Bangladesh University of Professionals

Term Paper
on
Social Safety Nets in Bangladesh

Submitted to:
Mohammad Amzad Hossain
Professor, Department of Economics
Jahangirnagar University

Submitted by:
Sazzadur Rahman
ID- 17251086
Session- (2016-2017)
Date: 28.08.2020

Abstract

Social Safety Nets (SSNs) and the wider topic of Social Protection have assumed a centrality
within the development literature in recent years. Publicly sponsored protection of the poor and
vulnerable has emerged from the shadows to become a mainstream concern for policymakers.
The contribution of SSNs is now viewed not merely in terms of their impact on challenged
families, but their systemic benefits - in enabling higher levels of employment and
entrepreneurship, sustaining household consumption and human capital, securing pro-poor
growth and promoting social inclusion and national cohesion. A body of experience, ranging
across continents, has now been established to inform the building of functional social protection
systems. The ambit of SSNs in Bangladesh is often wide and fragmented. As a developing
country, Bangladesh has 161.4 million population where 76% of the population live blew the
poverty line. poverty in Bangladesh has been an alarming social issue for a significant amount of
time. So, program like social safety is so much important to reduce the poverty rate from
Bangladesh. Initially the paper discusses several SSNPs that have been successful in other
countries of the world and highlights the current scenario of Bangladesh. The major objective of
the study is to look into the overall existing safety net programs on poverty reduction in
Bangladesh. The paper also looks into the impact of the existing safety net programs on reducing
inequality. In the final section, the study provides several policy suggestions on design, target,
and coverage of the existing safety net programs.
Table of Contents
Introduction......................................................................................................................................1
Objectives of the study....................................................................................................................2
Limitation of the study.....................................................................................................................2
Economy of Bangladesh..................................................................................................................3
Social safety net in Bangladesh.......................................................................................................4
Unconditional Cash Transfers......................................................................................................6
Public Works................................................................................................................................6
Humanitarian Relief.....................................................................................................................7
Conditional Cash Transfers..........................................................................................................7
Importance and Relevance...............................................................................................................7
Conclusion.......................................................................................................................................8
Reference.......................................................................................................................................10
Introduction

In the early 1990s the term "social safety net" surged in popularity, particularly among the
Bretton Woods institutions which used the term frequently in relation to their structural
adjustment programs. These programs were intended to restructure the economies of developing
countries, and these countries introduced social safety nets to reduce the impact of the programs
on the poorest groups. The Social safety net is a collection of supports and services provided by
the state or other institutions such as friendly societies including welfare an employment benefit
universal health care homeless shelters and sometimes subsidized services, which prevent
individuals from falling into poverty beyond a certain level and help to be a successful member
of the society, alternatively in economics social protection or social safety net referred as social
safety net programme, which is a set of policies and programmes aimed at reducing social and
economic risk and vulnerability of the poor, enhancing their capacity to protect themselves
against hazards and loss of income including under emergency situations. Social protection
programme includes conditional or unconditional cash transfers or food assistance to poor
families often through public works programme, provision of unemployment benefits, building
of skills through training programmes to increase labor productivity and income, investing in
more productive agricultural activities to improve household nutritional status and income, and
supporting families to access basic education and primary health care services. Social safety net
is a measure taken by the government in order to prevent the vulnerable section of its population
to fall beyond a certain level of poverty. Social safety net programmes (SSNPs) are designed
with the aim to provide support for the vulnerable section of the society. With a vision to prevent
transmission of poverty from generation to generation, the safety net programs opt for a more
efficient society in terms of the choices made by individuals. The Social safety nets play both a
redistributive and a productive role supporting moral philosophy as well as managing risks.
These two are the major pillars that justify the existence of safety net programs. It should be
mentioned at the outset that the safety net programs create a path towards poverty reduction in
the long run. They do not reduce poverty directly, rather, these programs tend to reduce
transitional poverty through ensuring proper nutritional intake, education, health care etc. In
other words, the safety net programs are methods through which poverty is expected to fall
through investment in human capital.

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Objectives of the study

The major objective of the study is to know about the programme of social safety nets and look
into the overall impact of the existing safety net programs on poverty reduction in Bangladesh.
Social safety net programme concerned with the well-being of the society, which aim is to
reduce the gap among the people of the society and the success of the activity could be the
results of a better world. So, it is so much necessary to understand the terms, structure, and
activity of social safety net programme when we are studying economics.

 To understand the programme, social safety net and its importance.

