Moving Out of Low Poverty Trap Investing at

“Moving Out of Low Poverty Trap: Investing at the Bottom of the Pyramid” A. Q. M. Golam Mawla General Manager, PKSF Dhaka, Bangladesh 29 October 2014 3/15/2018 1

Extreme Poverty (EP) in Bangladesh Øfood-energy intake: <1, 805 Kcal per day Schematic representation of different population segments for inclusive financing Ø per capita income: < TK. 1103 per month Ø Around 17. 5 million extreme poor Near poor 15 % above PL 26 % below PL Bottom 12. 4% 3/15/2018 Mainstream microfinance (540) Poverty line 26% Very poor program (12. 4%)

EP communities (in million) • Dalit, & socially excluded communities (5. 5) • Tribal/ethnic communities (1. 2) • Tea garden labourers (0. 1 - 0. 3) • Beggars (0. 7) • Domestic help (0. 42) • Physically handicapped population (10. 6%, WHO) • Street children (tokai) • Economically insolvent elderly people (appx 7% of total population) • Extreme poor living in ‘haors’ (5. 5) • Extreme poor living in climate change vulnerable areas/Chars § Insufficient economic opportunities § Poor access to public services & transfer § Vulnerable to external shocks § Face health and nutrition vulnerability § Gender inequity and marginalised group specific risks & vulnerabilities are also prominent Ø Extreme poverty is often chronic – it passes down from one generation to the next. 3/15/2018 3

Occupational Distribution of extreme poor Occupational Distribution of 1 million q. Salient characteristics § Not homogeneous participants of PKSF’s UPP programme § Vulnerable, limited access to basic needs § Mostly unskilled Traditional Sex-workers, 7. 95% Beggars, Others, Jobholders, 0. 07% 0. 70% 3. 84% Domestic § Highly dependent on day Help, 2. 49% labor/wages (low-paid wage Day Labourers Small labor) (on-farm), Entrepreneurs, 35. 92% 17. 10% § Often excluded from the society Rickshaw/Van Pullers, 13. 18% 3/15/2018 Day Labourers (off-farm), 18. 76%

Need to Address the Multidimensional Aspects of Poverty Ø“A condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services. ” – UN, 1995 Ø Dimensions + Indicators Ø Income + Food poverty line Ø Health + Daily protein intake ØMultidimensional Poverty Index (MPI) of UNDP measures not only income, but also basic needs and living standard ØLiving Standard + Type of toilet + Living space ØIn Bangladesh, 58% population are MPI poor 3/15/2018 + Source of water for drinking, cooking, and daily work, etc. ) ØEducation + Years of schooling + School attendance + Electricity, etc. ØAccess to safety net + Cash/food for work + Elderly benefits/ allowances, etc

Income poverty improved but nutritional status still remain alarming! 41 Nutritional status of mother and 36 under-5 children (per cent) 24 16 • 41% of children under age 5 are stunted, . . -m as s- 5 rde bo dy un of ith ht • 36% are underweight • 24% of women have BMI <18. 5 W om en w ei g er w nd U in ch re ild ch 5 rde un of g in as t W il. . n re ild ch 5 rde un of g tin un St d. . . • 16% are wasted, and 6

Key drivers for EP eradication in Bangladesh • Remittance inflow – Nearly 8 million migrant workers contributing $12. 5 billion/year • Microfinance – As of 2011 , 34. 36 million HHs availing US$ 5. 83 billion as microcredit • Ready Made Garments (RMG) – Employ over 4. 5 million worker mostly women and contribute 10. 5% of GDP • Many fold increase in Agricultural production – Employ nearly 23 million people (nearly 48% of the employment) • Expansion of Social Safety Net Programme – Covering 9. 04 million man month at a cost US$ 3. 25 billion • Human capacity development – Education, Vocational & Skill Training, Woman empowerment 7

Related Issues § MDGs Achievements v Reducing poverty v Child mortality reduction (own UN award) v Attaining gender equality v Maternal Health improvement v Universal primary education § Post-2015 Sustainable Development Goals (SDGs) § Bangladesh resets its goal of ending extreme poverty by 2022 § Targets to be middle income country (MIC) – reaching threshold per capita income of $1, 130 – by 2021 3/15/2018 8

Productivity § Productivity is an average measure of the efficiency of production - i. e. output per unit of input. The production performance can be measured as an average or an absolute income. § Productivity is a crucial factor in production performance of firms/ economic activities. Increased productivity helps raising living standards because more real income improves people's ability to purchase (i. e. higher purchasing power). Productivity growth also helps businesses to be more profitable. 3/15/2018 9

Low Productivity Trap Low Human Capital Low financial resources • No/little education • No/little technical skill • Little productive assets • Difficult and adequate access to financial resources • Little risk coverage Little/no access to • No/little access to land, water natural resources and other natural resources High vulnerability Poor market accessibility Little social capital 3/15/2018 • Vulnerable to climatic/manmade disaster Low Productivity Low investment /input No/little marketable products • Remote geographic location • Subjected to social discrimination Extreme poverty No/Little income

