Chapter 1: Development Context, Sixth Plan Targets and Strategy
Over the past 40 years since independence, Bangladesh has increased its real per capita income by more than 130 percent, cut poverty by more than half, and is well set to achieve most of the Millennium Development Goals. Bangladesh’s development experience is particularly remarkable in that it stands out as a positive example of a resilient young nation that has fought many natural and global disasters as well as internal political debacles and yet stayed firm on the development path. Notwithstanding many external and internal shocks, per capita income has risen continuously and steady progress has been made in lowering poverty. This positive development experience provides the basis for optimism, notwithstanding the many remaining policy and institutional constraints and the global uncertainties, that Bangladesh will continue to make inroads in improving the living standards of its citizens.
Growth of Income
Bangladesh witnessed decades of slow economic growth until 1990. Growth rate started to rise since early 1990s. During the first decade of the 21st century, the average economic growth rate approached 6 percent per annum.
Despite the progress in economic growth, Bangladesh is lagging behind some of its high performing comparators. Figure 1.1 provides a comparison of annual average GDP growth rates in Bangladesh, China, India and Vietnam during 1990s and 2000s. Even though the Bangladesh growth path is rising, the average growth rate for Bangladesh during the 2000s was much lower than that of the rates in China, India and Vietnam.
Figure 1.1:Annual average GDP growth rate of comparators
Source: World Development Indicators
Poverty Reduction and Human Development
Poverty is the single most important socio-economic policy challenge for Bangladesh. It has been striving for a long time to reduce the incidence of poverty and to improve the living standards of its millions of impoverished citizens. Bangladesh has made substantial progress in reducing poverty, where the percent of population living below the poverty line went down from more than 80 percent in early 1970s to 31.5 percent in FY10 (Table 1.2).
|Plan period||Annual average growth (%)|
|First five year plan (FY73-FY78)||5.5||4.0|
|Two year plan (FY78-FY80)||5.6||3.5|
|Second five year plan (FY80-FY85)||5.4||3.8|
|Third five year plan (FY85-FY90)||5.4||3.8|
|Fourth five year plan (FY90-FY95)||5.0||4.2|
|Fifth five year plan (FY97-FY02)||7.0||5.1|
The decline in poverty in Bangladesh stems in large part from strong economic growth over the past two decades. The economy’s expansion during the 1990s – an average, annual GDP increase of almost 5 percent – meant a rise in real, per capita GDP of 36 percent or twice the average rate of other low-and middle-income countries in the same decade. This impressive performance was fueled by growth in real GDP in the manufacturing sector where the output of export-oriented, ready-made garment (RMG) enterprises grew by double-digit. Also, the remarkable growth in the inflow of remittances helped reduce poverty by supporting the expansion of construction and services GDP and by providing a strong safety net Bangladesh has also made significant strides in the area of human development, though the agenda remains far from complete. In the education sector, there is notable progress, especially in regard to increasing access and gender equity, both at primary and secondary levels. Net primary enrollment rates rose from 61 percent in FY91 to 91 percent in FY06, while a corresponding increase in enrollment rates at the secondary level rose to 41 percent from 28 percent. Gender parity in access to primary and secondary education has also been achieved. These achievements are particularly noteworthy when compared to countries in the South Asia region and other countries at similar levels of per-capita income.
Notable progress has also been achieved in health indicators over the last 40 years. The total fertility rate (TFR) declined from 7 live births per woman in the mid 1970s to about 2.7 children per woman in 2007, while the contraceptive use rate has increased from 7.7 per cent to 55.8 per cent during the same period. Life expectancy has increased from 46.2 years in 1974 to 66.6 years in 2007. Though remarkable improvements have been made in reducing infant and child mortality, Bangladesh is behind in meeting MDG targets on proportion of malnourished children.
Employment provides the key link between economic growth and poverty making it the major instrument for poverty reduction in Bangladesh. Labor force (age 15 +) in Bangladesh increased from around 19.7 million in 1974 to 49.5 million in 2006, the latest available year for Labor Force Survey (LFS). That gives an annual long term trend growth rate of 2.9 percent (Figure 1.2). The labor force growth rate was more expansive in recent years owing to the changing demographic structure of higher share of population in the working age group as well as a rising female participation rate. Thus, the average annual growth of labor force between 2000 and 2006 was 3.3 percent.
Figure 1.2:Trend in Labor Force and Employment 1974-2009, millions
Source: Bangladesh Bureau of Statistics
As compared to labor force, employment grew at a slightly slower pace of 2.8 percent annually. As a result, the unemployment rate, traditionally defined, increased modestly, reaching 2.1 million people, which is about 4 percent of the labor force. This relatively modest unemployment rate, however, hides the true employment challenge in Bangladesh. Like other poor agrarian economies, Bangladesh suffers from what is known as the problem of “disguised unemployment” that is characterized by the concentration of a large number of workers in low hours, low productivity, and low income jobs. These disguised unemployed are engaged in agriculture and informal services.
Although proper data on the magnitude of the disguised unemployed (or alternatively defined as under-employed) does not exist, this is well recognized as a serious challenge. Some illustrative examples convey the severity of the employment challenge. In Bangladesh some 78 percent of the labor force is engaged in informal sector activities (agriculture and informal services). Agriculture alone employs some 44 percent of labor force, even though its GDP share is only 19 percent. Another example is that the underemployment rate, calculated on the basis of number of hours worked per week, is high at 24.5 percent in 2006. A third example is that the unemployment rate among the young population in Bangladesh is higher than that in India and Vietnam (Figure 1.3). So, looking at numbers employed does not give a meaningful indication of the employment problem. The key issue is finding “good jobs” (defined as high productivity, high income jobs) for existing and new entrants to the labor force. This arguably is amongst the most important development challenge for Bangladesh moving forward. The employment issues are reviewed in greater detail in Chapter 2.
Figure 1.3:Youth unemployment rate (percent of total labor forces ages 15-24)
Source: World Development Indicators
Millennium Development Goals (MDGs)
The MDGs reflect the actions and targets contained in the Millennium Declaration that was adopted by 189 nations during the UN Millennium Summit in September 2000. Bangladesh has made noteworthy progress in the attainment of MDGs during 2000s. Bangladesh’s advancement towards MDGs is evident in human development, for example attainment of gender parity in primary and secondary school enrolment.
