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Bangladesh, Economic, International, Political

Smallholder farmers in Bangladesh at risk from country’s growing prosperity

Today, Bangladesh has almost everything going for it; pre covid-19 growth rate had been one of the highest in the developing world, social sector achievements have been exemplary during the covid-19 period (2020 and early part of 2021), the country is faring much better than many other countries. Columnists, commentators of development experiences have been hailing the country for proudly shrugging off the infamous label of ‘international basket case’ at its independence in 1971, and rightly claiming a middle income spot now.

Unfortunately, however, the benefits of growth do not seem to be shared by all. The most deprived people seem to be the country’s 9 million or so smallholder farmers (SHFs). The SHFs (defined by landholding size of 2.5 acres (1.0 hectare) or less) constitute 84 percent of all farmers. One in every four in Bangladesh depend directly on small farming for their livelihoods, more if ancillary activities like food processing, marketing and transportation of agricultural products are included.

The country’s food security largely depends on the SHFs, and the government can ill afford to neglect them.  Yet, the SHFs belong to the poorest segment of the country’s population, and they are facing a slow process of decline.

Two factors are primarily responsible for this outcome.

The first is the rising income inequality which is marginalising the large majority of the smallholders.

The country’s income inequality has kept on increasing, and the SHFs, mostly at the bottom end of the income scale, have experienced a decline in their relative share of the country’s income.

The second and the more menacing threat facing the SHFs is loss of their agricultural land over time.

Available data, though rather fragmented and often not very consistent, indicate a worrisome trend of loss of land by agriculture, the large burden of which is borne by the SHFs.

Information emerging from rather infrequent land censuses as well as surveys by researchers indicate a decline of agricultural land area from 20.2 million acres (8.2 million hectares) in 1984 to 17.8 million acres (7.2 million hectares) in 1996 i.e., by 2.4 million acres (1.0 million hectare). This is about 12.0 per cent over the 12-year period.

Over the longer term, 1984-2008, there has been a decline in agricultural land. Bangladesh seems to have lost about one per cent of cultivated land per annum (about 80,000 hectares) over this period due to non-agricultural uses such as urban expansion, expansion of rural habitation, construction of roads and highways, economic zones, and other infrastructure facilities.

There is evidence of land loss brought out by other studies too. The Soil Resource Development Institute (SRDI) shows that over the 44-year period of 1976 and 2010, a total of 43 thousand hectares of land per year seems to have been lost to agriculture. A private survey of 6 divisions in Bangladesh shows that land loss is very high in Dhaka (a Division with very high development activities) than in Khulna. Given the growth momentum in recent years, it can be hypothesised that land loss has increased in recent years.

The loss of land however is not due to coercive tactics of the rich and the powerful, nor of the state.  

The coercive tactics by the private sector are not ruled out, but much more is lost through operation of market forces, though purchases by both rural and urban entrepreneurs, tax evaders, money launderers and speculators. Small farmers (needing cash to meet their various economic, social and health related exigencies) succumb to the offer of cash by the rich purchasers. Encroaching salinity, river erosion, floods and droughts increase the magnitude of land loss. These natural disasters ‘force them’ to sell a part or whole of their holding ‘voluntarily’.

But it is not only the private sector interests that gobble up agricultural land. The same is done by the public sector too, but for the ‘noble purpose’ of rapid economic growth. Big public projects like power plants, roads and highways, economic zones, airports, cantonments, parks etc., require acquisition of large swathes of land. Land holders are now compensated handsomely at about 2-3 times of the market price of land. The poor and cash starved SHFs even wish that their land is ‘marked’ for acquisition by government.

The government policy of handsome compensation unwittingly becomes an instrument for land loss by poor SHFs.

Growth pushing back the frontiers of agriculture is not unique for Bangladesh only. China, for example, is losing about 1 million hectares of land every year, and the USA about 400,000 hectares every year. But the difference is that while those countries can afford to lose, given their large land mass; Bangladesh, with high population and low land/man ratio, can ill afford to do that.