Limitation of the study

It is very common to have some issues when conducting a study. The study is all about social
activities with the estimated economic information about Bangladesh. The limitations could be
lack of latest and updated information, as such we had to take information mostly from the
secondary data and very limited information was collected from primary data.

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Economy of Bangladesh

Bangladesh is a large Muslim-majority democracy that shares borders with India and Burma.
Bangladesh is a developing country with 162,650,853 population. It is the 39th largest in the
world in nominal terms, and 30th largest by purchasing power parity. It is classified among the
Next Eleven emerging market middle income economies and a frontier market. In the first
quarter of 2019, Bangladesh's was the world's seventh fastest growing economy with a rate of
7.3% real GDP

annual growth. Bangladesh’s economic freedom score is 56.4, making its economy the 122nd
freest in the 2020 Index. Its overall score has increased by 0.8 point, led by a higher score for
property rights. Bangladesh is ranked 29th among 42 countries in the Asia–Pacific region, and its
overall score is well below the regional and world averages. The top income tax rate is 25
percent, and the top corporate tax rate is 45 percent. Other taxes include a value-added tax.

The overall tax burden equals 9.1 percent of total domestic income. Government spending has
amounted to 13.7 percent of the country’s output (GDP) over the past three years, and budget
deficits have averaged 3.6 percent of GDP. Public debt is equivalent to 34.8 percent of GDP. The
total value of exports and imports of goods and services equals 38.2 percent of GDP. The
average applied tariff rate is 10.7 percent. Layers of nontariff barriers impede dynamic flows of
trade. Government openness to foreign investment is less than average. The financial sector
remains underdeveloped and vulnerable to government interference. The level of state ownership

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and control of banking is considerable. The garment trade that began in Bangladesh in the 1970s
is now a $30 billion industry. But the economy is diversifying. The services sector – including
microfinance and computing – makes up 53% of the country’s GDP. Bangladesh has made
remarkable progress in reducing poverty, supported by sustained economic growth. Based on the
international poverty line of $1.90 (using purchasing power parity exchange rate) a day, it
reduced poverty from 44.2 percent in 1991 to 14.8 percent in 2016/17. In parallel, life
expectancy, literacy rates and per capita food production have increased significantly. Progress
was underpinned by steady growth in GDP, which averaged 6.5 percent in the last decade
(according to official estimates). Rapid growth enabled Bangladesh to reach the lower middle-
income country status in 2015. In 2018, Bangladesh fulfilled all three eligibility criteria for
graduation from the UN’s Least Developed Countries (LDC) list for the first time and is on track
for graduation in 2024. Sustained economic growth has rapidly increased the demand for energy,
transport, and urbanization. Insufficient planning and investment have resulted in increasingly
severe infrastructure bottlenecks, congestion, and pollution. To achieve its growth aspiration of
becoming an upper-middle income country, the government urgently needs to ensure continuity
of sound macroeconomic management, implement structural reforms, expand investments in
human capital, increase female labor force participation, and raise productivity through increased
global integration. Improving infrastructure as well as the business climate would allow new
productive sectors to develop and generate quality self and wage employment.

Social safety net in Bangladesh

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 and the
World Bank has been supporting the Government of Bangladesh since 2010 to maximize the
impact of these safety net programs on the poorest households particularly.. In addition to these,
there are 15 funds to provide further assistance to improve the overall condition of the poor
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

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replaced by the Women Support Center or the Rural Maintenance Program. In FY 2019, a
budget of approximately BDT 642 billion, or equivalent to 2.5 percent of the Gross Domestic
Product (GDP), has been allocated for this purpose. Among these, about BDT 372 billion is
being used to implement safety net programs as per the globally recognized classification. They
are in the form of cash allowances, public works, and education and health incentives for poor
and vulnerable households, which aim to contribute to the fight against poverty and improving
human capital. The World Bank has been providing financial and technical support to the largest
safety net programs in Bangladesh to improve their poverty impact, particularly by addressing
service delivery efficiency and transparency.

At least a number of 13 ministries are engaged in the planning and implementation of these type
of projects. In addition to these ministries, the Bangladesh Bank and Palli Karma-Sahayak
Foundation (PKSF) are also operating social safety net programs. Involvement of multiple
ministries cause considerable overlap in programs and administration which stretch the
administrative and resource capacity of the country. For example, the Ministry of Women and
Children Affairs offers the Maternity Allowance for the Poor Lactating Mothers and the Ministry
of Health offers Maternal Health Vouchers. Various education stipend programs are run by three
different ministries. There are similar cases when emergency or disaster related programs are
considered. This implies that there is very little coordination among the ministries in planning,
targeting, and implementing the various social protection programs in the country. 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 4 efficient ex-ante policy calls for
protection before risks appear. Most countries at Bangladesh’s level of income does 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.

