On a sustainable development trajectory

Mohammed Farashuddin
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"Bangladesh, long known in the west as an international basket case is doing its best to consign to history the dismal label so firmly attached to it by the US diplomat Henry Kissinger. The economy is humming and the stock market surging. Now the government is being urged to pursue reforms while the opportunity lasts,” says Dr. R M Cutler, Senior Research Fellow, Institute of European, Russian and Eurasian Studies, Carleton University, Canada.

Some features

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In nearly three decades of politically independent Bangladesh, the search for economic emancipation (mukhtir sangram) appears to be in the right track but still a long way to go. Counted in per capita income which is at best a grossly flawed yardstick for measuring development, Bangladesh has advanced to a level of $700 (from below $200 in 1972) with major chunk of the achievement made since the restoration of democracy in 1991. The annual GDP growth rate during the period ranged 5 percent to 6.5 percent. In 1972 food production was a meagre 10 (ten) million tonnes; it reached a very impressive level of more than 30 (thirty) million tonnes despite the setback during the period 2001-2008. Social indicators such as the infant mortality rate, access to healthy sanitation facility, primary school enrollment, literacy rate and life expectancy at birth have shown impressive positive trends. However, the fellow travelers, in the path of economic growth for socio-economic development, Singapore, Malaysia, Republic of Korea, Thailand, Indonesia, Taiwan, Maldives which were more or less at par with the sub-continent six decades ago, have progressed remarkably to the levels of high HDI countries. There must be tangible factors and intangible forces that caused galloping in the fellow travelers to our cantering in the growth path.

Without going into the inter-country differentials in growth, this article proposes to see what the causes of the painful failures are and to examine the prospect for Bangladesh to embark on a travel path of sustainable human development. For one thing, the pathetic show in the population planning area has to be traced to abrupt policy changes. During the period 2001-2008, the entire health sector suffered a severe setback with the discontinuation of several community based programmes. Added to this was the longstanding and pointless feud between the physicians and the population planners. The consequent disaster from the two above factors resulted in the field level family planning operatives retreating to 'office work' rather than motivation and service delivery at the doorsteps. The service delivery has also been hampered by a crisis in SMC. No wonder the total fertility rate (TFR) has stagnated at above 3, the contraceptive prevalence rate has not increased and the annual population growth rate, according to experts outside the government ambit, has gone up from the still publicised 1.4 per cent per annum to well above 2 percent. Neither has a coordinated and vigorous education policy been put in place for the transformation of the highly favourable composition of the population (predominantly of productive age) into assets of high value human resources through a vocationalisation of education up to secondary level and a technological bias at the tertiary level.

Suboptimal governance has been cited by the experts as a major cause for Bangladesh achieving only modest economic growth much below the potential. Poor to below average governance has resulted in a fluctuating law and order situation. Price spiraling of essentials through syndication and hoarding, obstructed flow of raw materials, and finished goods and services, profiteering, illegal toll collection, land grabbing, indiscriminate landfill of the water bodies particularly in the capital city, tampering with the tendering process, terrorism, robbery, corruption and murder with impunity have certainly contributed to an uncertain investment climate that discourages many. These weaknesses are also causing a lowering of the productivity of capital. The execution of five of the killers of the Father of the Nation after a due judicial process according to the law of the land may help some improvement in establishing the rule of law. Long delayed and eagerly awaited trial of the war criminals and of the perpetrators of the jail killings, killing of president Ziaur Rahman, SAMS Kibria, Ahsanullah Master, Momtazuddin and all the other killings and of the grenade attack of 21 August 2004 shall pave the way for a conducive governance.

For a developing country like Bangladesh, infrastructure growth, both physical and social, is expected to fall behind the pace dictated by an aim of rapid industrialisation. For one thing, the capacity and the efficiency of the ports are hindering the desired pace of economic growth. Severe shortage of energy is perhaps the most serious bottleneck in the growth path. There has been an inexplicable neglect in enhancing the generation of electricity and in mobilising investment in the exploration of gas (and perhaps oil) in the period 2001-2008. Neither have there been credibly certain steps by the new government to augment electricity generation in its first year in office. Better late than never, in very recent times, there are concrete steps taken in awarding five short gestation power plant contracts for 350 mw electricity. If these are added to the national grid along with another 700 mw power generation already in progress, the investors may see the light at the end of the tunnel to come forward in stepping up investment actions. The new government has shown a remarkably positive resolve in energy savings through effective management and in diverting electricity to the irrigation activities. Similar decisiveness is essential in the long delayed coal exploration for electricity generation and in making the big investments in the gas sector. If the ambitious projects of dredging the major rivers get under way, the prospect of environment friendly hydel power generation will brighten. The expected import of 250 mw plus electricity from India as well as more from Nepal and Bhutan, thanks to the recent Bangladesh- India agreements, will add an extra fillip to the economic growth momentum of the country. The half-hearted attitude towards renewable energy prospect, solar-energy in particular (India already generates 12000 mw solar energy), is very difficult to understand in the context of ideal climatic conditions, favourable clustering of rural houses and in view of the paramount need for small doses of electricity for the much talked about micro, small and medium enterprise (MSME) strategy of linkage industrialisation.

