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Disasters are great educators: Focus on strengthening institutions  

| Updated: May 30, 2020 21:59:14


Disasters are great educators: Focus on strengthening institutions   

The unprecedented global pandemic is razing the global economic gains (earned over the decades) due to huge uncertainty created in the process. Bangladesh is no exception. In fact, it is more unfortunate for Bangladesh as it has been the star performer in terms of ever increasing overall and per capita growth defying the challenges of the last global financial crisis. The institutional set up, both at the macro and local levels, was able to generate an environment of incentives and efficiency for the economic actors. The 'rules of game' that essentially embody this institutional infrastructure provided growth conducive policies and regulations supporting higher stock of physical and human capital, a vibrant market mechanism, flow of finance even to the smaller economic units and, of course, the campaign for Digital Bangladesh provided necessary support to innovations embraced by both new and older entrepreneurs. Of course, this phenomenal growth process also witnessed the fastest growth of 'super rich' in the world which has been tagged as the biggest challenge for addressing the inequality of wealth and income despite some levelling of consumption outlay across the board. The latter may have provided some cushion for bolstering domestic demand at the bottom of the pyramid leading to consistent fall in poverty, both overall and extreme.
However, the ongoing pandemic has been demolishing all the gains made in the areas of both growth and poverty reduction. In fact, if this pandemic is prolonged, not only the growth rate may be miniscule but some experts are concerned about the danger of doubling of the rate of poverty from last year. It is in this context, there is an imperative to revisit the institutional landscape and try hard to control damage so that we can navigate through this mindboggling downturn. In addition to strengthening the formal 'rules of game', we must also continue to boast our informal institutions developed in the guise of community ('Samaj') in the historical context which generated a lot of 'social capital' to balance the efforts of the state and the market. In fact, the non-state actors including the community have been playing a significant role in sharing their capital with the less fortunate members in keeping them stay afloat. So, we must not forget about this inner strength of our community while pushing for strengthening the formal institutions. Keeping that caveat in mind, let's go through the list of policy and regulatory imperatives needed for strengthening our formal institutions both immediately and in the medium and long-term in the context of 'new normal' created by the on-going pandemic.
STRENGTHENING INSTITUTIONAL CAPACITY AT THE NATIONAL LEVELS
Immediate Responses
* Preserve state capacity to coordinate delivery of relief, both food and non-food, for avoiding food insecurity.
* Strengthen local and national administration for maintaining law and order.
* Restore and monitor supply-chains of agricultural and other essential products to ensure win-win outcomes for both producers and consumers.
* Bolster and stabilise domestic consumption and hence the demand to compensate the loss of external demand from falling remittances and exports.
* Reduce cost on travel, meetings, conferences and other non-essential expenditures and divert the surplus for essential expenditures related to corona response in the revised budget.
* Enhance economic diplomacy to access low-cost emergency supports from financing partners.
* Encourage stronger partnership between local government and administration with credible NGOs that are engaged in food and cash support for the needy.
* Strengthen cooperation between the administration, mobile-financial services and the regulator to deliver the cash support and other payment support for businesses.
* Continuous deeper consultation among stakeholders of different sectors led by related Ministries (e.g. MOA, MOF, MOLG etc.) to shape up the response framework.
Short Term Measures
* Continue many of the immediate activities for at least up to the end of FY 2020-21 to stabilise the survival strategy already put on cards.
* Support institutional cooperation between public, private and NGO sectors to enhance health responses including testing, tracing, isolation and treatment.
* Encourage deeper consultation between health experts and the government for more coordinated response to COVID-19 challenges.
* Encourage private sector to come forward with greater CSR support to the frontline soldiers, particularly, the health personnel and police, with personal protection equipment.
* Encourage selected RMGs and chemical industries to redirect their production lines towards production of masks, head-shields and gloves not only for home consumption but also for exports.
* Encourage budget-makers to go 'out of box' in providing additional fund for health and social protection with 'big bang' approach. The quality of implementation to avoid 'misspending' must be ensured by related agencies including ACC. Encourage digital monitoring of field actions to achieve more transparency.
* Encourage BB and MRA to further enhance refinancing channels to provide liquidity to MFIs who have better reaches in the villages, particularly for supporting micro enterprises that provide maximum employment and livelihood support in the rural economic set up.
* Strengthen economic diplomacy to reach the source countries asking not to push out the expatriate workers on humanitarian ground to stabilise the remittance flows. If needed, go for joint support for the temporary stay of the workers so that they can go back to their work once the lockdown is withdrawn.
Plans for Medium and Long Term
* Prioritise institutional infrastructure for physical and human development in both next and subsequent budgets to meet the challenges thrown out by COVID-19 crisis. Health. Social protection, agriculture and micro enterprises must be on top of the support list.
* Realign objectives, strategies and resource mobilization of strategies of eighth five year plan and as well as the perspective plan.
* Focus sharply on strengthening institutions for macroeconomic stability by further capacity development including greater autonomy of the central bank and security exchange commission.