This dilemma between unhindered growth and protecting the landholding of SHFs raises the critical question: should Bangladesh sacrifice growth to protect smallholder interests?

This is an enduring dilemma, and this is certainly not what is suggested. Policies can be crafted without sacrificing either. Bangladesh badly needs infrastructure projects, economic zones and investments to continue its upwards trend of prosperity. But that does not mean that it will have to be at the cost of SHFs. It is possible to craft policies to accommodate both.

What is required is a much stricter land utilisation policy, not only by making construction ‘going vertical’, but also limiting the conversion of agricultural land for non-agricultural uses. The government could impose hefty penalties for land purchased for speculative and money laundering purchases. Further, the government could create a national digital ledger, which will contain information on land codified as agricultural (including fishery, livestock) and non-agricultural.  Conversion could be allowed only after careful review and only on national interests, and even that after public hearing of the views of land right groups/environmentalists and public representatives.

In addition, there should be increase in investments (i) on research to increase productivity of SHFs, by developing new and more productive varieties of plants, (ii) to improve transparency of land sales by Distributed Ledger Technology (DLT), also called Blockchain, (iii) to reduce distress sales of land by farmers by providing loans on easy terms, and (iv) further increasing taxes on non-agricultural land. These policies if carefully developed and implemented could go a long way to stop the rot of our agriculture.

Dr Atiqur Rahman is an economist and ex-Lead Strategist of IFAD,

Advanced science, Disasters - natural and man-made, Environmental, International, Life as it is, Technical

Amid global warming – why are we in a deep freeze?

Obverse effects of global warming

During winter, more often than not, a large part of northern United States is pummelled by an Arctic blast, sometimes severe, sometimes less so, that lasts for a week or two. But this winter’s blast plunged not only Midwest and Northeast into a deep freeze with bone-chilling temperatures as low as negative 45 degrees Celsius, but it also tested the mettle of millions of people living in the Deep South, particularly Texas, a state that seldom experience sub-zero temperature.

An onslaught of freak wintery weather—a cocktail of heavy snow, sleet and chilling ice storm—with sub-zero temperatures knocked millions of Texans off the power grid and plunged them into deep freeze, the lowest being negative 12 degrees in Houston. Frozen and burst water pipes in homes and businesses were widespread. Unlike northern states, Texas is not equipped to handle ice, sleet or snow. As a consequence, hundreds of vehicles, including dozens of 18-wheeler, were involved in horrific and sometimes fatal pileups on untreated icy roads.

The recent extreme weather is not limited to the United States. That is because when the winter is extreme in one part of the hemisphere, it is often extreme all across the hemisphere. Thus, the “beast” from the Arctic hit Europe too. In January, Spain experienced a deadly snow storm with dangerously low temperatures. Even a tropical country like Bangladesh, especially the northern region, could not escape the wrath of the cold wave.

Snow fell hard in Greece and Turkey, where it is far less normal. Snow also fell in Jerusalem and parts of Jordan and Syria, while snow-covered camels in Saudi Arabia made for a rare sight. We also had more than our fair share of snow. In the lower Hudson Valley of New York, where I live, Mother Nature already dumped around 36 inches of snow since the last week of January, with more in the forecast. Most of the snow—24 inches—fell in a single storm event from January 31 through February 2.

Climate change deniers have often used cold winter weather to advance their argument that global warming is a Chinese hoax. In one infamous example, when an Arctic freeze descended on the northeast, including New York City, in December 2017, former US President Donald Trump tweeted, “Perhaps we could use a little bit of that good old Global Warming to protect against” harsh winters. Only an ignoramus person like him could make such a stupid statement!