Syed Zakir Hossain

After decades of inappropriate growth models, it is high time that Bangladesh ventures into a growth with equity through an employment generation thrust. The UN has concluded that as many as 49 percent of the Bangladesh population may be under a 1.5 PPP dollar per day. This translates into a 75 million people (the entire population of Bangladesh at birth) compared to 50 million people below the poverty line in 1972. The fact that the gini-coefficient has, according to some, reached a level of 0.49 lends additional credence to the UN findings that the ranks of the poor are swelling simultaneously with the growth in GDP. Poverty eradication, attainment of the Millennium Development Goals (MDGs) and establishment of an exploitation free society as envisioned by the founding fathers of the nation will necessitate significant additional steps in empowerment of the disadvantaged and their participation in planning, implementing and monitoring the development activities and in their reaping just shares in the fruits of the development process. In the language of Sustainable Human Development of UNDP i.e. in the human development indexing (HDI), people should be put into the centerpiece of the development process with singular emphasis on empowerment, mainstreaming and participation of the disadvantaged. A strong local government can be a powerful instrument in such an empowerment, mainstreaming, participation and even leadership role of the people of the rural areas if the policy environment is really conducive. The move to revive the upazila tier of the local governance after two decades of hibernation generated optimism. Alas, it has been a short lived dream! The final form of the passage of the Local Government Act has embedded in it the seeds of suspicion, rivalry and therefore, self-destruction of the system. The possessiveness of the Members of the Parliament in handling the resources meant for the local level development delayed the revival of the upazila system for two decades; the bill as has been passed with drastic amendments to the recommendations of the Rahmat Ali Commission (1997) and the Showkat Ali Commission (2007) will perhaps kill the golden egg laying swan itself.

Silting of rivers through sediments (18.5 percent of global total of sediments flow through the lower reparian Bangladesh) has been causing more than the normal level of floods and eroding rivers. Besides crop loss, people become destitute through river erosion. The ALA-LILA laws require that when rivers change course, the losers of land through erosion should be entitled to get the possession and title of the land accrued in the process. In the absence of justice guaranteeing governance and land administration such accruals are usually usurped by the musclemen sponsored by some land grabbing politicians. The landless thus migrate to the urban centres, Dhaka city to be precise contributing to the 6.0 (six) percent annual population growth of the metropolis. According to one estimate, more than 2000 (two thousand) people are added to the Dhaka population along with 150 plus motor vehicles defeating all efforts of reducing traffic jam because of the congestion of the limited and hardly expanding urban services and utilities; no wonder the already inefficient and chaotic traffic management gets more and more jammed adding to the miseries of city dwellers.

A precariously narrow export base and an inexplicable risk-averting profit guaranteed policy protection sought by some producers-exporters make the exports imports gap ever widening as well as remaining susceptible to possible disastrous consequences. Some entrepreneurs would like to have best of both the worlds in reaping the benefits of the market forces, profit maximisation, under the public sector policy protection like cash incentive, duty free imports and lower interest rates. Also the economic and trade policy regimes have been unusually biased in favour of trade and service sector activities to the detriment of industrialisation. No wonder, the relative decline in the share of the primary sector, agriculture and related activities, (under 20 percent now compared to 51 percent in 1972) is being gained by a relative increase in the contribution of the tertiary sector (50 percent now compared to less than 30 percent in 1972). The stagnation of the share of secondary/manufacturing sector means the reduction in the job creation opportunity.

