ISSUES AND CHALLENGES
High levels of rural poverty:
Poverty in Bangladesh is primarily a ’rural phenomenon’, with 53 percent of its rural population classified as poor, comprising about 85 percent of the country’s poor. Achieving the Millennium Development Goal (MDG) of halving poverty to 26.5 percent by 2015 will require a growth rate of at least 4.0 percent in agriculture and 7.0 percent in the non-farm sector. However, economic and institutional realities, the country’s geographical and demographic characteristics, and its vulnerability to natural disasters, make this a very challenging task.
Low agricultural productivity:
Another challenge is rapidly shrinking land base. While the country’s population is growing at the rate of 1.6 percent per year, demographic pressures and increased urbanization have caused cultivated area to decline at a rate of 1 percent per year. As cropping intensity has approached its limit (about 175 percent now), growth will need to come from intensification of cereal production, diversification into high-value crop and non-crop activities, and value addition in the agro-processing sector, including storage, processing and marketing. This will require reforming the agricultural research and extension systems, and financial and other regulations. Land administration and security issues also need to be addressed.
Improper functioning input and output markets:
The lack of easily accessible markets and collusion by the traders pose significant constraints in both agricultural input and output markets. Marketing margins are high relative to services provided. Lack of market information and infrastructure, the poor law and order situation, the existence of syndicates, and collection of illegal tolls further aggravate the situation.
Lack of enabling rural investment climate:
For nearly 45 percent of the rural population, who are already landless or functionally landless (owning less than 0.05 acre of land), and a majority of the new labor force every year, a declining land base and a small urban employment means that employment in the rural non-farm sector presents the best chance to escape poverty. The growth of the rural non-farm sector, however, is constrained by lack of or poor quality of rural infrastructure and services, highly centralized government framework, weak rural financial systems, and a poor law and order situation.
Weak rural institutions:
While the NGO sector in Bangladesh is well developed and the quality of informal institutions is improving, formal rural institutions remain very weak. Government agencies at all levels face overlapping functions, lack of coordination, low skill levels and incentives, and lack of responsiveness, exacerbated by an urban bias. Elite capture is also quite common in rural areas.
Vulnerability to natural disasters:
Bangladesh is the terminal floodplain delta of three large rivers - Ganges, Brahmaputra and Meghna. Every year about 20 to 30 percent, and every few years about 40 percent, of the country is flooded, causing serious damage to infrastructure, crops and the overall economy. Projected climatic changes and rise in the sea level are likely to worsen the situation. Since independence in 1971, the Government has made large investments to protect against floods and cyclones. However, issues such as public and private roles and community participation in disaster management, environmental protection, and institutional reforms of Bangladesh Water Development Board (BWDB), need to be addressed.