Interview: Qazi Kholiquzzaman Ahmad
'Development caught up in the cycle of poverty and corruption'
Dr Qazi Kholiquzzaman Ahmad is an economist and the chairman of Palli Karma Shahayak Foundation. The Dhaka School of Economics was established at his behest. During the Liberation War of 1971, he was involved in the wartime government’s planning commission. In an interview with Prothom Alo, this economist speaks about Bangladesh’s poverty, economic disparity, the government’s policies and policy implementation, and a host of other issues.
The third wave of coronavirus is underway. How were the government’s preparations to tackle coronavirus?
No country was prepared for this at the outset. No one could conceive that coronavirus would take on such proportions in the form of a pandemic. After SARS and MERS, though, scientists had suspected that another epidemic may loom large in the offing. Bangladesh wasn’t prepared either and so things were disorganised at the beginning. We had to learn. And we had to learn step by step. But what was important for Bangladesh was that speedy measures were taken to keep the economy moving. From the beginning, arrangements were made for stimulus. On 8 March 2020 coronavirus was first detected in Bangladesh. And on 13 April the stimulus was announced, though it did take time to implement.
In the first wave of coronavirus many people lost their jobs due to the lockdown. Many faced a food crisis. But the crisis was not acute because of three reasons. Firstly, the government declared allocations for them. Secondly, in Bangladesh the general people always come forward to stand by people in distress during calamities. Thirdly, there was no food crisis in the country. The government perhaps provided one fourth, and the rest of the assistance came from the people. It very certainly wouldn’t have been possible for the government alone to overcome such a big crisis. Even so, there was an allocation of Tk 25 billion (Tk 2500 crore) for the social safety net in the 2020-2021 fiscal. However, Tk 95 billion (Tk 9500 crore) was spent.
Did this reach the actual sufferers?
The poor did receive a large amount of it, though I wouldn’t say it all went to them. There were problems. There are devious elements involved in the government relief. There were such miscreants even during Bangabandhu’s time and there still are. However, this time certain immediate measures were taken so these elements couldn’t take too much advantage.
When it comes to the stimulus packages, the wealthy benefitted more, particularly the businesspersons.
Those who had more, received more. Big businesses were given Tk 300 billion (Tk 30,000 crore) in stimulus. And they received this quite promptly. In the 2020-21 fiscal, Tk 200 billion (Tk 20,000 crore) went to the small and medium entrepreneurs. Of this, Tk 140 billion (Tk 14,000 crore) went to the small and micro entrepreneurs and Tk 60 billion (Tk 6000 crore) went to the medium entrepreneurs. The medium received this and small received this too, but the micro entrepreneurs at the rural level did not. There are about 12.5 million people (1 crore 25 lakh) who have no contact with banks. The prime minister later allocated Tk 20 billion (Tk 2000 crore) for them. Later another Tk 30 billion (Tk 3000 billion) was given to them in two phases. As the banks can’t reach them, this was provided to them through organisations like the Palli Karma Shahayak Foundation (PKSF) and Palli Sanchoy Bank.
Despite these initiatives by the government, it is said that poverty has increased during the coronavirus pandemic. Prior to corona it was said that 20 per cent of the people were living below the poverty line. Some studies now put this at 35 to 40 per cent. The finance minister does not admit this.
It is difficult to calculate. Different people have different ways of calculation. It depends on the methodology being used. So I can’t give you the percentage of increase in poverty, but both poverty and disparity have increased during coronavirus times. This is not only in Bangladesh, but the world over.
The coronavirus pandemic is not over yet. Has the government taken any effective measures so poverty and disparity does not increase?
A lot of emphasis is being placed on agriculture. Agriculture has saved us during coronavirus. Loans and stimulus are being provided to agriculture. That is why agriculture did well last time and has done well this time too. Nature was conducive too in these two years. There were no major calamities. Meanwhile, small enterprises are also being provided stimulus. And those outside of this are being given a lot of training to groom them for employment.
What has PKSF done to eradicate poverty during the coronavirus pandemic?
Firstly, we carry out our work though partner agencies. Our work was programmes were held up for the first few months. Once the restrictions were lifted, we speedily provided our partner agencies with funds. Before the onset of Omicron, we were back to our pre-corona performance.
There are allegations that PKSF provides the NGOs with funds at very low interest rates, but the NGOs take high interest from the recipients. Is that justified?
The government has a micro-credit regulatory authority who provide funds at 24 per cent. They calculate that 21 per cent is spent by the NGOs on recovering the loans and other management purposes. The entrepreneur loans we give from PKSF have an even lower rate of only 18 per cent. And the loans for improving living standards is given at an 8 per cent interest rate.
Can those who are given micro loans actually extract themselves from poverty?
Microcredit Campaign is a Washington-based organisation that works to advocate microcredit globally. In 2010 they published a report on microcredit in Bangladesh. They carried out a survey from 1990 till 2008 on microcredit. According to their findings, only 9.4 per cent of the poor families who took loans, managed to rise above the poverty line.