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The following program briefs provide detailed information on each of these safety net programs,
present outcomes and achievements, and discuss opportunities to strengthen, as well as the
supports. They include:

Unconditional Cash Transfers

1. Old Age Allowance: Bangladesh has seen declines in fertility and mortality following
vast improvements in human development. This also means that the country has a
growing elderly population which is expected to grow further. This program targets the
poor and vulnerable elderly (62 years and older for women; 65 years and older for men)
and pays BDT 500 ($6) per month to over 4 million beneficiaries across the country.
2. Allowances for the Widow, Destitute and Deserted Women: Women’s empowerment in
Bangladesh has shown steady progress over the years, but the poor and marginalized
continue to face poverty amidst many social restrictions. Since the 1970s, the government
has been implementing important social safety nets focused on vulnerable women. This
program pays BDT 500 ($6) per month to over 1.4 million beneficiaries across the
country.
3. Allowances for the Financially Insolvent Disabled: Persons-with-disabilities constitute
about 7 percent of the population in Bangladesh. Despite various initiatives from public
and private entities as well as NGO sectors, coverage of support has been limited. The
program started in 2006 with 100,000 beneficiaries and has now expanded to 1 million
beneficiaries who receive a monthly BDT 700 ($8.5) allowance.

Public Works

1. Employment Generation Program for the Poorest: The food, fuel, and financial crisis of
2007-08 revealed the vulnerability of the poor to shocks. Since 2010 the World Bank has
committed $767 million to Bangladesh to strengthen this program. The program currently
supports over 0.9 million beneficiaries with a daily wage BDT 200 ($2.5).
2. Food for Work/Work for Money and Test Relief: This safety net program is a
combination of helping to build and repair rural infrastructure, while generating
employment and reducing the risk of disaster and climate change caused from food

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 insecurity. Target beneficiaries used to be paid with food until recently, but cash wages
have been gradually introduced for better efficiency.

Humanitarian Relief

1. Vulnerable Group Feeding: In the wake of the famine in 1974, the Government of
Bangladesh, in partnership with the World Food Program (WFP), launched the
vulnerable group feeding program. The program provided a monthly transfer of 31.25 kg
of wheat per household per month for a period of two consecutive years. To date, it
continues to be a humanitarian program that provides food transfers to the poor during
disasters and major religious festivals.

Conditional Cash Transfers

1. Towards a Child Benefit Scheme: Investments in development of children are vital for
the future productivity of individuals and for the country’s economic prosperity. The
period from conception to the first 1,000 days and to school ages provides a very
important window of opportunities for human development. The World Bank supports
the Income.
2. Support Program for the Poorest (Jawtno) for early childhood support focusing on health
and nutrition. Each enrolled beneficiary receives a ‘Jawtno cash card’ which is
biometrically enabled to serve as her beneficiary ID as well as her instrument for cash
withdrawal.

Importance and Relevance

According to the World Social Protection Report by ILO (2017), social protection plays a key
role in achieving sustainable development, promoting social justice, and realizing the human
right to social security for all. This report has also noted that transfers for children and families,
in cash or in kind, are critical for realizing children’s rights by preventing them from falling into
poverty, preventing child mortality, contributing to their healthy development and well-being,
improving their access to essential goods and services, and reducing child labor. Social
protection thus ensures that children can realize their full potential and enjoy an adequate
standard of living. ILO Recommendation No. 202 asserts that a state should establish and

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maintain a nationally defined Social Protection Floor (SPF), comprising basic social security
guarantees to secure protection aimed at preventing or alleviating poverty, vulnerability, and
social exclusion. In a country like Bangladesh aiming to become a developing country by 2024,
where child labor is vastly visible in both rural and urban areas, it is crucial to address the child
labor issue in order to ensure sustainable human capital for development.

