Covid-19 has forced Bangladesh to take a long hard look at its urban poverty situation and the fragmented social protection system that failed city residents. As Bangladesh focused on countering the impacts, especially in low-income urban communities, the measures were often temporary and difficult to administer. Now, the challenges are growing even as the economy recovers and the country navigates a path towards a post-Covid recovery phase.
Urban areas were already emerging as the new poverty frontier when the crisis worsened due to the pandemic. And the knock-on effects on unemployment, incomes and food insecurity have already been widely documented.
Among key issues, general inflation (point-to-point) has notably risen to 6.22% in March 2022 compared to 5.47% a year back. Non-food inflation drove the general trend in recent months with transport, clothing, furniture, and furnishings incurring price hikes. A spike in food inflation since February 2022 is now influencing the trend.
These hikes are partly linked to costlier imports of energy and essential commodities driven by Covid-induced surges in global prices and freight costs. Domestic price adjustments for fuel, gas, and transport together with weak market monitoring of essential commodity prices further exacerbated the situation.
Global uncertainty owing to the ongoing Ukraine-Russia crisis, the Covid resurgence in China together with its zero-Covid policy and lockdown and other developments are also impacting global trade and supply chains. This may further affect inflationary trends in Bangladesh. Overall, inflation will likely continue to rise, as per Bangladesh Bank.
As a result, households with low incomes – especially the poorest urban households – who already bore the brunt of Covid-19, are likely having to cope with further diminishing financial power. Lower middle-income households may also be faced with food insecurity. Keeping all these in consideration, Bangladesh cannot afford to lose sight of social protection (including urban social protection), especially in the upcoming national budget. Open Market Sales (OMS) schemes in urban areas must be continued and expanded as part of ongoing government efforts.
Beyond these immediate concerns, Bangladesh needs to invest in a shock-responsive urban social protection system that can respond to the country's climate crisis. Bangladesh has already been experiencing rapid urbanisation in stride with economic growth.
At the same time, more frequent and intense climate-induced disasters are displacing rural populations towards urban settings such as Dhaka. Studies estimate, one in every seven people is likely to be displaced by climate change by 2050. Moreover, major coastal cities such as Dhaka and Chattogram may also become less hospitable. According to a 2018 World Bank study on internal climate migration in South Asia, these cities are highly vulnerable to sea level rise, storm surge impacts and heavy flooding. Covid-19 has already exposed faultlines in Bangladesh's urban social protection system. This underscores why investments need to be made now and include cities beyond Dhaka and Chattogram.
Bangladesh already has the blueprint to transition towards such a system – the long-term National Social Security Strategy and action plan. This includes expanding coverage of social assistance and introducing social insurance programmes in urban areas. Some forms of social assistance programmes for children, the elderly and persons with disabilities are already envisioned as part of ongoing reforms.
However, simply extending or duplicating rural social assistance programmes will not address the distinct vulnerabilities of those in urban areas. They face higher living costs, multiple aspects of deprivation and more uncertain employment opportunities.
Social protection reforms that focus on employment policies and on social insurance are also key priorities alongside social safety nets, as emphasised in Bangladesh's 8th Five Year Plan. As noted earlier, the pandemic disproportionately hurt vulnerable urban households. Working adults from such households are likely to be self-employed, informally employed or belong to unprotected, low-income formal sectors. They need support to protect their incomes and jobs, especially in crisis contexts. Here, gendered needs of women require serious attention.
Taking note, Bangladesh plans to introduce social insurance schemes (e.g., unemployment insurance schemes) for both formal and informal workers as part of a pilot National Social Insurance System under the National Social Security Strategy. However, the benefits are more likely to accrue to formally employed workers who can afford to contribute towards investing in their own security compared to those who are working in the informal economy.
Given the new realities and by drawing on international experience, Bangladesh can explore how to introduce and expand affordable social insurance schemes to all working adults that helps reduce their insecurity.
Here, partnerships will be key to designing and implementing such urban-specific, shock-responsive programmes especially during emergencies. Bangladesh can leverage established partnerships between the Local Government Division and development actors working on urban poverty. For example, UNDP's Livelihoods Improvement of Urban Poor Communities Project (LIUPCP) is among the biggest urban poverty reduction initiatives in the country.
Similarly, the role of non-government organisations (NGOs) can be pivotal in piloting small-scale programmes to draw insights into what works for vulnerable urban households. Partnerships with actors in Bangladesh's insurance sector will also be crucial for moving forward.
Sarah Amena Khan is a development practitioner.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.