It may be counterintuitive, but paradoxically, among the many factors, anthropogenic climate change is mainly responsible for the short-lived bursts of extreme winter weather that we have been witnessing in recent years. Indeed, there is strong scientific evidence that rapid heating of the Arctic caused by global warming is pushing frigid air from the North Pole further down south due to distortion of the polar vortex.

Under normal conditions, cold air is concentrated in a huge low-pressure gyre around the North Pole in an area called the polar vortex—about 15 to 50 kilometres above the Earth’s surface in the layer of the atmosphere known as the stratosphere. When the vortex is strong, the jet stream—a narrow band of strong, fast-flowing wind in the upper atmosphere that generally blows from west to east all across the globe—acts as a barrier between the spinning cold air in the north and the warmer air to the south. As a result, cold air remains trapped in the Arctic, making winters in the northern mid-latitudes milder.

How does global warming distort the polar vortex? It is well-known that the rise in global temperature is not evenly spread around the world. Because of the loss of Arctic ice which otherwise would have reflected a substantial amount of solar radiation back into outer space, average temperature in and around the North Pole is increasing about twice as fast as in the mid-latitudes. This is known as Arctic Amplification. Several studies show that the amplification is particularly strong in winter. Consequently, a rapidly warming Arctic weakens the jet stream, which in turn weakens the polar vortex to the extent that it becomes distorted, thereby spilling its cold air southward.

According to meteorologists, in a span of two weeks from December to January, Arctic Amplification gave rise to a phenomenon called Sudden Stratospheric Warming, in which temperatures in the atmosphere 15 to 30 kilometres above the Arctic jumped by nearly 55 degrees, from negative 80 to negative 25 degrees. This accelerated warming weakened the jet stream considerably and subsequently distorted the vortex so severely that it got knocked off the pole, resulting in a sudden plunge in temperature south of the Arctic Circle all the way to the US-Mexico border. Hence, the once-in-a-lifetime cold winter in Texas and other southern states.

Continued rise in global temperature will not necessarily mean an end to bitter cold waves during winter any sooner. One group of researchers believe that Arctic blasts will still occur, but their intensity will depend on how much greenhouse gases we vent into the atmosphere. It is very probable that they will become rarer over time, but the ones we are experiencing now will more likely persist and last longer. Another group says that warming in the Arctic will increase the chances of frigid polar air spilling further south, leading to more periods of extreme cold days in the future, much colder than the ones we are experiencing now.

Nevertheless, the recent weather pattern clearly demonstrates that both extreme heat and extreme cold can happen side by side. Besides, two to four weeks of cold snaps do not make a winter. They are short-term weather events, while climate is about long-term trends. Arctic blasts are, therefore, not enough to compensate for the overall warming of the climate across the planet. In fact, last year was one of the hottest years on record, with the average temperature surpassing a number of all-time highs. And it occurred without the warming influence of El Niño.

Finally, we are in a deep freeze amid global warming because our “senseless and suicidal” romance with fossil fuels has fundamentally changed the global weather systems for worse.

Quamrul Haider is a Professor of Physics at Fordham University, New York.

Cultural, Economic, Human Rights, International, Life as it is, Political, Religious

Mind-boggling Saudi mendacity

Kingdom of Saudi Arabia

Saudi Arabia portrays itself as the holiest place in the whole of Muslim world of 54 sovereign states and claims to be the custodian of two most sacred mosques in Islam. But the reality cannot be furthest from such exulted claims. The country is bereft with corruption, misogyny, brutality, inhumanity, deception and downright criminality. No country in the whole world can match or even come close to Saudi Arabia’s egregious claim of virtuosity and the reality of unfettered criminality.

Let us scrutinise Saudi Arabia’s activities in modern times and the havoc these activities are creating worldwide. To do so, we have to start from the roots of Saudi Arabia, its barbaric activities, its total absence of humanity and its criminal use of religion for political purposes. Overall, this country wants to gain prominence and supremacy at the back of religion and to do so, nothing is off the table.  

