International Center for Microfinance and Social Business

The Problem of Poverty in Bangladesh

Jul 07 2011

Ever since its founding, Bangladesh has been known as one of the world's poorest countries. There has been an ongoing battle against challenging living conditions ¬ overcrowding, floods, deforestation, erosion, soil depletion and natural calamities. As Grameen Bank founder and Noble Prize winner Muhammad Yunus argues, solutions are available ¬ provided we are willing to entertain fresh thinking about poverty and its remedies.

I don't think we can blame fate, nature or God for our troubles. The real problem in Bangladesh is not the natural disasters. It is the widespread poverty, which is a man-made phenomenon.

Taking steps toward safety

Cyclones, floods and tidal surges occur in other countries. In most, they do not cause human misery of the magnitude we see in Bangladesh.

The reason is that, in these countries, the people are rich enough to build protective systems and strong embankments. Rivers in Canada, England and France have tidal surges similar to those in Bangladesh, but dredging and causeway construction have minimized their effects and the threat to human life.

Furthermore, poverty and over-crowding have pushed the countless poor in Bangladesh to seek their livelihoods in more and more unsafe areas of the country, though they lack the capacity to organize even minimal safety measures for themselves.

A threat to world peace

Thus, poverty doesn't only condemn humans to lives of difficulty and unhappiness ¬ it can expose them to life-threatening dangers. Because poverty denies people any semblance of control over their destiny, it is the ultimate denial of human rights. When freedom of speech or religion is violated in this country or that, global protests are often mobilized in response.

Yet when poverty violates the human rights of half the world's population, most of us turn our heads away and get on with our lives.

For the same reason, poverty is perhaps the most serious threat to world peace, even more dangerous than terrorism, religious fundamentalism, ethnic hatred, political rivalries or any of the other forces that are often cited as promoting violence and war.

Loss of hope

Poverty leads to hopelessness, which provokes people to desperate acts. Those with practically nothing have no good reason to refrain from violence, since even acts with only a small chance of improving their conditions seem better than doing nothing and accepting their fate with passivity.

Poverty also creates economic refugees, leading to clashes between populations. It leads to bitter conflicts between peoples, clans and nations over scarce resources ¬ water, arable land, energy supplies and any saleable commodity.

Prosperous nations that trade with one another and devote their energies to economic growth rarely go to war with one another ¬ nations whose people are brutalized by poverty find it easy to resort to war.

By lifting people out of poverty, micro-credit is a long-term force for peace. And Bangladesh is a vivid example of what it can do.

Bangladesh today is a living laboratory ¬ one of the world's poorest countries that is gradually being transformed by innovative social and business thinking. Over the past two decades, conditions among the poor people of Bangladesh have steadily improved. Statistics tell part of the story.

Signs of improvement

The poverty rate (as measured by international aid organizations such as the World Bank) has fallen from an estimated 74% in 1973-74 to 57% in 1991-92, to 49% in 2000 ¬ and then to 40% in 2005.

Though still too high, it continues to fall by around 1% a year, with each percentage point representing a meaningful improvement in the lives of hundreds of thousands of Bangladeshis. The country is on track to achieve the Millennium Development Goal of reducing poverty by half by 2015.

Even more remarkably, Bangladesh's rapid economic growth has been accompanied by little increase in inequality. The commonly used Gini index of inequality has changed only from 0.30 in 1995 to 0.31 in 2005.

It's also noteworthy that, since 2000, the real per-capita income of the bottom 10% of the population has grown at the same annual rate as that of the top 10% (2.8%).

Tangible growth

The sharp drop in poverty is reflected in changes in economic growth, employment patterns and the structure of the economy. Growth of the Bangladeshi economy ¬ at $71 billion, the third largest in South Asia, after India and Pakistan ¬ has averaged 5.5% since 2000 and reached 6.7% in 2006, compared with just 4% in the 1980s. In addition, per-capita growth has increased from 1% in the 1980s to 3.5% currently.

Reliance on subsistence agriculture is gradually declining. In 2005, non-farm labor surpassed agriculture as the main source of income in rural areas, and fully 50% of the nation's GDP is now derived from the services sector.