Strategies for Removing the Trap Ø Expanding Opportunities (i. e. promoting sustainable livelihoods) Ø Facilitating Empowerment (enhancing access to services) Ø Ensuring Protection (both covariant and idiosyncratic - need to be addressed) 3/15/2018 11

Promoting Sustainable Livelihoods q A livelihood is sustainable when it can cope with and recover from stresses and shocks, maintain or enhance its capabilities or assets, while not undermining the natural resource base q Livelihood strategies Reduced reliance on day-labour Creating ‘livelihood ladders’ Enhanced regular income from market-based IGAs q Livelihood outcome o More income & increased well-being o Reduced vulnerability & improved food security o More sustainable use of NR base q Key questions: What will be transforming structures and process? What will be role of government/private sector/MFIs? 3/15/2018 12

Removing constraints of the bottom poor – Demand Side Issues q Technical know-how and demand-driven technical services q Appropriate financial services q Market linkage - quality assurance, knowledge on market demand q Potential areas of investment o Farming (Livestock) • Goat (Black Bengal, Boer, Jamnapari) or sheep (Chotanagpur, Dmarah, Suffolk) farming : Buck center, Small breeding unit, • Dairying (Fresian cross - at least 8 litter average milk) • Beef (Crossbred bull calves, Pabna/shahiwal) o Land leased based farming specially in char area o High value commercial vegetable gardening o Off-farming- Small business, vocational trades, tailoring 3/15/2018 13

Homestead Gardening Traditional gardens are scattered, seasonal Investment ØTotal investment BDT 60 -80/per decimal/year. ) Net profit ØBDT 530 -650/decimal year. ØProvide vegetable 42. 89 gm/person/day. Traditional vegetable garden Developed gardens produce vegetables throughout the year, produce more varieties of vegetables and are on fixed plot of land (bed system-Robi, Kharif-1, Kharif-2). Investment ØTotal investment BDT 180 -200/- per decimal/year. ) Net profit Ø BDT 2, 350 -2, 600//dec/year. ØProvide vegetable 364. 56 gm/person/day. Developed vegetable garden

Small Scale nursery Investment/1 decimal ØTotal investment (seed, tree/fruit sapling, fertilizer etc. ) BDT 25, 400/ - per decimal/year. ) Income ØIncome BDT 53, 600/- per decimal land/year.

Native Shing/Magur, Tengra, Koi fish culture Magure/Shing culture/2 decimal pond Investment Net profit ØTotal investment BDT 13, 800/- per decimal pond/year (2 crops/year. ) ØBDT 18, 200. /- per decimal/year (2 harvest/year) Thai koi culture/2 decimal pond Investment Net profit ØTotal investment BDT 5, 500/- per decimal pond/year (2 crops/year. ) ØBDT 8, 500/- per decimal/year (2 crops/year) 16

Fish Culture (Crab fattening) Traditional method crab fattening- encircle earthen area (Pond/Gher)- Investment ØTotal investment BDT 45, 800/- per decimal pond (20 crops/year. ) Net profit ØBDT 11, 000/- per decimal pond (20 crops/year) Crab fattening pond Scientific method crab fattening -bamboo made floating case. Investment Ø Total investment BDT 2, 64, 770/- from 30 cage (40 m 2 area) within 12 crops (12 days/crop) Net profit ØBDT 91, 630/- from 30 cage (40 m 2 area) within 12 crops (12 days/crop) Reference: M. Begum et. al 2009 Crab fattening bamboo made case

Black Bengal Goat (BBG) rearing LIFT Intervention at WAVE a) Total HH (BBG rearer): 6382 b) Total goat: 44895 60000 50000 40000 30000 20000 10000 0 Traditional a) Non descriptive housing b) flock size: 1 -2 doe c) No attention to health d) Small litter size (less than 2) e) High mortality Investment (yearly) Goat & treatment: 8000/--10000/Income: Kid: 3500/-5500/Net profit: 2500/-3500/-(2 cycle) Asset: Doe-5000/--6000/- Jun-14 May-14 Apr-14 Mar-14 Feb-14 Jan-14 Dec-13 Nov-13 Oct-13 Sep-13 Aug-13 Jul-13 Jun-13 May-13 Apr-13 Mar-13 Feb-13 Jan-13 HH's No. Goat Improved a) Maccha rearing b) flock size: 4 doe c) Regular vaccination & deworming d) Good litter size (2 or more than 2) e) Low mortality Investment (yearly) Housing, Goat, feed & treatment: 25000/--30000/Income: Kid & doe- 42, 000/--45000/Net profit: 15000/--18000/- (2 cycle/year) Asset: Doe & house-17000/-19000/-

Buck Service Centre Feature: a) Maccha housing b) flock size: 4 buck c) Regular vaccination & deworming d) Natural Insemination once daily e) Ensure trabis f) Natural Insemination (NI)charge-100/Investment (yearly): Housing, Buck, feed & treatment: 50000/ --55000/Income: NI charge- 1, 000/--1, 10, 000/Net profit: 45000/--50000/- (3500/--4000/- monthly) Asset: Buck & house-28, 000/-30, 000/-

