26pc families take loans to meet basic needs

LoanProthom Alo illustration

Some one-fourth of the families take loans to meet basic human needs - food, clothing, shelter, medical care and education. People in rural areas are taking these loans more. A major portion of these loans are taken from non-government agencies at a high interest rate.

The figures came up in the final report on Food Safety Statistics- 2023 of the Bangladesh Bureau of Statistics (BBS). Various information came up with this survey, including the level of food insecurity in the country, its impact and people’s income and expenditure and the loans taken by them to fight food insecurity. The survey was conducted from 15 to 25 June on a total of 29,760 families across the country. The condition of not having access to sufficient food, or food of adequate quality, to meet one's basic needs is considered food insecurity.

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The BBS is saying food insecurity is a public health-related issue, which could be life-threatening sometimes. According to the BBS survey, some 0.82 per cent of the families in the country are suffering from severe food insecurity while some 22 per cent of the families have moderate or severe food insecurity.

Meanwhile the prices of daily essentials have been on the rise for the last two years. As a result, people are struggling to bear the additional costs. Apart from the consumers’ products, prices of daily essentials like oil, soaps and shampoos have also increased.

In addition to that, living costs have increased in every sector, including accommodation, education, health services and communication, which led to a change in our food habits. Economists say the rise in the living cost has resulted in a decline in the intake of nutritious food among people with low income.

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The BBS survey said the country is seeing a high inflation rate for over one and a half years. People’s income has not increased that much as compared to the rise in the prices of daily essentials. As a result, people are taking loans to cope with the pressure to meet the basic needs. The survey on food insecurity also shows this information on people taking loans.

According to the figures of the BBS survey, the total number of khanas (households) is around 410 million. Around 26 per cent of the families are taking loans to meet their basic needs. The people in the villages are suffering the most. The BBS survey says some 28 per cent of the families who took loans to meet their basic needs are from villages. The rate is 24 per cent and 15 per cent in the city corporation and town areas respectively.

Speaking to Prothom Alo, South Asian Network on Economic Modelling (SANEM) Selim Raihan said, “The number of families at food insecurity is higher in our own survey than that which came up in the BBS survey. It is becoming harder for these families in extreme poverty to survive taking loans. So it is essential to bring this large community under the social safety net programmes.”

According to the BBS survey, each of these families takes Tk 90,000 as loans every year on average.

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Most of these loans have been taken to tackle the accommodation crisis, and these families take Tk 109,222 as loan on average every year for this purpose. The second highest amount of these loans is taken for marital purposes. The families take Tk 99,714 on average as loans for marital purposes every year. The average amount of loans taken for food every year is Tk 49,000.

Most of these loans are taken from NGOs. Overall, more than 60 per cent of these families take loans from NGOs at a high interest rate. The families also loan money from relatives, banks and other sources.

Millions of people in food insecurity

According to the BBS, families at the moderate level of food insecurity mean families who cannot afford nutritious foods regularly. Around 22 per cent families were at moderate food insecurity and 0.82 per cent families were at severe food insecurity.

The BBS has conducted a survey on food security related issues for the first time. The government agency said there is a lack of government statistics regarding food insecurity. It is the reason they conducted the survey.

However, different international agencies have conducted surveys on food insecurity. For instance, the UN (United Nations) report on food security and nutrition published in July 2023 said some 52.7 million people were under extreme to moderate food insecurity in Bangladesh from 2020 to 2022. According to a survey by the World Food Programme (WFP) in 2023, some 40 million people suffered from food insecurity last year.

Loan dependency for survival

The prices of daily essentials started rising following the outbreak of coronavirus in the country in 2020. According to a World Bank report published in December last, some 71 per cent of the families were concerned with the price hike. The middle class, lower middle class and the low income people were being forced to loan money, the report stated.

Another study published by the Centre for Peace and Justice (CPZ) of the BRAC University in March 2022 stated some 34 per cent of the people of the country had to take loans to survive amidst the economic crisis driven by the pandemic.

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The study said one third of the money from the loan was spent for food, one fourth was spent to pay for old loans and a portion was used for medical purposes.

It is evident from the latest BBS survey that the tendency to loan money to meet the basic needs hasn’t reduced. The amount of loan per family has doubled. Some one third of the families of the country are running on loans.

SANEM executive director Selim Raihan said despite the big success in the financial growth of the country, a large portion of common people are suffering from food insecurity.

“It’s like the shadow beneath the lamp,” he added.

*This report appeared on the print and online versions of Prothom Alo and has been rewritten in English by Ashish Basu