Cash support for the poor in informal sector during Covid-19 pandemic

According to the Labour Force Survey (LFS) 2016-17 of Bangladesh Bureau of Statistics, out of the total 60.83 million employed labours in the country, 85.1 percent work (51.7 million) in the informal sector. Informal sector accounts for 43 percent of GDP. Those working in informal economy include wage labourers, self-employed persons, unpaid family labor, piece rate workers and other hired labours.

Hundreds of thousands of people in the country's informal labour sector became unemployed or had their income drastically reduced after March 26, when the government announced the shutdown to contain the spread of coronavirus. The low-income people, especially informal workers in the hospitality, retail trade, construction and transport sectors, and the small- and medium-sized enterprises will be hit hard who have limited or no access to healthcare or social safety nets.

Poor people in informal sector have a higher likelihood to lose their work and have no buffers to absorb a loss in income. Migrant workers who had escaped rural poverty by finding work in cities are forced back into rural poverty again. Transport workers and hungry people in different districts have been seen demonstrating on highways demanding food over the last two months.

Government's response

The government is going to provide one-time cash support of Tk2500 to 5 million low income families (mainly the poor and distressed in both urban and rural areas) affected by coronavirus through four major mobile financial service providers- Nagadh, BKash, Rocket and Surecash.

The Prime Minister has inaugurated the cash support programme on May 14, 2020. The government plans to spend Tk12.50 billion under this programme. The government is now verifying the information of the listed families to judge the accuracy of the list. The listed families were supposed to receive money through mobile financial services before Eid-ul-Fitr.

The Ministry of Disaster Management and Relief has prepared a list of the people based on information collected by the DC, UNO offices and city corporations across the country. The list includes rickshaw pullers, van drivers, day labourers, construction workers, agricultural labours, transport workers, hawkers, restaurant employees, domestic helpers and so on.

Response of different think tanks to government assistance programme

Policy Research Institute (PRI)

According to Policy Research Institute (PRI), a monthly cash transfer of Tk3,000 can be quite an effective support. Their observation is based on some ground realities as Brac is currently administering such a cash assistance scheme for their identified poor and vulnerable households.

For them, this amount is small, but – based on the expenses related to the basic minimum needs – this should help the households to survive the crisis.This amount is unlikely to encourage many non-poor households to seek assistance.

It can be estimated that if a total of 12 million households are to be supported with monthly direct cash assistance of Tk3,000, the total programme cost for three months will be Tk10,800 crore, which is just about 0.36 percent of Bangladesh's estimated GDP for fiscal 2019-20 (Daily Star, May 04, 2020).

Unnayan Onneshan

For Unnayan Onneshan, Tk15,000 should be given to each effected household (51.7 million people) for six months as a basic grant. (ProthomAlo 24 April).

Centre for Policy Dialogue (CPD)

The Centre for Policy Dialogue (CPD) urged the government to allocate a monthly cash handout of Tk8,000 for each household from 75.7 million marginalised people, saying the government rescue package lacked any specific allocation for the group.

The think-tank proposed to continue the handout scheme for two months so that poorest could survive during the Covid-19 emergency period. (Dhaka Tribune, 13 April).

PPRC-BIGD

A survey by the Power and Participation Research Centre (PPRC) and Brac Institute for Governance and Development on 5,471 poor families (including newly poor), presumably most, if not all, from the informal sectors in the urban space and rural areas finds about 80 percent respondents lost jobs.

Around 18.2 million poor are left out of this assistance programme. They recommend spending Tk5,600 crore (food security support package) for one month to support 38.2 million poor (Daily Observer, April 17, 2020).

World Economic Forum (WEF)

The government should consider an unconditional cash transfer programme for an initial period of three months at a rate of $95 per month, which corresponds to the minimum wage for the formal sector in Bangladesh. This would cost the government roughly $14 billion, or four percent of GDP, said World Economic Forum (WEF).

While this sort of cash transfer program always suffers from targeting issues, Bangladesh enjoys a sophisticated mobile financial services network, which could improve the cover of the programme. Non-governmental organisations, mobile financial service providers, and the government can work together to deliver this social assistance (WEF, 2019).

The financial support proposal for people in informal sector as proposed by a number of think tanks vis-s-vis the government is depicted below.

Table: Government and think tanks on financial aid for the people in informal sector affected by Covid-19

Problems and issues

Following are some of the issues that warrant further discussion and analysis. There are three major issues i.e. technical complexities, poor governance (planning & implementation and insufficient coverage). The greatest challenge is concerned with finding the deserving beneficiaries first and then distributing the aid among them.