The Kingdom of Saudi Arabia came into being in 1932 when Abdulaziz ibn Saud managed to beat his rival, Ikhwan in the battle of Sabilla in 1930 with the covert support of Britain and named the country after his family name, Saud. In other words, the country became the possession of the Saud dynasty. The country and the people were extremely impoverished at that time. But as luck would have it, in 1938 vast reserve of oil was discovered in areas close to the Persian Gulf by a British oil company. As petrodollars started pouring in, the country prospered, despite blatant corruption. The oil revenue in 2019 was $202 billion, despite oil price being less than half of what it was a year ago.

Saudi Arabia’s objectives with its vast oil wealth rests on two main planks: (i) legitimising and securing the rule of ibn Saud over the country and (ii) gaining undisputed supremacy in the Islamic world by eliminating any vestiges of dissent to their Sunni sect from other religious sects in Islam. Needless to say that Islam, being the political religion, readily lends itself to use overtly and covertly to achieve the above mentioned objectives of the Saudi Sunni dynasty.

When Abdulaziz ibn Saud conquered Riyadh in 1902 by sheer brutality, he realised that the fractious regions of desert lands of Arabia could only be brought together under his control if the overarching umbrella of religion was established – an uncanny resemblance of what Prophet Mohammed felt some 1400 years earlier. He revived an alliance drawn between Mohammad ibn Saud (the founder of 1st Saud dynasty) and the preacher Abd-al Wahhab in 1744 whereby ibn Saud and his heirs pledged to protect the Wahhabi dynasty from the prevailing animosity towards it in exchange of retaining the proprietary right over this Wahhabi ideology by the Saudis. This Wahhabi ideology mirrored the original teachings of Islam as encoded in Salafism, but with more vitriol and viciousness.  It suited Abdulaziz ibn-Saud and his band of warrior Islamicists very well to use Wahhabism/Salafism as a tool to impose autocracy in the name of Islam. Thus, Islam became truly a political-military religion.

What ISIL/IS did in Iraq, Syria and elsewhere reflect in totality the Wahhabi ideology which Saudi Arabia propagated and promoted. Few beheadings by IS in camera of ‘infidels’ might have shocked the world; but in Saudi Arabia beheadings of human beings on offences like adultery, apostasy, heresy, insult to prophet Muhammad etc. are almost every day affair. These are all done in Saudi Arabia legitimately under the Sharia Law. That the brutality of Sharia Law conflicts with the Human Rights Provisions to which Saudi Arabia had signed up to does not bother them an iota. Law is what suits the interests of the ruling class in Saudi Arabia; not something that conflicts with their interests.

It may be mentioned that the political Islam, reflecting the Bedouin culture of 7th century in the deserts of Arabia, lends very good helping hand to those bigoted men. As per religion, women are not to be treated equal to men. In fact, in matters of inheritance, a daughter is exactly half of a son. A woman cannot divorce her husband at all in Islam, but a man can divorce his wife by pronouncing ‘divorce’ words three times. If a woman is raped, it is always the fault of the woman – on the grounds that she might have aroused sexuality in the man and hence she is the one to be punished. Many hundreds of migrant women workers in Saudi Arabia and other Gulf Countries are punished every year by long term imprisonment, severe lashing or even beheading when their masters happen to rape them. For fear of their lives, these women workers remain silent. But if they become pregnant, they have to face brutal punishment as prescribed by the Wahhabi ideology.

Saudi Arabia’s other objective is the global domination of Sunni Wahhabism. As the King of Saudi Arabia is the custodian of two holiest mosques in Islam, Sunni domination is effectively his domination. The war in Yemen that is going on from 2014 is due to Saudi Arabia’s attack on Houthi rebels who are mainly Shias. Saudi Arabia had been bombing various parts of the country to kill Houthi rebels and any fatality of innocent civilians were regarded as collateral damage. More than 233,000 civilians have died until the end of 2020 due to the Saudi-led coalition attacks on Yemen, according to UN Humanitarian Office. Millions of children are now facing serious malnutrition and death due to diseases.