The end of the Sixth Plan coincides with the terminal year for the MDGs (2015). This provides an opportunity to take stock of progress with MDGs so far and undertake corrective actions in areas where progress is lagging. A review of progress shows that Bangladesh has covered significant grounds and can safely be said to be on track in relation to most of the targets (Table 1.3). Bangladesh is making strides in reducing poverty, already brought down the poverty gap ratio to 6.5 against 2015 target of 8 with the rate of poverty reduction being 1.44 percent in relation to the required rate of 1.23 percent. With regard to targets such as expansion of primary and secondary education, infant and child mortality rate, containing the spread and fatality of malaria and tuberculosis, reforestation, access to safe drinking water and sanitation latrines especially in urban areas, Bangladesh has done remarkably and may well reach several of these targets before the stipulated time. The country has already achieved gender parity in primary and secondary education.
|Base year 1990-95||2000-02||Current 2005-10||Target 2015||Status|
|Goal 1: Eradicate Extreme Poverty and Hunger||Goal will probably be met|
|Target 1: Halve by 2015 the proportion of people living below the poverty line|
|Poverty headcount ratio (2010)||59||50||31.5||29||On Track|
|Poverty Gap Ratio (2010)||17||13||6.5||8||Goal met|
|Target 2: Halve by 2015 the proportion of people who suffer from hunger|
|Prevalence of child malnutrition (percent of children under 5)||68||51||45||33||Off Track|
|Population below minimum level of dietary energy consumption (percent)||28||…||20||14||On Track|
|Goal 2: Achieve Universal Primary Education||Goal will probably be met|
|Target 3: Ensure that all boys and girls complete a full course of primary schooling|
|Net enrollment ratio in primary education||61||83||91||100||On Track|
|Percentage of cohort reaching grade 5 (percent)||43||…||55||100||Needs attention|
|Adult literacy rate||37||39||58||—||Needs attention|
|Goal 3: Promote Gender Equality and Empower Women||Goal will probably be met|
|Target 4 : Eliminate gender disparity in primary and secondary education preferably by 2005 and at all levels by 2015|
|Ratio of girls to boys in primary and secondary education (percent)||77||104||106||100||Achieved|
|Ratio of girls to boys in tertiary education (percent)||37||32||32||100||Needs attention|
|Ratio of literate females to males (percent of ages 20 -24)||65||77||85||100||Needs attention|
|Share of women employed in the non- agricultural sector (percent)||19||…||25||50||Needs attention|
|Goal 4: Reduce child mortality||Goal will probably be met|
|Target 5: Reduce by two thirds by 2015 the under 5 mortality rate|
|Under 5 Mortality Rate (per 1000)||146||82||54||50||On Track|
|Infant Mortality Rate (per 1000 live births)||92||56||41||31||On Track|
|Immunization, measles (percent of children under 12 months)||54||69||82||100||On Track|
|Goal 5: Improve Maternal Health||Goal will probably be met|
|Target 6: Reduce by three quarters, by 2015, the maternal mortality ratio|
|Maternal Mortality Ratio (per 100,000 live births)||574||400||194||143||On Track|
|Births attended by skilled health staff (percent of total)||5||12||24||50||Needs attention|
|Goal 6: Combat HIV/AIDS, malaria and other diseases||Goal will probably be met|
|Target 7: Have halted by 2015 and begin to reverse the spread of HIV/AIDS|
|Contraceptive Prevalence Rate (percent of women ages 15-49)||40||60||72||Needs attention|
|Target 8: Have halted by 2015 and begin to reverse the incidence of malaria and other major diseases|
|Deaths of malaria per 100,000 population||1.4||…||0.4||0.0||Needs attention|
|Incidence of tuberculosis (100,000 people)||264||233||225||Halving||Needs attention|
|Tuberculosis cases detected under DOTS (percent)||21||34||74||75||On Track|
|Goal 7 : Ensure Environmental Sustainability||Goal will probably be met|
|Target 9: Integrate the principles of sustainable development into country policies and reverse the loss of environmental resources|
|Productive forest area (%) (70 % tree density)||9||10||13||20||Needs attention|
|Consumption of ozone depleting CFCs (per capita tonnes)||195||0.0||128||0||Needs attention|
|Proportion of terrestrial and marine areas protected||1.6||—||1.7/0.5||5.0||Needs attention|
|CO2 emissions (tonnes per capita)||0.1||0.2||0.3||…||Needs attention|
|Target 10 : Halve, by 2015, the proportion of people without sustainable access to safe drinking water and sanitation|
|Proportion of urban population with access to safe drinking water||98.8||82.0||99.9||100||On Track|
|Proportion of rural population with access to safe drinking water||93.1||72.0||79||96.5||Needs attention|
|Proportion of urban population with access to sanitary latrines||56.2||56.0||88.0||85.5||On Track|
|Proportion of rural population with access to sanitary latrines||15.3||29.0||85.0||55.5||On Track|
|Target 11: By 2020, have achieve a significant improvement in the lives of at least 100 million slum dwellers|
|Proportion of households with access to secure tenure||…||…||36.4||…||Insufficient data|
|Goal 8: Develop a Global Partnership for Development||Goal will probably be met|
|Target 12 : Develop and implement strategies for decent and productive work for youth|
|Youth unemployment rate (percent of total labor force ages 15 24)||2.9||8.0||13.4||…||Needs attention|
|Target 13 : Make available the benefits of new technologies, especially information and communication|
|Fixed line and mobile telephones (per 100 people)||0.2||1.3||13.6||50||On Track|
|Internet users (per 100 people)||0.2||3.4||…||Insufficient data|
However, among the challenges that Bangladesh faces, improving maternal health is a major concern. Maternal mortality, although currently on track, should be monitored closely. The country is also struggling in terms of forest cover and maintaining protected areas, specially the wet lands, for bio-diversity. Access to safe drinking water and sanitary latrines particularly in the rural areas is another aspect where greater attention is required. Yet another challenge that Bangladesh faces is in addressing certain pockets of poverty that are lagging far behind with respect to the national averages and where the benefits of MDGs attainment need to be specifically reached. These areas include the urban slums, the hill tracts, coastal belts and other ecologically vulnerable areas.
