Bangladesh’s success story is a lesson in poverty reduction: Here’s why

The Dhaka skyline seen from a high-rise – Commons

• Since its founding in 1971, Bangladesh has emerged from overwhelming poverty to achieve the highest cumulative GDP growth globally from 2010 to 2020
• Bangladesh’s success story is a lesson in development for the modern world

By Asif Saleh

Even in its most remote corners, the world is changing. Global unrest, climate change and growing numbers of refugees are blurring the lines between development and humanitarian response. Migration to cities is causing societal changes; technology is creating both opportunities and division; and the financing landscape is going through a tectonic shift.

To meet these challenges, development needs to be done differently. The sector risks becoming irrelevant if it cannot adapt. Lessons from Bangladesh offer examples on how to stay relevant.

Since its founding in 1971, Bangladesh has emerged from overwhelming poverty to be proclaimed by The World Bank in 2020 as ‘a model for poverty reduction’. It achieved the highest cumulative GDP growth globally from 2010 to 2020 and is now on course to become a developed country by 2041. 

The Bangladesh paradox has been researched well, and the role of non-governmental organisations (NGOs) in this progress is well documented. What is not researched enough is why their approach has been so successful.

The traditional approach to development across the world has been fairly uni-directional; designed and dictated by decision-makers from the Global North. Implementation strategies are imposed on local partners, who are in turn held accountable to them by these decision-makers, who also decide how impact is measured. 

Aid recipients are seen as ‘beneficiaries’ whose primary role is to be grateful for the assistance. Once the project is over, or donors’ priorities shift, everything changes. Long-term development is short-changed.

Approaches by international development organisations like BRAC and microfinance lender Grameen have provided an antithesis to this model. They are fundamentally challenging the way development programs are designed, financed and scaled. 

They have brought a sense of entrepreneurial zeal, courage and ambition to the sector, which has led to concrete results – BRAC, for example, has scaled its work to a level where almost every one of the 170 million people in Bangladesh has received services from it or one of its subsidiaries.

Key reasons behind the success in Bangladesh

There are four key reasons behind this success in Bangladesh. First and foremost, there was plenty of room for NGOs in Bangladesh. Successive governments have seen and understood the positive results of social innovations by NGOs, and that those results complemented their work of getting services to citizens.

This work prioritised simple, frugal solutions for complex challenges. It benefited from the support of international institutions, governments and philanthropic actors, but support was channelled to programs and self-sustaining social enterprises that were developed and grounded in local communities.

Secondly, the key to BRAC’s approach is its very different way of looking at people; it sees them as active contributors to economic growth. BRAC believes that the way to unmake poverty and inequality is to invest in the potential of people living in poverty, and to address the critical market gaps that fail them. 

Too often capitalism looks at the base of the pyramid and sees millions of potential consumers. In doing this, it misses out on the opportunity to tap into their creativity, engage them in productive livelihoods, and link them to markets – or to create new ones.

Thirdly, taking a problem-driven approach, rather than a proposal-driven one, and looking at problems holistically, has produced a steady stream of innovations to meet critical needs in multiple communities from multiple dimensions. Crucial to this has been engaging women from those communities as catalysts of change, in positions such as teachers, health workers and artisans.

Last but not least, there is the tacit realisation that real, sustainable development is not a five-year project cycle. It takes time. Long-term development is about building capacity, raising awareness about harmful behaviours and giving people the tools to change their own futures. Investing time in building depth in programming, being on the ground, and having a deep understanding of community dynamics is crucial.

Does this long-term and interconnected programming mean greater expense? No. It means greater value. Until the UK brutally slashed its foreign aid budget, which deeply impacted BRAC, BRAC’s strategic programming accounted for 17% of the UK’s global impact on extreme poverty and 13% of children completing primary school education, while costing 0.5% of its annual development budget.

Long-term, problem-focused and human capacity-centred programming is effective. BRAC’s Ultra-Poor Graduation’s model has provided access to training and incentives to almost 10 million people to lift themselves out of extreme poverty and onto self-sustainability. BRAC’s one-room school model, which comprehensively addresses every reason parents do not send their children to school, has brought education to 14 million children, the majority of whom are girls.

BRAC Bank’s bKash, the first mobile financial service provider in Bangladesh, has become, in just 10 years, a verb in daily spoken Bangla, and transacts almost $ 2 billion every day. Grameen Trust bet on mobile phones in Bangladesh in the mid-90s, transforming the rural economy by creating Grameen Phone, Bangladesh’s most popular mobile phone company. 

Both Grameen and BRAC have microfinance entities that have scaled the most in the country, bringing financial services to almost 15 million clients at one of the lowest interest rates for microfinance institutions globally.

This programming approach can also lead to the creation of social enterprises that generate vital funding to tackle poverty and inequality. For example, BRAC Bangladesh’s annual spend on development programming is approximately $ 150 million, and BRAC itself is now is the biggest contributor to this. 

In Bangladesh, BRAC’s Aarong connects 65,000 artisans to markets to create the nation’s most popular lifestyle brand. Aarong Dairy links farmers who often have just three cows each to otherwise inaccessible markets; it now makes up one-third of the nation’s dairy market.

What does this all mean for the sector? At a time when the development challenges are greater than ever and financial constraints are severe, development organisations need to be bold, ambitious and precise in identifying problems and solutions, like the private sector. We need to be patient, pro-poor and human centred, like the public sector. More than ever before, we need to work strategically, hand-in-hand, with private actors and governments, to ensure holistic, scalable solutions.

The COVID-19 pandemic has increased poverty and inequality worldwide. Bangladesh’s NGOs offer crucial lessons for all. It is time to challenge the status quo and do development differently worldwide.

(theprint.in/world/bangladeshs-success-story-is-a-lesson-in-poverty-reduction-heres-why/810178/)

(The writer is the Executive Director, BRAC. This article was originally published on the World Economic Forum (WEF).)