Population growth ¬ a major problem in Bangladesh, one of the most densely populated countries on earth ¬ has fallen sharply, from an annual average of 3% in the 1970s to 1.5% in 2000. This is close to India's 1.4% but much lower than Pakistan's 2.5%.

Quality of life

This slowdown means that more families have the resources to care for their children and provide them with decent opportunities for education.

It also means the liberation of millions of women from an endless cycle of child-bearing and child rearing, giving them the chance to help their families improve their standard of living through productive work.

Controlling population

The decline in population growth has been driven, in large part, by improvements in health care. When more children survive, parents feel more confident about using birth control ¬ they no longer believe they need to bear five or six children in hopes of raising two. During the 1990s, the percentage of Bangladeshi mothers receiving prenatal health care doubled.

Partly as a result, infant mortality rates in Bangladesh fell by more than half (from 100 to 41 per 1,000 children) between 1990 and 2006. In addition, the mortality rate for children under five is 52 per 1,000 in Bangladesh ¬ compared with 87 in India and 98 in Pakistan.

Healthcare and life expectancy

In 2005, the percentage of one-year-old children ¬ among the poorest 20% of households who had been fully immunized stood at 50% in Bangladesh, compared with 21% in India and 23% in Pakistan.

Around 81% of children had been vaccinated against measles, compared with 58% in India. And while child malnutrition remains a serious problem, the percentage of children whose growth is stunted has declined from almost 70% in 1985-86 to 43% in 2004.

Statistics for life expectancy at birth, which were static at around 56 years through the early 1990s, have begun to climb. By 2006, life expectancy was estimated at 65 years, and the unusual situation in which women's life expectancy was lower than men's has finally been reversed, with women now at 65 years and men at 64 years.

Educational opportunities

Educational opportunities for children have also improved. The percentage of children completing the fifth grade has increased from 49% in 1990 to 74% in 2004. National literacy rates have increased from only 26% in 1981 to 34% in 1990 and 41% in 2002. The 1990s witnessed a tripling in the number of children attending secondary school.

More girls now attend secondary schools than boys, a feat unmatched in South Asia and a remarkable achievement given the fact that, in the Bangladesh of the early 1990s, there were three times as many boys as girls in secondary schools.

Health and sanitation

The quality of shelter and access to basic sanitation and telecommunication services have all improved significantly in recent years. In 2000, 18% of households lived under straw roofs. By 2005, the percentage had fallen to 7%.

A sanitation campaign has resulted in increased access to safe latrines from 54% in 2000 to 71% in 2005. The mobile-phone revolution has boosted the fraction of the population with access to telephone services from 2% in 2000 to 14% currently.

Guarding against disaster

Bangladesh's capacity to withstand natural disaster shocks has improved significantly. Following the massive floods of 1998, per-capita GDP fell sharply, but a flood of similar scale in 2004 had a negligible impact on growth.

This resilience is attributable to a more diversified economy and improved emergency response capabilities, including early warning systems and cyclone shelters, throughout the country.

Between 1980 and 2004, the Human Development Index (a widely used measurement of key standard-of-living indicators for developing nations) increased by 45% in Bangladesh compared to 39% in India and 16% in Sri Lanka. This is despite the fact that, as of 2004, per-capita GDP in India was 68% higher than in Bangladesh, and in Sri Lanka over 200% higher.

Global applications

As these numbers suggest, the problems of poverty in Bangladesh, though improved, are far from being solved. Bangladesh is still one of the poorest countries in the world, with tens of millions of people living at a level barely above subsistence. But the social and economic trends are moving in the right direction.

The challenges and opportunities facing Bangladesh illustrate some important themes that many of the world's developing countries share:

1. The need to think strategically about development, analyzing a country's potential role in its region and the world in search of opportunities for growth;
2. The need to get past myths, stereotypes, and assumptions about poor countries and their relations to their neighbors;
3. The need to find fresh, positive approaches to development that emphasize the potential strengths of a country and its people, not just their problems;
4. The need to think about how social business can address social and economic problems that are usually left to be resolved by governments.

These ideas offer hope for alleviating the worst effects of poverty both in Bangladesh and in many other poor countries around the world.

Editor's Note: This feature is adapted from CREATING A WORLD WITHOUT POVERTY by Muhammad Yunus. Copyright 2007 Public Affairs. Reprinted with permission of the publishe.