Saudi Arabia and its cohorts in the Gulf Cooperation Council (Bahrain, Kuwait, Oman, UAE, Qatar and Saudi Arabia) had been funding and fuelling the discontent among the Syrian people against the Alawite regime of Bashar al-Assad. Alawite belongs to the Shiite sect of Islam, which Saudi Arabia regards as the enemy of Sunni. Other Shiite denominations such as Ismaili, Zaidi, Baha’is and Ahmadiyya are Wahhabis/Salafist enemies. Sufi had been declared non-Muslim. ISIL/IS had been killing these apostates under their occupation, unless they accept Sunni ideology straightaway.

Saudi Arabia is the root of most of the evils, if not all, of the world today. Most of the attackers of the World Trade Centre in New York in 2001 were Saudi fundamentalists. The untold misery of millions of people in Syria, Iraq and other places were due to Saudi inspired rebellion against established regimes. Despite that, the country did not feel any compassion to offer refuge to the dispossessed war victims, although the country has hundreds of billions of dollars and vast unused tracts of land. Saudi and other Wahhabi regimes in the Middle East gave the Fatwah that women (and even girls over 10 or 11) would be required to wear face veil (hijab) and all body veil (burqa) as part of the religious requirement. And now hundreds of millions of women round the world wear these attires, although there is nowhere in the religious books that they are mandatory.

In 2018, a Saudi dissident journalist Jamal Khashoggi who worked for the Washington Post had been killed in Saudi Consulate in Istanbul, Turkey. He advocated liberalisation of strict Wahhabi doctrine in Saudi Arabia and in the process became an enemy of crown prince Mohammad bin Salman. When Khashoggi went to Saudi consulate in Istanbul to collect his marriage certificate on 2nd October 2018, the death squad was waiting for him. He was murdered, his body was chopped up into pieces and then dumped into the well of the Consul General’s home just across the road. They also enacted an elaborate ploy as one look-alike Khashoggi leaving the consulate through the back door. When Khashoggi did not come out of the consulate hours later, his fiancée (a Turkish national) started enquiring, the Saudi Consulate said at first that they knew nothing about Khashoggi’s whereabout and when she contacted high level Turkish officials, then they said he had left through the back door and produced the video clip to support it. That was a complete fake as reporters found that the imposter was wearing different shoes and different tie. The Turkish government investigated the case and found that Khashoggi had been brutally murdered inside the consulate. Two weeks later, the Saudi government said that he was killed in a fight. Yesterday, the American Intelligence report produced in 2018, which was stopped by Donald Trump’s orders, had been made public and that showed that he was murdered inside the consulate by the direct orders of crown prince Mohammad bin Salman. For over two years, the Saudi government had been lying and deceiving the world and Donald Trump was complicit with it.      

There is a humourous saying which asks, when do you know that an Arab is lying? The answer came, when he opens his mouth.

  • Dr A Rahman is an author and a columnist
Bangladesh, Cultural, Economic, Human Rights, International, Literary, Religious

International Mother Language Day

Language is the most important and principal method of communication between humans and only language sets us apart from other animals. Yes, animals do communicate by making noises, by the sign language or by body language. But we, the Homo sapiens, had taken the method of communication to a higher level by inventing language comprising letters, words, punctuation etc in structured forms to convey our feelings by oral and written methods.

Thus, language confers us our mode of expression, our identity, our existential experience. We inherit it from our mothers, almost through umbilical cord – like blood, like nutrition. We develop our tongue like our mothers’ and that is why it is called the mother tongue and the language is called the mother language.