Why is the people’s standard of living not improving in proportion to the rate of growth in Bangladesh?
As economists, what we first learn begins with the individual. Then we learn about the market. Then people become numbers, ratios. Most economists say if there is growth, there will be development. They talk about investment, but there is no mention of where this investment is being made. One is extremely wealthy and the other has nothing. The average between the two makes up per capita income. I have long been maintaining that growth is not development. I feel this even more so after joining PKSF. People are multidimensional but the projects are one dimensional.
Does decreasing this disparity get any priority at all in the government economic policy?
This is clearly enunciated in the policy and is there in the plans on paper. It is in Awami League’s election manifesto too. When it comes down to actual application of these policies, that is where there is a shift. When the project is drawn up, there is a shift. And there is further shift from the plans when the projects are implemented.
Over the last 13 years of this government, disparity has increased rather than decreased…
In 2010 the Gini coefficient was 0.45. In 2018 it became 0.48. Anything above 0.50 is very bad. In India the Gini coefficient is 0.51 and it’s even worse in Pakistan. Bangladesh has managed to rein it in and so it’s not that bad. This was possible by placing emphasis on agriculture and the social safety net. The 5 per cent wealthiest in the country in 2010 made up 24 per cent of the national income. This is 28 per cent now. And 5 per cent of the poorest makes up 0.73 per cent. That has fallen to 0.23 per cent. This inequality has been addressed in the national policy, but the problem lies in implementation.
Bangladesh’s development is caught up in the cycle of poverty and corruption. How can this be resolved?
It can be resolved by implementing the government’s policy. Poverty will decrease if those who are in need are provided with assistance rather than appeasing those who already have plenty. To me, disparity is the biggest problem. Those who are implementing the government policy, consider people just to be numbers, ratios. They do not listen to the people. They do not know the people. It is because of this disconnect with the people that programmes are also disconnected from the people. Then, because growth and per capita income has increased, because the UN says all is well, there is a sense of complacence.
A recent report of Transparency International on corruption, places Bangladesh at the second lowest rank in South Asia. How do you see this?
I do not want to give much importance to such figures of foreign institutions. However, we must admit that we are trapped in two cycles. One is corruption and the other is disparity. Corruption has spread so extensively, it is not possible to do anything outside of this. This exists at all levels, from the bottom to the top. A report of the river protection commission shows they have a list of 50,000 encroachers. Many of those involved in running banks, have become corrupt. Many of those who take loans are corrupt. There is a nexus between the two. Those taking the loans are so powerful that if the bank official refuses them, he may lose his job. The owners of some banks themselves are corrupt. They transfer funds from their own bank.
What about the service sectors?
It is the same there. You have to give something if you want to get service. Such long-term corruption damages the country and the target will not be achieved. We want to be a mid-income country by 2030 and that is very easy to achieve. After all, this is determined by per capita income. Our main target is to establish Bangabandhu’s Sonar Bangla, Golden Bengal. The benefits of development must reach all. We must go far to achieve that. We must establish a fair economy. More attention must be paid to those who lag behind, who are distressed.
Is the Anti-Corruption Commission managing to play any tangible role at all?
It does not seem that the Anti-Corruption Commission is able to do anything much independently. If a government official is to be nabbed, permission must be taken from the higher authorities. There is need to change the institutional policies. Many of the policymakers have told me there is no interference in ACC’s functions. But in reality, the big fish are never touched. Only the small fry are caught.
There is a lot of corruption in business. The government is supposed to control this, but this coterie of businessmen controls the government instead.
Around 70 per cent of the members of parliament are businessmen. They play a pivotal role in law making in the parliament. Ministers and MPs who are businessmen are active in various sectors. So naturally there is the pressure of the business circle on the policymakers. To break away from this, we will have to go back to Bangabandhu. Bangabandhu had said, “I do not want anyone to be too wealthy. I am not a communist. I am socialist.” He spoke of bringing smiles to the faces of the distressed. He had a staunch philosophical belief in social equity.
There are many commissions and these commissions come up with reports. You used to be the head of the jute commission. How far are the commission reports actually implemented?
All that we had recommended in the jute commission report had been included in the policy. We had not called for the closure of jute mills. There was an effort to find ways and means of saving the jute mills. But suddenly these were all shut down. The textile and sugar industries are in dire straits too. There are two factors here. One is business interests and the other is industrial interests. Business capital is strong here now. They are powerful. It is because of them that the commissions’ recommendations are not implemented.
So does that mean the business groups are more powerful than the industry owners?
Bangladesh has not developed much of an industrial heritage. This was absent in Pakistan times. After that there was some emergence of industries, but the business mindset remains stronger. There is the propensity to make a fast buck, become wealthy over night. So these vested interest groups change the government’s policies. This is being done in personal interests too.
Thank you too