Income Inequality and Regional Disparities
While rapid growth has helped reduce poverty substantially, there are two negative developments associated with the growth process that need attention and better management. First, there is evidence of growth in income inequality. And second, evidence also suggests that there are significant regional disparities of growth and development outcomes.
There is considerable concern in Bangladesh about the growing income inequality. Results show that the distribution of income is much more unequal than the distribution of consumption. Income inequality as measured by the gini coefficient for the distribution of income rose substantially during the 1980s and the 1990s. During 2000 and 2005 the income gini coefficient increased further from 0.451 to 0.467 due to an increase in rural income inequality. Thus, the rural income gini coefficient increased from 0.393 in 2000 to 0.428 in 2005. The urban income gini coefficient remained unchanged at 0.497. However, the latest data show that income gini coefficient at the national declined slightly to 0.458 in 2010 though it was still higher than the level in 2000. The urban income gini coefficient also declined to 0.452 and it was lower than the level in 2000. On the whole, income inequality is a serious problem in Bangladesh and reversing the trend in a sustainable manner will be a major challenge for the Sixth Plan.
Bangladesh development experience also shows considerable spatial differences. Broadly speaking, the Divisions of Barisal, Khulna and Rajshahi show higher poverty and lower income growth than the Divisions of Chittagong, Dhaka and Sylhet. Although international experiences suggest that divergences in spatial growth outcomes are inevitable in view of diverging initial conditions including human development, infrastructure, and geography, policy neglect has also contributed to spatial disparities in Bangladesh. Low growing regions also tend to have a higher incidence of poverty. So a meaningful poverty reduction strategy must also address the lagging regions problem.
Sixth Plan Core Targets in the Context of Vision 2021
Notwithstanding past progress with poverty reduction, the Government recognizes that Bangladesh is still a low income developing country. An estimated 47 million people are living below the poverty line. Most of the labor force is engaged in informal low productivity and low income jobs. The access to secondary and tertiary education is limited and the quality of education at all levels is deficient. The poor group in Bangladesh is severely disadvantaged in terms of ownership of assets and has inadequate access to institutional finance as well as to basic services including quality education, healthcare, water and sanitation. This group of people is also disproportionately affected by natural disasters and the adverse effects of climate change. Publicly supported mitigating measures in the form of social protection programs are inadequate.
In recognition of these substantial development challenges, recently the Government has embarked on a Perspective Plan covering 2010 to 2021 aimed at implementing Vision 2021. The key message of Vision 2021 and the associated Perspective Plan is summarized as follows. “The development perspective envisages to achieving, in the coming days, a prosperous progressive nation in which food and energy security shall prevail with drastic reduction of poverty and a low level of unemployment. The perspective also includes great strides in human development including health and nutrition, effective population control, progress in all levels of education, primary, secondary and tertiary in addition to commendable improvement in science and technology, along with great achievement in ICT. Infrastructure development will improve integrated multi-modal transport encompassing, railways, roads and inland water transport having connectivity with our neighbors. In other words, the development perspective implies the simultaneous fulfillment of economic and social rights of the people alongside civil and political rights. For this to happen strong links between economic growth on the one hand, and expansion of employment opportunities, reduction of poverty, expansion of democracy and empowerment, consolidation of cultural identity and protection of environment with its freshness for the next generation on the other will be established” [page 1, Outline Perspective Plan of Bangladesh 2010 to 2021 (making vision 2021 a reality)].
The broad development goals underlying the Perspective Plan include:
- building a secular tolerant liberal progressive democratic state
- promoting good governance and curbing corruption
- promoting sustainable human development
- reducing the growth of population
- instituting a prudent macroeconomic policy mix
- promoting a favorable industrialization and trade policy regime
- addressing globalization and regional cooperation challenges
- ensuring adequate supply of electricity and fuel
- achieving food security
- making available adequate infrastructure
- pursuing environmental friendly development and
- building a digital Bangladesh
The Perspective Plan sets the strategic directions and provides a broad outline for the course of actions for making the Vision 2021 a reality. This broad framework leaves considerable latitude for the Sixth Five Year Plan (FY11-FY15) and the Seventh Five Year Plan (FY16-FY20) to work out operational details of how the country should move forward. Nevertheless, the objectives and targets of the two plans to be implemented [i.e. the Sixth Five Year Plan (FY11-FY15) and the Seventh Five Year Plan (FY16-FY20)] within the purview of the Perspective Plan period must be consistent with the visions, objectives, and targets contained in the Perspective Plan.
A number of core targets have been identified to monitor the progress of the Sixth Plan. These targets have been set according to the vision and objectives of the perspective plan as well as the goals of the Millennium Development Goals1. The achievement of these targets by the end of the Sixth Plan should likely put Bangladesh on course to realize most of the objectives of the Vision 2021 and MDG goals. These monitor able targets fall in seven broad categories: (i) Income and Poverty; (ii) Human Resource Development (iii) Water and Sanitation; (iv) Energy and Infrastructure, (v) Gender Equality and Empowerment; (vi) Environment Sustainability; and (vii) Information and Communications Technology (ICT). Brief descriptions of the targets under each of these broad categories are given below. Table 1.4 summarizes the targets for the Sixth Plan against targets of the ‘Vision 2021’ and the MDGs.