Technical problems

In a mock test by the government for providing cash assistance to 50 lakh poor families, many listed national identification (NID) numbers did not match the ones on the national identification database of the election commission. Officials in the Ministry of Finance received lists from the district level most of which were in Bangla. So it was very tough to first translate and then try to match a bulk of the lists with the election commission database.

Moreover, most of the mobile phone numbers of the beneficiaries in the list had no mobile financial service (MFS) accounts, and providers had to open the accounts after matching their NIDs with the EC database, which was time-consuming. "Operators' technical readiness was also a challenge too; some are using the oldest technology. It would take time to check with the EC database and open an account. (Daily Star, May 13).

The PMO and information and communication technology ministry would crosscheck the mobile numbers of the poor families provided by union digital centres and ward digital centres under the ICT ministry in order to eliminate the fake people from the list. If the names of the beneficiaries were found authentic, they would be asked to give alternative mobile numbers for transferring money. This will be a daunting task.

Irregularities and Poor Governance

Corruption, nepotism and favoritism appear as big barrier to implementation of the government scheme. Allegations of massive anomalies were reported in different parts of the country in the government cash aid for the distressed families.

The same mobile numbers have been sent more than once. Eight lakh names out of 50 lakh listed beneficiaries were dropped from the government list after repetitions of mobile numbers were detected, disaster management minister Md Enamur Rahman told the press on May 16, 2020 (New Age, May 17). Chairman of a union council in Habiganj used ten mobile numbers for 400 out of 1,176 people in the list (TBS, June 2).

A large number of solvent people across the country have been selected for the government cash relief. Elected representatives (Chairmen, members, mayors and ward commissioners) were found engaged in anomalies and irregularities. Relatives of members and chairmen got their names included in the beneficiaries list.

In Sunamganj, the list was prepared considering voting politics. Besides, more than one from the same family and the people who are enjoying other facilities from the government were also included in the list (TBS, June 2).

Coverage, Amount and Duration of the Scheme

This support seems to be one-time measure. This will be provided from the contingency fund of the budget 2019-2020. Does the government have any plan for allocating financial aid for these people in the next FY budget 2020-2021 too?

Think tanks' proposal regarding the coverage, amount of money and duration is obvious from the table above. This support for the poor in the informal sector should continue for six months depending on the situation. Initially it should continue for three months. It may be extended for another three months if the situation does not improves substantially.

Are the tea-garden workers included in this scheme? Are transport workers included in this scheme? They need to be included in the scheme. Given, the fund constraints, cash support of Tk2500 for each family seems reasonable. It is not enough. It helps the family to survive though.

Government has planned to cover 2 crore people (50 families where each family consists of 4 members). The scheme needs to be expanded (2.5 times higher than the government coverage) to cover 51.7 million people who constitute the informal sector in Bangladesh and affected adversely due to outbreak of covid-19 pandemic.

Remedies and conclusion

How will the government get the selection of the target group people right? Government can ensure active involvement of CSOs while preparing list of beneficiaries at the field level along with local government bodies, upazila and district administration, Election Commission, mobile operators and MFS providers while selecting the target group.

Government needs to play the role of an anchor and ensure smooth coordination among different actors and institutions vertically and horizontally. NGOs have rich experience in doing this sort of job earlier and they are familiar with the local conditions.

Moreover, NGOs are relatively free from nepotism, favoritism and corruption. It is worth noting that NGOs supported government to increase sanitary latrine coverage in Bangladesh from 40 percent in 2003 to over 90 percent in 2020.

The participation of NGOs and the civil society members (teachers, religious leader, cooperatives, WDF) in monitoring and distribution of the aid will help minimise the duplication of the beneficiaries (who are already supported by relief and social safety net programmes). They can keep vigil eyes over the selection and distribution process and ensure that one member from one family gets the aid.

The concerned authorities can publish the list of the beneficiaries in the websites of union parishads/ pourashavas and city corporations to make sure that the cash benefit goes to the deserving people.

Government must punish the people regardless of social status position and party affiliation (elected representative, political party activists of the ruling regime and government officials) who would be found involved in corruption, irregularities and misappropriation of the fund allocated for the poor people.

Dr Taiabur Rahman, is a Professor of Development Studies at the University of Dhaka. He can be contacted at taiabur.rahman@gmail.com