Toward new technology Vermicompost Production (semi-commercial) Feature: a) Produced by the worm (cow dung, kitchen waste) b) Improves soil organic matter (5%) content c) Improves germination rate, crop’s growth & yield Investment (yearly): 1. Rings (10 no’s): 2500/2. Vermin (20000 no’s): 20000/3. Cow dung (12000 kg): (self) 4. Sac, sieve, net: 1700/Total: 24, 200/Income: Vermicompost (4800 kg) & Vermin (80000 no’s): 1, 37, 600/Net profit: 113400/- (8 batch/year) i. e. or 9450/- monthly PRIME Intervention ü No. of farm established: 18045 (Small & semi-commercial) ü Total investment: 42. 8 million ü Total Production: 14454 ton/year ü Income: 173 million (except vermin)

Quail (layer) Production Feature: a) Need Low Investment b) Starts laying at six to seven weeks of age c) Laying 280 to 295 eggs/year. Investment: Cage, Quail, feed & other: 48, 000/Income: Egg, Quail & other: 67, 000/Net profit: 16, 000/--18, 000/- (one year) Asset: cage & equipment- 5, 000/- Rabbit Production Feature: a) Short gestation period (30 -32 days) b) Give birth 6 -8 time per year c) Addressing the tribe Investment: Cage, rabbit, feed & other: 23, 000/Income: Rabbit: 31, 500/Net return: 7000/--8000/- (7 kitting/year) Asset: Rabbit, cage & equipment- 8, 000/-

Off-farm Activities Mat making Basket making Investment Ø Total investment 20, 400. 00 BDT (training, equipments, cloth etc. ) Ø Total investment 5, 400. 00 BDT (training, materials etc. ) Income ØIncome 2, 600. 00 -3, 200. 00 BDT/month ØMonthly income 3, 500. 005, 500. 00 BDT/month

Off-farm Activities Omanian cap Investment Ø Total investment 3, 000. 00 BDT (Training, cloth, thread etc) Income ØMonthly income 2, 000. 002, 500. 00 BDT (4 cap/month)

Off-farm Activities Tailoring Investment Stitching Investment Ø Total investment 25, 000. 00 BDT (training-6 months, machine, cloth, etc. ) Ø Total investment 8, 000. 00 BDT (training) Income ØMonthly income 2, 500. 003, 500. 00 BDT ØMonthly income 2, 500. 003, 000. 00 BDT 24

Vocational Activities Mobile Servicing Hosiery Investment Ø Total investment 8, 140. 00 BDT (training) Income ØMonthly income 6, 000. 0010, 000. 00 BDT Investment Ø Total investment 70, 600. 00 BDT (training, machine, equipments, computer etc. ) Income ØMonthly income 10, 000. 0015, 000. 00 BDT

Vocational Activities Mechanic Electrical Investment Ø Total investment 30, 500/-BDT (training, equipments etc. ) Ø Total investment 22, 600. 00 BDT (training) Income income ØMonthly income 6, 000. 00 -8000. 00 BDT ØMonthly income 6, 000. 0010, 000. 00 BDT

Education Program ENRICH • Total Centres- 3239 • Total 86, 745 Students- • Each SK has on the average 26 students per centre. • 53% of students are girls. • Low cost: Cost/Centre/Year -Tk. 26, 250/ • Ultra-poor and poor students are achieved good results in their school exam. • % of dropped-out: 7% • High appreciation from the society

Moving Forward q Living remains no more a daily struggle q Attaining qualitative economic security. It’s a result of many small qualitative changes in livelihoods q New livelihood strategies have to contribute in increasing the purchasing power of the households q Considering heterogeneity, need further stratification within the extreme poor q Expanding economic opportunities to create ‘livelihood ladders’ § Promoting high earning livelihood strategy § Identifying and exploiting new income generating activities and making markets work for the extreme poor § Growth of homestead economy as a source of cash income § Acquiring new skill to enhance the scale of operation 3/15/2018 28

Removing constraints of the bottom poor – Supply Side Issues • Mind-set of development agencies yet to be re-oriented toward addressing the bottom poor. Besides, they are not technically and financially equipped to address the bottom poor issues. Furthermore, they do not have sufficient trained staff to handle the issues of bottom poor. • Absence of targeted, long-term, flexible programme for the bottom-poor • Both government and non-government agencies are shying away from the poor of vulnerable disaster prone areas. 3/15/2018 29

Conclusion q PKSF attempts to expand growth-oriented marketbased activities for the poorest q Multidimensional aspect of poverty must be addressed q Making sufficient investment for enhancing human and social capital q A more focused and programmatic approach has to be undertaken q Expanding employment opportunities in both formal and informal sector is crucial q Identify and expand market linkages for the poor 3/15/2018 30

Thanks 3/15/2018 31