.60

billion people globally struggle to access clean cooking facilities, forcing them to rely on solid

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fuels.The study concentrated on the MEPI, a composite score that incorporates households' lack

of access to power services in general (Nussbaumer et al., 2012).

2.0 OVERVIEW

It is critical to examine residential energy use in greater detail in order to comprehend the

nation's energy status. The various ways that energy is used for lighting and cooking are shown

in Figure 2.1. The dependency on kerosene among families has declined across the survey

periods, from roughly 30% in 2005 to 13% in 2016, as seen in the figure. The rising acceptance

of electricity as a more environmentally friendly fuel source for cooking and lighting is one

potential explanation for this. Regarding this, the data demonstrates that household electricity

usage grew from 15% in 2005 to 22% in 2016.

Figure 2.1 types of fuels used for lighting and cooking in households as a percentage.

77% of Bangladesh's community loses access to clean fuels and technology to cook at

home, as shown in the 2021 Energy Progress Report on Sustainable Development Goal (SDG),

leaving Bangladesh's rural households approximately 92% practice solid fuels for cooking and

heating, resulting in energy shortages. This study seeks to understand how the MEPI scores vary

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across Bangladesh in order to gauge the extent of energy poverty from a multidimensional

viewpoint. In the MEPI, a lower number is preferable to a higher one since a higher score

denotes greater levels of lack of energy availability and price.

Figure 2.2 The incidence of multidimensional energy poverty at the national and

regional levels.

The national level MEPI is the construct of the headcount ratio, which for the years 2005,

2010, and 2016, is 0.7774, 0.6430, and 0.5904, respectively. The upward trend in the

accessibility and affordability parameters included in the MEPI computation may be a significant

factor in Bangladesh's ongoing reduction in overall energy poverty. With MEPI percentages of

40.42%, 28.27%, and 24.48% for the years 2005, 2010, and 2016 respectively, Dhaka leads with

the lowest percentages. Considering that Dhaka is the country's capital and has experienced

higher socioeconomic growth than some other subdivisions giving its better MEPI score to be

expected.

The highest MEPI scores in the survey periods, that is, 70.67%, 55.95%, and 46.83% for

the three years respectively were earned by Rangpur. The region's persistent high prevalence of

income poverty may be one factor contributing to this tendency. In general, the MEPI scores

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tend to reflect a downward tendency over time when viewed from the standpoint of geographic

location, that is rural against urban. However, the larger percentage of intensity over the selected

period can be the result of rising housing costs and unchecked food price increases as a result of

rising migration to urban centers.

3.0 POLICY IMPLICATIONS

Huge numbers of people across the globe particularly in rising Asia are suffering from

energy poverty. Despite how it has significantly increased, Bangladesh's energy poverty status

still has to be greatly improved. Since 2010, the GOB has placed a major focus on investing in

the energy industry which has led to a noticeable improvement in accessibility to electricity as

well as various types of cooking fuel. Multidimensional energy poverty has a detrimental impact

on schooling and greatly impairs health conditions, mostly due to air pollutants. Sufficient

regulations for the rapid deployment of renewable energy should be developed so that there is

continuous and dependable access to power in underdeveloped areas.

Utility expenses for groups with mid-to-low incomes may be reduced in the near term

with the support of new policy measures to promote energy efficiency practises at the end

customer level. The analyses of the MEPI give policymakers something to think about on how to

make new energy available and reasonable before it is too late to handle the dangerous impact.

The severity of the impact is much tougher for others who live in rural regions, thus these

concerns need to be seriously examined. In addition to reducing global climate concerns, moving

the focus of subsidies away from fossil fuels and toward clean energy, alternative sources of

electricity would help cost-effectively deal with the issue of energy poverty.

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4.0 REFERENCES

Maloney, C. (1985). Why does Bangladesh remain so poor? Part II: eight answers. UFSI

Reports, 34, 1–10. https://pubmed.ncbi.nlm.nih.gov/12280442/#:~:text=The

%20initial%20response%20often%20blames

OECD iLibrary | Poverty rate. (2019). Oecd-Ilibrary.org.

https://www.oecd-ilibrary.org/social-issues-migration-health/poverty-rate/

indicator/english_0fe1315d-en

Omar, M. A., & Hasanujzaman, M. (2021). Multidimensional energy poverty in

Bangladesh and its effect on health and education: A multilevel analysis based on

household survey data. Energy Policy, 158, 112579.

https://doi.org/10.1016/j.enpol.2021.112579

What is multidimensional poverty? (2020). Mppn.org.

https://mppn.org/multidimensional-poverty/what-is-multidimensional-poverty/