Behind the spectacular success of the agriculture sector, two disturbing elements of medium to long term duration seem to be failing in attracting the attention of the policy makers. Food self-sufficiency that Bangladesh has reached or very nearly so, is an aggregative and at a point of time concept. Food grains are harvested at two major points of time when the excess of supply occasioned by the pressure of selling by the producing kishan kishanis for meeting social, family and repayment of debt needs for cash tend to force the price at times below the cost of production levels. Unless the government procurement mechanism is attractive and efficient (which it is not many a times), the ten thousand odd rice mill owners and other middlemen buy up the low price 'surplus' during the harvesting seasons and get involved in profiteering by raising food-grains prices immediately after the harvesting seasons. Policymakers often suffer from a dilemma in fixing the 'correct' procurement price. Too low a price may harm the incentive for the producer to exert as much pressure in future starting a 'cobweb'. On the other hand, too high a price, although good for the growers, may be politically unpalatable as 85 percent of the people including the vocal urban middle class and many farmers have to purchase foodgrains. A solution out of this dilemma and the often used bogey of global price movements lies in creating producers' cooperatives, constructing rural food godowns, renting selling these to the cooperatives and advancing subsidised credits for the cooperatives to supplement their own resources in buying up their surplus during the harvesting times and selling these throughout the year thereby ensuring stable prices and decent operating surplus. There is also a need for expediting the crop insurance programme. The second cause of alarm is the reported decline in the soil quality and texture due to nonjudicious use of chemical fertiliser and absence of rotation of crops. This danger has already shown up in some tobacco plant growing areas as well as in prawn /shrimp hatcheries. Thus the only country that recorded impressive increase in food production in 2009, thanks to the judicious inputs subsidy cum price support policies, has no room for complacence and ought to take remedial measures in restoring soil quality. Also the mechanism used in the late 90s in building up buffer stock of essentials and releasing these through OMS for long periods need to be revived for price stabilisation. Unfortunately, the proposed conversion of TCB into a PLC with adequate empowerment in manpower, money and operational flexibility has been stalled by the vested interests. A TCB in a PLC form can help break the syndication.

Thoughts on a few starting points Consensus
If Bangladesh has to emerge as one of the 'eleven largest economies of the world' as predicted by Goldman Sachs, her political leaders must make the utmost endeavour in forging a national consensus around the major policy issues in politics as well as in economics. The starting point for them can be to agree that two decades of primacy to economics may usher in a prosperity that may propel Bangladesh into a poverty and exploitation free developed country. It is already a medium category country in the HDI world of the UN system and is knocking at the doorsteps of the Middle Income Country of the World Bank type. But the investors at home and abroad must be assured that the major thrusts in the economic policies i.e. the reliance on the market forces with appropriate safeguard regulations shall continue despite regime changes. It is essential that agreements on principle put the national Parliament to the point of convergence through healthy and open debates on all governance issues. There is no alternative to arriving at national unity in the crucial matters of education, health, population and energy issues as well as on attitudes to the regional/sub-regional amity and cooperation in promoting customs and economic integration.

The way forward
A vigorous starting point can be a set of targets such as eradication of poverty by the year 2051 and reducing the number of people under the poverty line to 25 million by 2021. Towards that end, a strategy of growth with equity may be put in place for a per capita income of $1200 by the year 2014 and $ 2000 by the year 2021. A related objective can be in starting a process of lowering the gini co-efficient.

An imperative towards the realisation of the goals listed above will be to prepare and implement a manpower plan. It will assess the quantum, quality and composition mix of the human resource requirements of the gigantic but sustainable development effort, inventory the existing human resources on each of the categories, ascertain the gap and overhaul the education system for meeting the deficit through a vocationalisation of the education up to secondary level plus its technological revamping at the higher tiers. An assessment of the manpower service demand globally and additional effort to generate more semi-skilled and professionals for the international market will help diversifying the destination and at least doubling of the current level of remittance flow. However, a global standard of certification of the skills has no substitute for attracting external market for exporting human services.

Long neglected population planning may be given priority attention starting from the top agenda statements of the Head of the Government and Leader of the Opposition through reforming / strengthening the management structure, and setting up of a separate Division for Population Planning under a renamed Ministry of Health, Population and Family Welfare to redoubling the service delivery both at the doorsteps and at the community health centres since revived. Small family norms would not only be lauded in vigorous campaign but also the parents of two children families ought to be given significant state benefits with safeguards against misuse. A flooding of the market with the traditional family planning devices alongside an inspired group of field level workers with enhanced logistics can recreate the wonders of the success once again.