|Vision 2021||SFYP 2015||MDGs|
|A. Production, Income Generation and Poverty|
|1. Real Income Growth (%)||6.1||10||8.0|
|2. Head Count Poverty (%)||31.5||14||22||29|
|3. Industrial Sector Employment||17||30||25|
|4. Contribution of Productivity to Economic Growth (%)||8||20||10|
|5. Overseas employment of skilled labour (%)||35||20||50|
|B. Human Resource Development (Education, Health and Population)|
|6. Net Enrolment at Primary Level (%)||91||100||100|
|7. Enrollment Rate in 12th Class (%)||100||60|
|8. Percentage of cohort reaching grade 5 (%)||55||100||100|
|9. Total Fertility Rate Reduction||2.7||1.8||2.2|
|10. Increase Contraceptive Prevalence Rate (%)||60||80||72|
|11. Under 5 Mortality Rate (per 1000)||62||50||50|
|12. Immunization, measles (percent of children under 12 months)||87||100||100|
|13. Maternal Mortality Ratio (per 100,000 live births)||194||143||143|
|14. Births attended by skilled health staff (percent of total)||24||50||50|
|C. Water and Sanitation|
|15. Proportion of urban population with access to safe drinking water||99.9||100||100||100|
|16. Proportion of rural population with access to safe drinking water||79||100||96.5||96.5|
|17. Proportion of urban population with access to sanitary latrines||88.0||100||100||85.5|
|18. Proportion of rural population with access to sanitary latrines||85.0||100||90||55.5|
|D. Energy and Infrastructure|
|19. Electricity Generation (MW)||5803||20000||15457|
|20. Electricity Coverage (%)||47||100||68|
|E. Gender Equality and Women Empowerment|
|21. Ratio of girls to boys in tertiary education (%)||32||60||100|
|22. Ratio of literate females to males (percent of ages 20 24)||85||100||100|
|23. Female Overseas Employment Rate (%)||5%||20%||10%|
|F. Environment Sustainability|
|24. Productive Forest Coverage (%) (70 % tree density)||13||20||15||20|
|25. Research and Development Spending/GDP (%)||0.6||1.4||1|
|26. Compulsory ICT Education (education level-class)||5||12|
|27. Telecentre/Community e-centre with Inter-net facilities at unions (%)||100||100|
|28. Computer laboratory at the primary government school||20||5|
|29. Increase teledensity (%)||90||70|
|30. Expansion of Broad Band Coverage (%)||40||30|
I. Income and Poverty
- Attaining average real GDP growth rate of 7.3% per year over the Plan period.
- Reduction in the head-count poverty ratio by about 10 percentage points.
- Creating good jobs for the large pool of under-employed and new labor force entrants by increasing the share of employment in the industrial sector from 17 percent to 25 percent.
- Increasing the contribution of factor productivity in economic growth to 10 percent.
- Overseas employment of skilled labour to be increased from 35% to 50%
II. Human Resource Development (Education, Health and Population)
- Achieving 100 percent net enrollment rate for primary education.
- Increasing enrollment rate in 12th class to 60%.
- Percentage of cohort reaching grade 5 to be increased to 100 from current 55 percent.
- Under 5 mortality rate to be reduced to 50 per 1000 live birth.
- Infant Mortality Rate to be reduced to 31 per 1000 live birth.
- Maternal Mortality Ratio to be reduced to 143 per 100,000 live births.
- Immunization, measles (percent of children under 12 months) to be increased to 100 percent.
- Births attended by skilled health staff to be increased to 50 percent.
- Reduction of Total Fertility Rate to 2.2
- Increasing Contraceptive Prevalence Rate to 72 percent.
III. Water and Sanitation
- Safe drinking water to be made available for all urban population.
- Proportion of rural population with access to safe drinking water to be increased to 96.5 percent.
- Proportion of urban population with access to sanitary latrines to be increased to 100 percent.
- Proportion of rural population with access to sanitary latrines to be raised to 90 percent.
IV. Energy and Infrastructure
- Generation of electricity to be increased to 15,457 MW by FY15 such that the target of 20,000 MW electricity generated by FY21 is attained.
- Electricity coverage to be increased to 68 percent.
- To increase energy efficiency by 10%
- Improve railways and waterways as energy efficient multi-modal transport system to reduce carbon emission.
- Production of natural gas to reach about 4500 mmcfd by December 2015
- Optimizing domestic production of primary energy resources including renewable energies.
- Expanding access of the poor to primary and secondary energy sources through affordable pricing and targeted distribution.
- Construction of 6.15km. long Padma Multipurpose Bridge at Mawa-Janjira;
- Construction of about 26 km. long Dhaka Elevated Expressway.
V. Gender Equality and Empowerment
- Female to male ratio in tertiary education to be raised from current 32 percent to 60 percent.
- The ratio of literate female to male for age group 20-24 to be raised to 100 percent from the current 85 percent.
VI. Environmental Sustainability
- Increase productive forest coverage by 2 percentage points.
- Improve air quality in Dhaka and other large cities and enacted Clean Air Act
- Treat all urban waste water by FY15 to clean river waters
- Promote Zero discharge of industrial effluents.
- Urban wetlands are restored and protected in line with Wetland Conservation Act
- At least 10% of the wetland in peak dry season is protected as aquatic sanctuary
- Jolmahal leasing system phased out in favour of pro-poor community based management
- Risk Atlas for at least 7 cities/towns developed by 2015.
- 500 meter wide permanent green belt established and protected along the coast
- Eco-tourism promoted at least in 15 protected areas and ECAs
- Comprehensive Marine Resources Management Plan developed
- Land zoning for sustainable land/water use completed.
- Environmental, Climate Change and disaster risk reduction considerations are integrated into project design, budgetary allocations and implementation process.
- Canals and natural water flows of Dhaka and other major cities restored.
VII. Information and Communications Technology (ICT)
- Increase public spending on Research and Development to 1 percent of GDP by FY15 and 1.4 percent by FY 21.
- Establish compulsory ICT education at secondary level by FY13 and extend it to the primary level by FY21.
- Establish tele-centre /community e-centre with internet facilities at all union level.
- Establish computer laboratory at the primary government school with 5 computers per school.
- Introduce of E-governance at all executive levels of government and at all district level.
- Introduce electronic GD and FIR at all Police Stations in Dhaka.
- Raise telephone density to 70 percent.
- Expand Broad Band to 30 percent.
- Introduce Wireless Broad Band (Wi Max) across the country.
- Introduce digitalization of land records
These targets may appear ambitious but with concerted efforts they are achievable. The development experience of Bangladesh is a testimony to the dynamism and resilience of a young nation. Despite the massive development challenges and constraints that Bangladesh faced immediately after independence, the country has successfully pushed ahead with many aspects of the development agenda. Some of these remarkable achievements include:
- Reducing Total Fertility Rate from 7.0 in mid-1970s to 2.7 by 2007
- Increasing life expectancy from 46.2 years to 66.6 in 2007
- Increasing the rate of economic growth from an average rate of 4% in the 1970s to 6% in the 2000s
- Increasing the savings and investment rates from below 10 percent each in the 1970s to 24 percent (investment rate) and 30 percent (savings rate) in FY10
- Cutting the incidence of poverty by 60% between the mid 1970s and FY10
- Achieving gender parity in primary and secondary education
- More than tripling of the production of rice (from 10 million tonnes in FY73 to 32 million tonnes in FY10) thereby achieving near self-sufficiency in normal production years.