So, when language is challenged, the very identity is challenged. That is what happened immediately after the creation of Pakistan in 1947. The Two Nation Theory (TNT) propounded by Allama Iqbal in 1930 and supported by Mohammad Ali Jinnah to fork out a separate Muslim State called Pakistan in India was the beginning of Political Islam in India. The low-level sectarianism that had existed in India for centuries had been uplifted to communalism and patriotism by the support of the opportunistic Muslim and Hindu politicians.

The Indian subcontinent had been divided into India and Muslim Pakistan in August 1947. The province of East Pakistan comprising 55% of the whole country’s population was totally Bengali speaking, whereas West Pakistan having 45% population had Punjabi, Sindhi, Baluchi as well as Urdu speaking people; with Urdu spoken by about 7% population.

The fault line between the two provinces appeared in less than a year after partition when Mohammad Ali Jinnah declared in a speech on 21st March 1948 at the Race Course in Dhaka that Urdu would be the only national language of this nation. It was an injustice of monumental scale. It was an attempt to rob the mother language of 55% of the people and impose Urdu in the name of Islam.

The students from university level downwards felt betrayed and humiliated. Only a few months ago they spearheaded the creation of the Muslim State on the assumption that two provinces would be self-governing with their own culture, own language. Even Sheikh Mujibur Rahman went to Guwahati, Assam in 1946 with more than 500 students from Calcutta to campaign in the plebiscite in Assam for Pakistan. Now they were at the brink of losing their language, their identity!

The students’ movement started to grow; low level local protests merged into sub-district and district levels. From 1948 to 1952 students’ grievances and anger were palpable and at the boiling point. They felt that they had been made to jump, at the urging of the politicians, religious leaders and above all their parents, from frying pan to fire!

The students took a decision to observe the Language Movement Day on 21 February, 1952 throughout the whole province and Dhaka University students took the lead. The government declared Section 144 of the Penal Code in Dhaka and banned all assemblies of more than five people. But schools, colleges and universities were left open and so assemblies of five or more people were inevitable. The government of Pakistan wanted to teach a brutal lesson to the arrogant and disobedient students and thereby to the people of the province!

The students started gathering at the Dhaka University Arts Faculty campus in the morning of 21st February. They wanted to express their demand that Bengali should be one of the national languages of the country. Slowly and cautiously, they emerged through the main gate of the campus and turned left towards the Dhaka Medical College. They had no weapon of any sort and had only placards. Hardly the front the demonstration moved 100 meters or so, the waiting police at the edge of the campus opened fire on the students. Five students died almost instantly with blood spilling over the street and more than 17 students were seriously injured. In less than five years of creation of Pakistan, the students had to pay with their own blood for the sins of their forefathers (and their sins too) for opting for a Muslim State!

First Shaheed Minar in Dhaka in 1952

A day later the university students along with medical college students started building a monument in memory of their fallen students at the side of the road, which was only a stone’s throw away from the campus, and it was completed on 23rd Feb. The police came and with all their brutality desecrated the memory and demolished the monument. It was an insult to the memory of martyred students and an all-out onslaught on the people of East Pakistan. However, a few days later, on 26 February, 1952 the editor of local Bengali newspaper, Daily Azad, inaugurated a new monument within the compound of the Medical College and it had been named as the Shaheed Minar – the Martyrs’ Monument.

The government of Pakistan eventually accepted Bengali as one of the national languages of Pakistan, when the National Assembly adopted it on 7th May 1954. In Pakistan’s first Constitution in 1956, Bengali and Urdu were given the status of national languages under Article 214.

But what led to the bloodshed of students on the street of Dhaka could not be swept away any more. The constant denigration of Bengali culture and language by the Pakistani government, economic subjugation, employment disparity etc added fuel to the fire of language movement. On 26th March 1971, Pakistani military junta launched an unprovoked attack with full military force on civilians and the Dhaka university students and teachers to teach another lesson. The hitherto tenuous link of Muslim fraternity between the East and West had then broken down completely and after nine months of brutal war, Pakistan surrendered and Bangladesh achieved liberation on the 16th of December 1971.