Conclusion

There is nothing like an ideal or universal safety net program design that can be guaranteed for
successful poverty reduction. This actually points out the need for a coordinated policy
framework for poverty reduction along with effective implementation of the safety net programs.
Bangladesh gave significant importance on the role of safety net in poverty reduction. In fact,
safety nets have been treated as one of the four strategic blocks in fighting poverty. In view of
the identified poverty and inequality impact of safety nets in this study, an increased allocation is
well justified since per capita benefit received by the poor is still very small in assisting them to
get out of poverty permanently. A well-judged choice on modality is crucial for providing social
protection in a country like Bangladesh. However, in case of risk management, distribution in
kind would be the preferable choice since the nature of disasters in Bangladesh causes starvation
more than anything else and mere survival becomes the prime concern. One important aspect of
safety net programmes demanding improvement in Bangladesh is the “regional disparity” issue.
Uneven distribution of wealth and variation in poverty incidence between regions has to be
incorporated in targeting the poor. At the same time, the growing urban poverty needs to be
considered and social protection for the urban poor needs to be improved. One concern would be
the food subsidy. In view of the steep rise in food price, the subsidy programme should continue
with due address to the growing number of lower-middle income group resorting to subsidized
distribution of food grain. Financing post disaster security programmes among the victims is
always a big issue for a government of a third world country like Bangladesh, calling for donor
assistance. However, for other types of safety nets, financing should depend on domestic
resources as much as possible since donor contribution in safety nets tend to be discontinuous or
not lasting for long, being replaced by other initiatives. This may result in loss of efficiency, a
scarce resource for any developing country, gained by the implementing authorities from the
previous programme. Lack of coordination between the funding partners also hold the chance of

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overlapping target groups, while some of the potential beneficiaries may remain outside the net.
Most important issue would be to manage leakages in transferring resource to the poor. Along
with administrative reforms, this will call for better targeting. Avoiding 32 participation of non-
poor in the transfers require self-targeting mechanism along with community targeting to be in
place as much as possible. The local government bodies will need to be strengthened and work
closely with potential beneficiaries to further enhance the targeting efficiency. The national
policy will need to be characterized by its promotional role in public-private collaboration in
providing social security. At the same time, it will facilitate a common aim and understanding
between political regimes to avoid change of nature and means of safety nets with a change of
government. Obviously, poverty reduction is not confined to, rather supplemented by, safety
nets. However, safety nets undoubtedly are vital options to fight damages from natural disasters
and for preventing transmission of poverty from generation to generation in the long run. While
on one hand the safety nets provide immediate relief during emergencies, by ensuring
employment, education and nutritional intake of the poor, these programs can often play leading
role in addressing poverty and inequality in the long run. Success of any such attempt will
depend on how, where and for whom the government decides to design the safety net programs.
There are a lot of lessons to be learnt from the various successful conditional and unconditional
transfer programs taking place in South America, Africa, and India. Successful replication of
such programs in the Bangladesh context may help to identify safety net programs that can leave
radical impact on poverty reduction in Bangladesh.

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Reference

Dhaka Tribune. (2020). Social Safety Net: Existing programs to expand, include 1.7m more
people. [online] Available at: https://www.dhakatribune.com/bangladesh/2020/06/02/social-
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Jul. 2020].

The Daily Star. (2020). Social Safety Net: Nothing specific for new poor. [online] Available at:
https://www.thedailystar.net/frontpage/news/social-safety-net-nothing-specific-new-poor-
1913029 [Accessed 27 Aug. 2020].

The Daily Star. (2020). Digital payment solutions the way forward. [online] Available at:
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[Accessed 27 Aug. 2020].

The Daily Star. (2020). Social safety nets, farm economy to take Centre stage in fiscal 2020-21
budget. [online] Available at: https://www.thedailystar.net/business/news/social-safety-nets-
farm-economy-take-centre-stage-fiscal-2020-21-budget-1896865 [Accessed 27 Aug. 2020].

Masud-All-Kamal, M. and Saha, C.K. (2014). Targeting Social Policy and Poverty Reduction:
The Case of Social Safety Nets in Bangladesh. Poverty & Public Policy, 6(2), pp.195–211.

Mamun, M. (2019). The Impact of Social Safety Net Programmes on Poverty Reduction in
Bangladesh: An Evidence from Old Age Allowance. Bangladesh Journal of Public
Administration (BJPA), 27(1).

Hossain Zillur Rahman, Liaquat Ali Choudhury, Khondoker Shakhawat Ali, Power and
Participation Research Centre (Dhaka, Bangladesh, and United Nations Development
Programme (Bangladesh (2011). Social safety nets in Bangladesh. Dhaka: Power and
Participation Research Centre.

Alam, M.A. and Hossain, S.A. (2016). Effectiveness of Social Safety Net Programs for Poor
People in the Government Level of Bangladesh. International Journal of Social Sciences and
Management, 3(3), pp.153–158.

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