Admittedly, the future development challenges are more complex in terms of the governance and institutional development agenda. The extremely high population to land ratio is a major limiting factor. Additionally, the adverse effects of environmental degradation and climate change pose substantial downside risks. Similarly, the global recession and food and fuel price inflation present significant risks. Even so, with a dynamic population, strong political leadership and a commitment to addressing the underlying governance and institutional development agenda, Bangladesh is well poised to push ahead with the implementation of Vision 2021.
Sixth Five Year Plan Strategy
Table 1.4 summarizes the targets for the Sixth plan against targets of the ‘Vision 2021’ and the MDGs. At the operational level the fundamental task of the SFYP is to develop strategies, policies and institutions that allow Bangladesh to accelerate growth and reduce poverty. Poverty is still pervasive. In developing the strategy for higher growth, employment, and poverty reduction and the Sixth Plan will draw on the lessons of past experience. In particular it will draw on the experience of the Fifth Five Year Plan (FY97-FY02), where a number of initiatives were undertaken to raise the GDP growth rate, increase food production, initiate agriculture diversification and improve health and education service delivery (see Box 1.1)
Acceleration of economic growth and employment: An essential pre-requisite for rapid reduction of poverty is to attain high economic growth ensuring sustainable productive employment and incomes for large number of people of Bangladesh. Productive employment is the most potent means of reducing poverty. But this is not easily achieved. This requires strategies and actions on the demand side of the labor market (driven primarily by economic growth) as well as strategies and policies on the supply side (labor force growth and quality).
Box 1.1:Achievements during Fifth Five Year Plan (1997-2002)
The Fifth Five Year Plan combined sound economic management with sold social policies to secure good economic growth as well as important progress with broad-based participation and social justice. On the economic front emphasis was placed on sound macroeconomic management, trade liberalization, promotion of exports, incentives for private investment, agricultural diversification, water resource development, micro-credits and rural development. On the social front emphasis was placed on human development, disaster management and broad based participation.
The results were impressive. For the first time in the history of Bangladesh, the economy witnessed an average annual real GDP growth rate of 5 percent, which was higher than average GDP growth rates during any past plan period. Despite the devastating flood in 1998, the annual average growth in agriculture was 3.7 percent. The economy also experienced low inflation rate – annual average inflation rate was 4.5 percent. Formulation of an education policy was a significant achievement in the educational front. Emphasis was placed on bringing health care to the door steps of the citizens by making the Union Health and Family Welfare Centers (HFWC) as the focal points for mother and child health. One community clinic for every six thousand people was established at government initiative. Nuclear Medicine Centres (NMC) were established which are still providing low cost medical services to the poor and vulnerable patients. Withdrawal of taxes and duties on medical equipment encouraged setting up of clinics and hospitals in the private sector. By abolishing monopoly in the mobile telephone sector and making mobile phones available to everyone at low prices and increasing access to information technology by reducing import duties, the government made it possible for Bangladesh to enter the digital age. In power, a number of independent power producers were established under the private initiative. Most important among them were 360 MW Haripur power project and the Megnaghat 450 MW power plant constructed by the US Company AES and Pendekar Energy. Deregulation of transport sector contributed to the development of private sector led modern transportation system.
Important gains were made in putting Bangladesh on the global map. The treaty on the water sharing of the river Ganges, the peace accord in Chittagong Hill Tracts, recognition of 21st February as international mother language day, election to the UN Security Council, sub-regional cooperation through the formation of D-8, BIMSTEC and the Association for Asian Parliamentarian for Peace (AAPP) bestowed on Bangladesh a new position of prestige and importance in the global arena.
On the demand side, both the rate of economic growth and its composition will matter for job creation. Acceleration of the growth rate will require a substantial increase in the rate of investment from the present 24.4 percent of GDP level. Much of the higher investment will need to be deployed to reduce and eventually eliminate the infrastructure constraint (primarily power and transport) and to strengthen human development. A large part of the financing will come from the domestic public resource mobilization and from higher private savings, including from remittances. Yet some critical level of financing from foreign sources that are strategic in nature and allow transfer of technology will be necessary.
Rapid economic growth, its composition and absorption of labor in high productivity, high income jobs are inter-linked. Low income elasticity of basic food items, land constraint and difficulties of penetrating the world agricultural export markets limit the ability of agriculture to grow at the same pace as manufacturing or services. Presently the average labor productivity and income in agriculture are also very low. Similarly a large part of the labor force is occupied in informal services with very low productivity and income. Accordingly, the economic growth process in the Sixth Plan needs to be appropriately balanced, thereby creating more employment opportunities in the manufacturing and organized service sectors and allowing a shifting of large number of workers engaged in low productive employment in agriculture and informal services to these higher productivity sectors of the economy.
Therefore, much of the high productivity, high income jobs will need to come from a labor-intensive manufacturing sector based on domestic and export markets and from organized services. Both large and small enterprises need to contribute to this growth. The role of small enterprises is particularly important to provide the employment base. The promotion of small enterprises in rural areas needs to be a major strategic element for creating higher income and employment in the rural economy, which is critical for sustained poverty reduction.
The dynamism in manufacturing sector will benefit from greater outward orientation. Bangladesh has witnessed this benefit from the highly positive experience of the ready-made garments (RMG) sector. Experiences from Korea, China, India, Thailand and Vietnam about the role of exports in manufacturing development are similarly positive. To increase the export potential as well as to diversify the export base, the Sixth Plan will seek to further reduce trade barriers within the context of the World Trade Organization (WTO) framework as well as seek more active cooperation with neighbors. Bangladesh will actively participate in concerned international and regional/sub-regional fora aimed at increasing Bangladesh’s access to international export markets, easing and eventually eliminating any non-trade barriers to Bangladeshi exports, encourage investments, increase trade in services including energy, promote regional connectivity, and establish best possible economic relations with all strategic countries including neighbors.
The re-balancing of the growth and employment process must be accompanied by strategies to enhance the income-earning opportunities of workers remaining in agriculture by raising land productivity and increasing diversification of agriculture production. Agriculture diversification in both crop and non-crop sectors will help promote commercialization of agriculture and raise farm incomes. In sustaining this economic growth, pro-poor, environmental sustainable and climate change adaptive approach in whole of the development process must be considered.