Needless to say, the most critical bottleneck in accelerating the pace of the tangible development has been a scarcity of electricity. Pursuance of the 350 mw shot gestation power plants, firming up the projects for the additional 700 mw generation as proposed, taking steps in generating at least 500 mw solar plus biogas energy and imports of at least 250 mw from India will provide a breathing space of two / three years. In the meantime, expediting decisions in the mining of coal including the prospect of 'a clean coal policy' and vigorous pursuit of the additional discoveries of certain availability of gas through appropriate investment will ease the medium term situation. But a medium to long term solution of the energy crisis will have to be sought in the sub-regional cooperation for hydro-electric generation as part of a gigantic effort to tap in on huge reservoir on the foothills of the Himalayas. The ambitions river dredging programme of the government will, in addition to enhancing the agricultural productivity and taming the damages of the floods, can also be a major source for hydro-electricity generation. Bangladesh will also have to switch to a cylinder based domestic gas consumptions (8 percent of total use) from the wastage prone piping system, a luxury unique in the whole world.

Indicative policy planning to attract big investment in the large scale industries (the main engine of growth) such as shipbuilding, ceramics, leather, composite textiles, powder milk manufacturing, sports goods and the like ought to be carefully drawn up and implemented. An employment generating cum poverty eradicating micro, small and medium enterprise, MSME strategy for sustaining the big success in agriculture, halting as well as reversing the migration from rural to urban areas and in producing organic fertilizers for restoration of the soil texture besides foreign exchange savings is to receive priority attention and resources. A lot of off-farm activities are ongoing in the agro-based industrialisation arena. The vigorous emphasis on the MSME will see agro and rural based processing of the outputs of agriculture, horticulture, community forestry in the short gestation, simple technology, local raw materials using and hugely employment generating industries the products from which have demand at home and abroad. For instance, the Four Cow Model being experimented by Dr. Mozammel Huq of EDCL can (a) generate methane gas (from a separation of the cow dung) for lighting, cooking as well as fuel in the micro enterprises, b) isolate huge quantities of organic fertiliser that will save import costs besides restoring the soil quality, c) generate raw hyde as inputs to the leather industry's new high local value adding window of treating raw hyde (to be imported from the Americas) into finished leather for which there exists insatiable demand in China, d) produce significant quantity of milk for processing into powder milk of high import substitution possibility, e) yield beef of super quality and f) generate productive employment towards sustainable human development.

If the appropriate level and intensity of gas exploration efforts can enhance the quantity of proven natural gas availability to a level of let us say 60 tcf plus even at a distance of 3/5 years, there will open up practically a limitless horizon in the shipbuilding industry (with meticulous environmental safeguards) and in the ceramics the demand for which in European and North American markets is sky-high. Another industry worthy of expansion is the pharmaceuticals which is, however, import dependent but at the same time of high local value addition.

The ambitious growth trajectory Bangladesh is potentially endowed with at this critical juncture of global economic context is born of a fatigued economic growth horizon in the advanced countries. In fact, besides China and India, Bangladesh is a high growth developing country along with Brazil, South Africa, Republic of Korea, Malaysia, Thailand and Indonesia. Thus investment capital can be attracted to large scale manufacturing in Bangladesh provided the proposed policy actions including expansion of the Chittagong and Chalna ports for facilitating access to maritime sea route for India's seven sisters, Nepal, Bhutan and even Myanmar are taken. There are multiple partners willing to consider a deep sea port in the Bay of Bengal paving the way for making Bangladesh into a gateway for international trade for prosperity. The expansion of the infrastructure, physical and social, provisions of enlarged energy as well as an acceptable level of rule of law and governance will help reduction in incremental capital output ratio (ICOR) which has a recent tendency to increase. An upward trend of investment in education from 2.6 percent GDP now to the global standards of 6.2 percent by the year 2015 along with an implementation of the proposed manpower plan plus the education reforms should make up the scarcity of efficient management and help reduce corruption to tolerable limits. If the current awareness about the adverse impact of climate change on a victim country like Bangladesh is translated into an availability of resources for mitigation programmes, it may be possible, amongst other achievements, to erect a solid barrier between the hard water of the sea and the sweat water of Bangladesh around Sundarbans as a major contribution to the global greening and prosperity of the sustainable kind. Development partners may seriously ponder over making additional resources available for this noble venture; they may also consider a swap of a good part of the debt of Bangladesh for such a programme. For the political bosses of the country there is no short cut to erecting a solid wall of consensus amongst (a) the forces with faith in the prosperity of Bangladesh, (b) belief in the ideals and values of its glorious war of liberation and long struggle for independence and (c) change in the mindset to sink political differences for achieving an equitable prosperity for the people.

A recent IFC survey has revealed that investment has picked up in Bangladesh in the third quarter of 2009 and the confidence in the investment climate for 2010 has peaked. Shall we not jump in determination to build up on the momentum to prosperity!

Mohammed Farashuddin, Ph.D is an economist, educationist and former governor of Bangladesh Bank.

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