Thus, Bangladesh became the first and only country in the world that fought for and gained freedom to preserve the mother language. In recognition of the unique sacrifice that the Bangladeshis made to establish Bengali as the national language, UNESCO had assigned 21st February as the International Mother Language Day. This day is celebrated throughout the whole world, wherever Bengalis are. The Bengali language is the 5th largest language in the world and is spoken by nearly 275 million people – Bangladesh (162 million), West Bengal (100 million) in India and the diaspora of Bengalis in the world (13 million). The top five languages are: 1. Mandarin Chinese (1051 million); 2. English (510 million); 3. Hindi (490 million); 4. Spanish (420 million) and 5. Bengali 275 million. Bengali is also one the culturally richest languages in the world, enriched by Rabindranath Tagore (Nobel Laureate in Literature in 1912), Nazrul Islam, DL Roy, Atul Prasad, Bankim Chandra and many more.

  • Dr A Rahman is an author and a columnist

Bangladesh, Economic, International, Political

Bangladesh’s rising Foreign Exchange Reserve – getting the most out of it

With the highest ever Foreign Exchange Reserve (FER) of 43 billion USD (end 2020), Bangladesh faces a dilemma – should it continue accumulating the reserve or invest the surplus reserve on large-scale public sector projects?

The government seems to be staking in favour of development projects. A write-up in the Daily Star reported that “The Bangladesh government has decided to use the country’s ballooning foreign exchange reserves to implement development projects” (Byron and Uddin, The Daily Star, 12 October 2020). If this is true, it is a momentous but risky decision for Bangladesh.

The FER in developing countries are mostly used for self-insurance: to acquire the ability to pay for imports, service external loans, maintain a stable currency exchange rate, and competitively priced exports. A good reserve spares a country from kowtowing to donors and preserve its dignity.

But maintaining a reserve beyond what is necessary for self-insurance also involves a cost; the cost is the spread between current earnings (which is zero or near zero) and potential return. Safety considerations may dictate maintaining a high reserve for rainy days; on the other hand, investments in high yield projects could generate a handsome dividend.

There is therefore a temptation to use the surplus reserves for large scale investments, and get a handsome return.

Such investments would be welcome if they can be invested in high yield sectors, and the reserves could be made to increase at its historic rate to provide self-insurance for the country.  If these two requirements are not met, the country can be in financial peril in the longer run. Examples abound in the world on large publicly financed investments not delivering the right returns at the right time.

At this time of covid-19 related uncertainties, the risk arising from the volatility of the global economic situation can be quite large. Today, most countries in the world, impacted by covid-19, have slumped. Small and big businesses, especially those related to tourism, travel, and those requiring close human contacts have suffered. And so far, recovery has been erratic. Even with the roll out of vaccines, the recovery remains uncertain.

The prospects of investment in these circumstances vary widely across countries. The opportunities for successes and the risks for failures, both can be high depending on how well businesses click with evolving economic opportunities, public health and financial support scenarios. Well placed, they can succeed (like Amazon, communication like Zoom, and not the least the medical equipment suppliers and covid-19 vaccine producers); if not, they can limp on and even fail (like tourism, airline industry and other forms of public transport).  Huge public investments can fail to deliver, not only because of bad choice of projects but also due to adverse local and global economic circumstances, bad management and the risk of time and cost overruns.

China’s trillion dollar ‘One Belt One Road’ project financed out of its huge reserve is a long-term initiative to project China’s global reach and its economic and political intentions. It is a high-stake investment which is expected to over a number of years. The country has enough economic prowess, well recognized management capacity and political influence to pull it up. Even if it does not fire initially, the Chinese juggernaut support structure and financial capacity can pull it up.

Similarly, examples of sovereign funds of many petroleum rich countries and rich developed countries can succeed as they have large resource base to back them up, tide over bad patches and come out successful at the end.  Such examples of investments using sovereign fund are not of much relevance to Bangladesh given the country’s smallish surplus reserve and limited capacity to take up large projects on its own.