Employment abroad and associated remittances have played a major development role in Bangladesh. This element of the employment strategy will be strengthened. In addition to pursuing the strategy to export low skilled manpower, the Sixth Plan would focus on export of well trained skilled and semi-skilled manpower to existing as well as new destinations.
Benefiting from higher labor force growth (the demographic dividend) and ensuring labor quality: Although Bangladesh is currently experiencing ‘demographic transition’ as a result of slower population growth, entry of young population in the labor force will continue due to demographic factors. This demographic dividend needs to be properly used through a well articulated human development strategy. The quality of labor force is weak due to low access and low quality of education. The Sixth Plan will seek to address these challenges by developing and implementing a well thought out education and training strategy. The strategy needs to be particularly sensitive to reduce the access gap of the poor, especially in the under-developed or lagging regions of the country. A significant part of the additional investment for higher growth will need to be deployed to the development of the labor force.
Improving factor productivity through information technology: Although factor accumulation (i.e. of labor and capital) would be the main source of economic growth in the Sixth Plan, strong efforts will be made to increase the contribution of total factor productivity in all areas of production including manufacturing, agriculture and services. Among the contributing policies is the introduction of appropriate information and communication technology (ICT). One of the central visions of the Perspective Plan is ‘Digital Bangladesh’ where it is conceived that through the successful implementation of the vision of the ICT policy and its principles it will be possible to build a ‘Digital Bangladesh’ by 2021.
Reducing the growth of population: In additional to the focus on economic growth and employment, strong attention needs to be given to reducing the growth of population. Notwithstanding past progress with the reduction of growth of population, Bangladesh is amongst the most densely populated country in the world. Renewed efforts must be placed to further slow down the growth of population. The population control strategy will emphasize girls’ education, female re-productive health, population control service delivery based on public-private partnership, and social mobilization.
Ensuring food security: The recent global food price inflation illustrates the critical importance of ensuring food security for a large poor country like Bangladesh. Past progress in rice production suggests that Bangladesh has the capacity to achieve food security efficiently through domestic production. Indeed, with proper incentives there is scope for food exports. The emphasis on productivity improvements will be particularly helpful in reconciling food security objectives with farmer incentives. In case of food production, climate change adaptation strategy in the agriculture sector will be prioritized to tackle the global food insecurity susceptibility due to climate change. The achievements of goals under the three dimensions of food security – availability, access and utilization, will be facilitated by the implementation of the National Food Policy and its Plan of Action and the Country Investment Plan (CIP) 2010-2015.
Addressing the land constraint: Bangladesh is one of the most densely populated countries in the world. As a result, land has become the scarcest factor of production in Bangladesh. This is reflected in galloping land prices throughout the country but especially in the metropolitan cities. Future growth strategy must take this binding constraint into account in order to ensure its sustainability. Efforts to reduce the growth of population will help, but better management of land is of paramount importance for sustaining rapid GDP growth in Bangladesh. Sound land management also has a direct effect on people’s welfare and poverty reduction. Landless farmers are amongst the poorest of the poor. Land is also essential for housing. The rapidly expanding slum population and rising land prices in urban areas are indications of increasing difficulties Bangladesh faces in providing people with proper shelter.
The main goal of the government’s land use policy and management is to ensure best possible use of land resources and delivery of land related services to the people through modernized and efficient land administration for sustainable development with accelerated poverty reduction. The lack of coordination between different departments responsible for preparation and maintenance of Record of Rights often leads to confusion, conflicts and many instances of litigation causing suffering of the people especially the small and marginal farmers. To mitigate this problem, the Ministry of Land has already undertaken projects to conduct digital surveys and introduce e-governance. Land records will be computerized and land mutation will be made automatic. The Government intends to modify and simplify all land-related laws, which is expected to remove many of the land related disputes. A special committee will be set up to come up with recommendations in this regard. Planned use of land according to Land Zoning Maps prepared on the basis of present and potential land uses will be ensured through enforcement of the provisions of relevant laws. The provisions of the Town Improvement Act of 1953 will also be more strictly enforced. The Government will take up projects for the development of rural townships where specific areas are to be earmarked for housing, marketplaces, industries and infrastructure. Land acquisition act and policy would be rationalized along with a system of fair and equitable compensation for acquired land.
Managing the spatial dimensions of growth: Growth experiences in Bangladesh and elsewhere show both a tendency towards urbanization as well as uneven pattern of regional growth. The urbanization problem has become particularly acute in Bangladesh owing to the primacy of Dhaka. The unbalanced growth of Dhaka shows both a large concentration of wealth and income as well as unsustainable pressure on Dhaka’s already fragile infrastructure. Concerning regional disparities, the divisions of Dhaka, Chittagong and Sylhet seem to do better in terms of both growth and poverty reduction as compared with Rajshahi, Khulna and Barisal. The Sixth Plan will make efforts to address both these spatial dimensions of growth. On the urbanization front the strategy will emphasize a more balanced growth of urban centers across the entire country through proper institutional reforms that involves the establishment of locally elected and accountable municipalities and city corporations. Property tax base will be reformed to strengthen the financial autonomy of these entities along with block grants from the budget based on principles of equity and population. Special emphasis will be given to improving land administration and management to arrest the spiraling urban land prices that is becoming a binding constraint to the expansion of manufacturing and modern services as well as limiting the ability to provide affordable housing. Regarding regional disparities, the Plan would strive to address the lagging regions problems, especially focused on Khulna, Rajshahi, and Barisal Divisions, through a strategy that involves public expenditure in infrastructure and human development, by improving the access to financial services, by promoting international labor migration from these divisions, and by facilitating more trade and investment in the border districts with neighbors including India.
Reducing income inequality: Inequality emerges from a combination of greatly unequal distribution of physical assets as well as human capital. Lack of factor endowment such as land, capital, credit and skills has been preventing poor people in Bangladesh to participate in productive economic activities and has compelled them to remain in a disadvantageous situation. Opportunity to break the low factor endowment trap through utilizing essential public services (such as education, training, safe drinking water, sanitation and other health facilities) has not been effective due to poor people’s limited access to those provisions. Access to these essential services for the majority of the population depends not only on their income levels but also on the quality and efficiency of the service delivery through the publicly funded and operated systems. Accordingly, the Sixth Plan’s strategy to reduce income inequality will follow a two-prong strategy. First, it will include efforts to increase the access of the poor to assets and means of production. And second, it will strengthen the delivery of human development services to the poor.