* Let BB tighten rescheduling guidelines to reduce default rate (NPL), strengthening disclosure mechanism, stronger auditing, institutionalising stronger bankruptcy legal framework and improving governance of the banking sector.
* Strengthen regulatory capacity of BB to make both rate of interest and exchange rates more market-friendly.
* Initiate a robust Risk Sharing Facility/ credit Guarantee Scheme to help banks come forward to fund MSMEs who are indeed the backbone of Bangladesh economy.
* Uphold the gains made so far in macroeconomic stability as reflected in terms of controlling inflation, import coverage of foreign exchange reserves and the capacity to service foreign debt.
* Encourage Bangladesh Bank to start online transaction of wage-earner's and premium investment bonds in addition to sale and purchase of treasury bonds which is already on at its Matijheel office.
* Encourage Bangladesh Security Exchange Commission to go for developing bond market with sufficient insurance back up so that returns look more attractive than Fixed Deposit Rates.
* Focus on shaping up economic competiveness and technology transfer in all areas of service delivery to enhance the quality of ease of doing business to bolster both local and foreign investment.
* Encourage NBR to go digital faster like BB to attract more revenues and better implementation of VAT law and other desired reforms to increase Revenue/GDP ratio which is the lowest in South Asia.
ENHANCED ROLES OF THE LOCAL GOVERNMENTS
Immediate Responses
* All local governments including Union Parishad, Upazila Parishad, Municipality corporations and city corporations should remain engaged in delivery of food and other forms of relief support to the poor, especially the new poor, to help them cope with the challenge of food insecurity accentuated by corona crisis.
* They should continue to cooperate with local administrations in preparing the list of the vulnerable people in consultations with the newly set up relief committees where representatives of the civil society, NGOS and, of course, elected representatives of the local governments are included. The process of listing the vulnerable must remain transparent and subject investigation if irregularities are reported.
* Since the school feeding programmes are not in operation, the school children who used to get packets of biscuits earlier should get home delivery of the same. The contracted agencies may be compensated for this extra effort. This is required to keep the nutritional intake well maintained for the children.
* The LGs must continue to look for those who are still starving despite so many support packages.
* Monitor the grassroots level government service providers like those involved in agricultural extension, sanitation, immunization, community health services, nutritional services so that people get these crucial services during the crisis.
* Ensure quick run of the Standing Orders to respond to disasters at all levels of the Local Government.
Short Term Measures
* Keep the arrangements on board so that schools can start as soon as the government decides to open these institutions and take strategic steps to make up for the lost sessions.
* The LGs should negotiate with the officials to help poultry, fishing and livestock farms in both obtaining feed and other inputs as well as marketing of their products.
* The LGs should cooperate with local administration to run local markets in open spaces to keep the supply chains of agricultural products operational.
* The LGs should work with the local administration to buy vegetables, fruits, eggs etc., from the local markets and give the same to the vulnerable people who get relief and low-cost food as well as to the police barracks, orphanages, jails etc., to ensure demand of these commodities.
* Strengthen the Union Digital Centres and Post Offices to expand agent banking and e-commerce activities even in the villages.
* The cooperation between city and municipality corporations with the NGOs and civil society groups to feed the hungry can be institutionalied to derive long time benefits.
Plans for Medium and Long Term
* The Union Parishads should be encouraged to strengthen the committees related to different sectors so that more diversified activities can be ensured to push inclusive growth. The committees on addressing child marriages, violence on women and climate change and disaster can deliver huge dividends to bottom-up sustainable development process if managed strategically.
* The LGs should negotiate with the government for stronger digital infrastructure to strengthen modern methods of education, public services, telemedicine, digital payment system etc. All educational institutions must have strong wi fi facilities.
* The LGs should work with the government to set up processing centres in addition to setting up of LSD storehouses to ensure better processing of crops, fruits and vegetables.
* The LG representatives should continue to monitor public services like different social protection schemes, community health clinics, maintenance of small infrastructures, distribution of seeds to the farmers etc. They can also play a significant role in strengthening Upazila Parshids which take major decisions of public expenditures in the locality.
* The Municipalities and Zila Parishads are more independent than Union Parishad and Upazila Parishads and hence can take more long-term decisions to push sustainable development.
* The city corporations have even more leverages to raise resources and direct the same for inclusive development with the help of local administration, NGOs and self-help groups.
* They can also reorient the social protection programmes for the urban poor, particularly those who live in slums, as well as floating population who do not have shelters.
* The waste management with support from the NGOs and private sector can be another area of long term intervention linking it to production of renewable energy.
Disasters are indeed great educators and as well as levelers. While these can create a lot of challenges, it is also true that disasters open up many opportunities for change. The demand for reforms get better reception by the ears of policy makers. Let the current pandemic be the harbinger of many changes in the institutional landscape in Bangladesh to sustain its growth outcome in the long run.

Dr. Atiur Rahman is Bangabandhu Chair Professor of Dhaka University and former Governor of Bangladesh Bank. [email protected]

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