The debate in India on the choice between self-insurance and public investment in large infrastructure projects could be more pertinent to Bangladesh. India today boasts of having a very high FER of about 585 billion USD, but compared proportionately with Bangladesh, the difference is not enormously high. What makes it more comparable to Bangladesh is its socioeconomic environment and the governance structure, in which these two countries are not too far apart.

India too called for investing the surplus FER for infrastructure projects and public sector investments for industrial development. But it attracted flaks from financial analysts, independent reviewers and economists. The government’s policy to invest in large scale publicly financed projects  was criticised on the grounds that such investments could very well crowd out private investments, that investment in the industrial sector could be boosted by cutting tariffs instead of creating facilities for the potential investors to borrow funds. Moreover, it was argued that big public sector investments could create monopolies, which is considered to be an unwelcome outcome where anti-monopoly and anti-trust legislations are not well developed. A better policy would be to support the domestic economy through market stabilization scheme rather than investing in infrastructure projects.

While the above provide some indications of what could possibly be the direction and modality of utilizing surplus reserve in a situation similar to that of Bangladesh, the answer to the dilemma facing Bangladesh has to be sought and resolved in the specific Bangladesh context.

Apart from the issues raised in the context of India, for Bangladesh, one has to consider the constraints on project implementation due to the evolving covid-19 situation, the usual drama of not so infrequent changes in project designs and management inefficiencies leading to time and cost overruns, and therefore delays in profiting from the returns on investments. The government currently has its hands full with (more than a dozen) large scale development projects, financed by foreign loans as well as by the country’s own resources. These mega projects are at various stages of completion, and some are suffering from significant time and cost overruns. The projected returns are expected to be delayed, and therefore low at current prices. Even though Bangladesh is projected to do well in terms of recovery from covid-19 slump, thanks to the pick-up of the vibrant garment sector and minor damage, if any, to the agricultural sector, the longer term prospects of recovery and growth would depend on how quickly the covid-19 pandemic is tamed.

And it will also depend crucially on how quickly the remittance income of the country, the main driver behind the growth of FER, picks up. It is hard to make a projection; much of the pickup will depend on the growth of the host economies of Bangladeshi migrant workers. It will also depend on whether the economies which traditionally absorbed Bangladeshi workers will continue their dependence on unskilled and semi-skilled workers or move towards automation, use of robot technology, and highly skilled workers.

The flow of remittances can probably increase over the short term, but in the longer term, it may as well decline.

The country’s FER therefore may even go up the in the near future, but whether it will return to the current high level is questionable. In this scenario, it would be wise for the country to focus on completing more than a dozen on-going large scale infrastructure projects (financed through local funding and donor assistance). It would be wise to take a step back from taking on more large scale investment projects, assess the situation, local and global, and not throw precaution out of the window in a hurry to minimize the opportunity cost of surplus FER. 

This does not mean that the purpose of holding on to the reserve fund is to keep the surplus fund idle. Given the time and cost overruns of the on-going projects, much of the surplus fund may be needed for successful completion of the on-going projects. Besides, the government could focus, in the short and medium term, on supporting (through subsidized loans) the small and medium industries in the private sector to strengthen the industrial base of the country, finance advanced research and capitalization of agriculture, develop the IT sector, and improve manpower skills so that expatriate workers can move up the ladder of income scale when they get employed abroad.

As the global economy recovers and the country begins to build up its reserve fund, it would be time for the country to be ambitious again. Until then, the government has to be cautious with people centric approach for consolidating growth. The country is doing fine, and the mega projects awaiting completion will keep the country engaged for some time.  Hurried approach and high ambition with more large scale projects can overheat the economy and jeopardies the stable and good progress the country made so far.

Dr Atiqur Rahman is an economist and ex-Lead Strategist of IFAD, Rome.