The strategy for enhancing the poor group’s factor endowment in the Sixth Plan will be focused on ensuring better access by the poor to irrigated water, fertilizer, electricity, rural roads and institutional finance. The government’s public expenditure policies and programs and the financial sector strategies and policies will pay specific attention to implementing this strategy.
A substantial expansion as well as quality enhancement of the supply of essential human development services for the poor will be done over the Sixth Plan period. The strategy will include developing a system of accountability and transparency in the delivery of these essential services to ensure availability of appropriate staff and adequate services for the poor. The human development strategy of the Sixth Plan will focus on these aspects in the design of strategies, policies and programs.
Ensuring social protection for the under-privileged population: Even with higher growth, better jobs and better access to essential services, a part of the under-privileged population will likely be left out. Additionally, substantial risks are posed by natural disasters and climate change for this vulnerable population. To address this challenge, the Sixth Plan aims at significantly strengthening the social protection programs. The strategy will be to design and implement a range of social protection programs that meets the needs of this under-privileged group. In this regard, existing programs will be reviewed and reformed to establish better targeting with a view to ensuring that all under-privileged groups including the disable, the elderly, the tribal population, and children and women at risk are given priority in the distribution of benefits. Particular attention will be given to strengthening the underlying institutions.
Ensuring Gender Parity: The National Policy for Women’s Advancement 2011 provides for the elimination of all forms of discrimination against women and ensure their rights and equal partnership in development. Accordingly, establishing equal opportunities for women in all sections of the society with an objective of integrating them into social and economic sphere is a major strategic element underlying the Sixth Plan. The Sixth Plan strategy embeds the critical role of women in nation building and thus ensures that their needs, rights, entitlements and contributions are appropriately reflected in the Plan document. The human development and social protection strategies underlying the Plan will place particular emphasis on gender aspects of development. It is also recognized that women are a heterogeneous groups such that their situations, deprivations, and needs vary according to their locations within various communities, religions, and regions. Thus, along with promoting rights and entitlements of women, Sixth plan envisages to cater to all these differential and specific requirements.
Ensuring environmental sustainability: A key element of the strategy of the Sixth Plan is a firm commitment to pursue an environmentally sustainable development process. Natural resources like land and water are limited and their per capita availability is diminishing due to rising population on the one hand and also due to excessive use of common pool resources on the other hand. Excessive and indiscriminate use of our natural common pool resources has degraded them to an unusable state. The degradation of natural resources reduces the well-being of people; especially the poor and women suffer more, as they depend much more on natural common property resources for fuel and water. Thus, the focus of the Sixth Plan’s environmental protection strategy would be the conservation and maintenance of natural resources, reducing air and water pollution, and liberating encroached rivers, water bodies, forest areas and khas land.
Bangladesh is a victim of climate change caused by rapid urbanization, industrialization and economic development activities worldwide. The growing evidence on climate change suggests that Green House Gas (GHG) emissions, resulting from the cumulative action of developed and emerging economies would have serious deleterious effects in near future, unless effectively contained. It is predicted by international agencies that, Bangladesh will be adversely affected by climate change in the form of melting of Himalayan glaciers, global warming and rising sea level, intensified natural calamities, and greater water scarcity leading to loss of livelihood, rising unemployment and poverty. Furthermore, a rise in the sea level, leading to coastal submergence (i.e. 17 % of Bangladesh) would cause large-scale displacement of people. Therefore, effective steps must be explored and adopted in collaboration with the international community within the Sixth Plan period to mitigate the adverse consequences of climate change. An acceptable and workable collaboration strategy must include fair and just burden sharing for mitigation as well as adaptation strategies across nations. All stakeholders’ commitment for persistent improvement in pro-poor environmental resource management and climate change adaptation is a precondition for environmental sustainability.
Improving governance: Along with sound development strategy, good programs and good policies, the ability to implement the Plan and evaluate the results of the Plan are critical determinants of the success of the planning effort. Proper implementation of the Plan requires attention to good governance, public administration capacity and monitoring and evaluation. The challenge of ensuring good governance in Bangladesh is well known. Low public administration capacity, occasional weaknesses in economic management and persistent corruption lie at the heart of the overall shortcoming in national governance. As a result, the public sector has not been able to play as effective a role as could have been the case in providing services and creating an environment for growth.
The Government understands that without fundamental reforms of core institutions, improvement in public administration capacity and a strong anti-corruption strategy, the ability to implement Vision 2021 and the underlying five year development plans will be seriously compromised. Similarly, an effective Monitoring and Evaluation (M&E) system is essential to monitor the implementation of the plan and associated programs. Without a solid M&E capability, there is a risk that resources might get locked in over the medium-term into programs that are not working or relevant in the changing economic environment. A strong M&E capacity is therefore an urgent national priority. The Government also recognizes that these are long-term challenges and require long-term coordinated and sustained efforts.
Good governance and institutions are interlinked. Ensuring good governance requires establishing strong institutions. For the Sixth Plan the governance improvement strategy will consist of focus on a number of key areas that require immediate attention and strengthening of a number of core institutions.
- First, efforts will continue to ensuring equality of opportunity and full mobility for all with freedom and dignity, and without religious, social or political barriers. The equal opportunity vision should also be accompanied by vast improvements in the opportunities for economic and social advancement. More specifically, individuals belonging to disadvantaged groups such as minorities and women will be provided with special opportunities to develop their skills and integrate themselves in the growth process.
- Second, good governance requires not only rule of law but also harmony and consistency of the laws. Good laws are a sine qua non of the rule of law. Review of the laws and their proper implementation will be considered as a subject matter of priority. The capacities and efficiency of the law enforcing agencies and the judiciary will be strengthened.
- Third, to provide better and speedier service and to improve the transparency and accountability of public service agencies, priority will be given to the implementation of e-governance through the implementation of the Digital Bangladesh initiative.
- Attention will be focused on developing and strengthening a number of core public institutions including the Central Bank, the Ministry of Finance, the Tax Department, the Planning Commission, Audits and Accounts, the parliamentary sub-committees, land administration, and the public utilities.
