Bangabandhu Sheikh Mujibor Rahman concluded his historic March 07 speech by pronouncing the word 'freedom' twice because he knew that achieving economic emancipation is equally important to freeing the country from the then Pakistani colonial administration.
At independence, over 90 per cent of Bangladeshis were villagers, a share that has now come down to nearly 70 per cent. The new state of Bangladesh was the product of 'Bengali nationalism' that arose to challenge West Pakistan's economic exploitation of its Eastern wing. In the 1950s and 1960s, a group of Bengali economists carefully documented the process of economic disparity and demonstrated how a 'two-economy' system had been increasing economic inequality between East and West Pakistan. The economic and political demands, as stipulated and enumerated under the Six-point Programme, were the frontal assault on the foundation of Pakistan's colonial exploitation and authoritarian mode of governance. Hence the general election of 1970 was fought on the issue of economic and political autonomy and inclusiveness, which reflected the legitimate demands of the people of the then East Pakistan. Bangladesh emerged from a quest for economic and political emancipation -- where people's participation will be the key to its development.
With the acceleration in the growth of per capita income, Bangladesh has made considerable progress in poverty reduction. The economic progress has translated into steady decline in poverty rates. During the 1990s, the national incidence of poverty declined from nearly 60 per cent to about 50 per cent; and a much more rapid reduction in poverty seems to have taken place in the following five-year period with the national poverty rate reduced to about 40 per cent.
Bangladesh has achieved robust and sustained growth of export earnings and exports have become an important part of the economy. While exports accounted for around 5.0 per cent of the economy in the initial post-independent years, now it accounts for over 20 per cent. More recently, remittances from migrant workers have emerged as a major factor, amounting to over 10 per cent of the economy in recent years. During the same period, Bangladesh also moved from aid dependency to self-sufficiency as total exports of goods and services were more than six times the foreign aid it received in most recent years. However, to what extent such growth in national earnings has added to human welfare?
Historical experience suggests that if economy grows fast, more and more people flock to the cities. Dhaka in particular has gone from being home to 2.0 per cent of the population of the country to 10 per cent in the past four decades. Lack of decentralisation is causing a growing spatial inequality in income earning, where residents of Dhaka and Chittagong are earning way more than the residents living elsewhere.
Our economic emancipation agenda definitely goes beyond the middle class in urban areas. If we are to adequately address the triple challenges of poverty, unemployment and inequality, we have to generate meaningful economic activities in rural towns and villages. Boosting small businesses in these areas is the most logical way of achieving this goal. All successful economies have invested strongly in the development of small businesses as well as cooperatives. Bangladesh should focus on growth-orientated enterprises as well as enterprises in sectors such as tourism, construction, agriculture, and entertainment industries as well as information and communications technology (ICT). The target is needed to support primarily the enterprises that are owned by medium and small-scale entrepreneurs, disabled persons, women as well as the youth.
We have been encouraged by the increasing involvement of the corporate sector, organised business, labour, private financing institutions, non-governmental organisations (NGOs), universities as well as our international partners. They all spread the same message of the need to grow small businesses, which is the engine of growth and development. Three key pillars of small business strategy should be: a) financial and business development support services, b) procurement support and 3) an improved regulatory environment. A key factor is, no doubt, access to finance. The availability and cost of funding to small businesses is vital but not sufficient. More needs to be done to strengthen technical skill and promote market access.
Amidst all achievements, a serious area of concern for Bangladesh is the rise in income inequality. There has been an increase in the degree of inequality in income distribution from the mid-1980s. Gini coefficient in the country stood at about 30.10 in 2017 from 33.12 in 2010. A small section of the population owns most of the country's wealth. Income share held by the highest 10 per cent increased from 21 per cent in 1984 to 37 per cent in 2017. Income share held by the lowest 10 per cent decreased from 4.13 per cent to 3.45 per cent during the same period.
Though macroeconomic and social indicators show that Bangladesh has been better off as an independent nation, it is far behind in achieving its goal of economic emancipation. Macroeconomic growth has contributed to higher national income, but growing income inequality needs to be addressed.
Dr Muhamad Abdul Mazid, a retired Secretary, is a former Chairman of NBR.