- Emphasis will be given to improving service delivery in basic services such as education, health, nutrition and water supply.
- Steps will be taken to strengthen public administrative capacity by reforming the civil service.
- Emphasis will be placed in developing capacities of local governments to play their development role in terms of delivery of basic services.
- Efforts will be made to implement the medium-term budgetary framework in all line ministries and to institute and implement an effective results-based Monitoring and Evaluation (M&E) system for public programs.
- All efforts will be made to reduce corruption in public services and take appropriate actions when corruption happens in an open and transparent manner.
Enhancing administrative capacity: The Government recognizes that administrative capacity is a serious constraint to the efficient delivery of basic services. Accordingly, several areas of intervention will be made to enhance capacity and bring efficiency, transparency and accountability in public service management. The Sixth Plan’s strategy for public administration capacity development and efficiency improvement consists of four pillars: strengthening the civil service; promoting devolution to local governments; strengthening public-private partnerships; and strengthening planning and budgetary processes.
Strengthening the civil service: The strategy is to develop a long-term program for rebuilding the civil service with emphasis on quality, performance and accountability. International experience suggests that one size fit all strategy for reforming the civil service does not work. The system must evolve from home grown experiences from within Bangladesh about what works and what does not. The basic features of the reform strategy includes merit-based recruitment and promotion; strong training; ensuring a proper incentive and work environment; establishing and enforcing clear rules of business and codes of conduct; and seeking feedback on performance through a citizen’s charter.
Establishing strong local governments: The strengthening of local governments is a key institutional development challenge for Bangladesh. International evidence suggests that properly instituted and accountable local governments can play a major role in spreading the benefits of development. While the lessons of experience from other countries can play an important role in helping the design and implementation of a proper system of local government, successful local governments must be based on the realities of the underlying political, social, administrative and economic realities of Bangladesh. The Government is committed to instituting an effective and accountable local government to help implement Vision 2021 and the programs of associated development plans.
Strengthening Public Private Partnerships (PPP): The Government recognizes that strong public private partnerships can play a catalytic role in mobilizing additional resources as well as creating additional capacity and help for implementing public programs. Accordingly, the Government has put emphasis on PPP to ensure expeditious development of infrastructure and utility services by attracting local and foreign investment and improving the expertise and technology. Through a well-defined policy framework, private initiatives would be encouraged to promote quality service delivery in the area of essential economic infrastructure. The Government is keen to encourage private investments in energy and power, roads, waterways, railways, ports, water and sanitation, telecommunications/ICT, housing and tourism. The Government will also consider expanding the scope of PPP further in the social sector. The positive experience of collaboration with NGOs in the delivery of basic education, health and population management services will be further enhanced.
Improving the planning and budgetary processes: In an environment of weak administrative capacity and limited budgetary resources, efficient planning and budgetary systems can play an important role in helping improve the efficiency of public spending. The Government has been taking a number of steps to improve planning and budgetary processes. One major initiative is the implementation of a move away from the traditional incremental budgeting towards a medium term budget framework (MTBF) process. The MTBF is intended to support the implementation of development plans by (i) ensuring that the government’s fiscal management contributes to macroeconomic stability and supports an enabling environment for economic growth and poverty reduction; and (ii) adequate public resources are allocated through a more strategic and policy-led budget planning process directed towards priority programs identified in the context of the approved medium-term development plan. A second initiative is to move away from the traditional public-investment focused plans to more strategic and indicative planning that puts emphasis on strategies, programs and policies for the entire economy. A third initiative is to link better the medium-term development plans to the MTBF process by making the plan a living document with annual review of performance.
The Sixth Plan will further improve the planning and budgetary processes by building on the above initiatives. Specifically, following actions will be taken:
- The Sixth Five Year Plan already makes a fundamental shift in the planning process by moving towards an indicative plan and focusing much more deeply on growth, employment and poverty reduction strategies, policies and programs. This indicative plan will serve as a living document through instituting a system of annual review of development performance and plan implementation. The performance review will focus on implementation of strategies and policies and look at broad economy-wide and sectoral outcomes rather than simply at financial progress of publicly funded investment projects. The results of the annual reviews will be shared with the cabinet and used to determine changes in plan goals, targets, strategies and policies as necessary in light of the changing global and local economy and the results of the plan implementation.
- The capacities of line ministries will be substantially strengthened to do proper planning and budgeting in the context of the implementation of the MTBF. Line ministries will need to ensure that proposed projects and programs are consistent with the objectives and framework of the Sixth Plan.
- Project approval process will be strengthened and streamlined to reduce delays and proliferation of tiny projects.
- Project approval at the Planning Commission level will be substantially strengthened. All projects that go to the Planning Commission must provide a proper appraisal report along with sound analysis that shows the consistency and relevance of the project to sectoral/economy-wide objectives, strategies and policies. The appraisal report will do proper economic and financial analysis of the proposed project, do gender and environmental analysis as relevant, and show an implementation plan while providing clear evidence of implementation capacity.
- Proliferation of projects and long implementation lags are a perennial problem. The Sixth Plan will seek to break this logjam by doing a proper review of all approved and active projects in the pipeline in cooperation with the line Ministries. The review of this portfolio stock will seek to clean out dormant or irrelevant projects and help line ministries close the projects that are facing implementation problems through restructuring or through other relevant interventions. The results of this exercise will be shared with the cabinet for endorsement and approval.
- The technical capacities of the Ministry of Finance and the Planning Commission will be substantially strengthened through proper staffing and training to ensure the timely implementation of the Sixth Plan and the MTBF. All efforts will be made to strengthen coordination between these two core ministries with a view to avoiding duplication, overlap and delays.
Establishing a results-based Monitoring and Evaluation (M&E) system: The proper implementation of the Plan will require careful monitoring and evaluation of the underlying policies and programs. In the past the focus has been on monitoring public spending in terms of achieving financial targets. In the Sixth Plan the emphasis will shift to the monitoring of results. To achieve this, the capacities of the Planning Commission and the line ministries to undertake results-based M&E will be strengthened. This will entail adopting proper M&E Frameworks, improving the database, and strengthening technical skills. This Framework will be monitored by GED under the guidance of the Minister for Planning. The findings will be properly disseminated to all stakeholders to ensure the usefulness of this endeavor.