Accepting facts and bracing for the hard days
Syed Fattahul Alim | Friday, 18 July 2008
The finance adviser the other day while refuting some economists' claim that the rate of pauperization has increased during the last two years has, however, admitted that the country's poverty alleviation efforts have received a severe jolt as a result of global food crisis and high price of essentials in the international as well as the domestic market.
He, however, mentioned the enhanced allocation for the social safety net programme in the current budget, which he thinks would help the most vulnerable section of the population survive the onslaught of poverty.
Needless to say, rising food price in the global market resulting from a complex mix of factors ranging from high costs of agricultural inputs to crop loss having its reason rooted in what is called climate change is a phenomenon of recent origin. All the factors that one can point one's finger at for this strange behaviour of food grains market can again be traced back to the sin of squandering the nature's reserve of non-renewable fossil energy.
It is not that the countries basically responsible for this gradual depletion of the world's energy reserve were not aware of the looming danger. They were and the scientific literatures on the gloomy prospects of such spendthrift manner of using up Mother Nature's reserves were available since the middle of the last century. But the consumption pattern of industrial capitalism being itself at fault for this spendthrift way of life of modern man, the scientists could do little to change it overnight by issuing their sombre warnings from time to time. Meanwhile, the world has come to a point of no return. The problems have come to a head. And as it has always happened in human history, it is always the innocent and the unsuspecting who are caught in the crossfire and have to pay the ultimate price for the sin of the powerful and the rich. So, Bangladesh as one of the third world victims of the global warming, high energy price and high food cost, is struggling hard to cope up with this threat to its survival.
Again, at home the same old syndromes of original sin is being enacted, though in a different form. It is the local rich and the powerful who recklessly consumed and exploited the country's resources, while the poor are being forced to pay the ultimate price. But they have only one way to pay it-through embracing more poverty.
Consider the problems being thrown at them one after another. First, the prices of food grains and other essentials, which are now flying too high for them to reach. Their income opportunities are shrinking as few instances of fresh business ventures and investments are visible within their reach especially in the rural context. The general ambience in the surrounding is also not that much encouraging for starting new business ventures. The inflation, which cannot anymore be termed as moderate or tolerable, has eroded the value of money. But the paradox is that even that cheap money is in short supply due to contractionary monetary policy of the Bangladesh bank. Meanwhile, in the face of economic slump in the US and other rich nations on both the sides of the Atlantic compounded by runaway inflation, the International Monetary Fund (IMF) has asked Bangladesh to further tighten its monetary policy. So, the flow of money in the market, which had already shrunk significantly will now turn into a trickle.
But guess who is to get the real drubbing with this further cut in the money flow? The brotherhood of the rich and the powerful will be able to live through this fresh move of the government to further tighten the money supply in the market. This in other words means that relatively better off section of society both in the urban and the rural backgrounds will become shier about spending their money. Then how would the poor get the money to survive the onslaught of the fresh spate of penury?
The finance adviser, however, has held out the hope that there would be increased allocation in the social safety net programme. Instructions, on the other hand, has been sent by the central bank to the commercial banks to extend their credit facilities to the Small and Medium Enterprises (SMEs). The hope is it would go a long way towards creating more job opportunities for the poor.
But these are only the hopes to be materialised in the future. But how are they going to survive the deadly blows of skyrocketing price of food grains and other essential commodities with their empty pockets when the limited income people are growingly finding it hard to meet their food costs? One cannot after all live on hope only.
However, the suggestion of enhanced credit facilities for the SMEs is undoubtedly a very reassuring one at this critical juncture of national life. But there is a catch here. It is not for the first time that the successive governments have been laying stress on the importance of the SMEs in job creation and their commitments to develop this sector of the industry. But in spite of all these assurances, the results have remained unknown to the man in the street. For thus far, the SME has not been able to cross the barrier of abstraction into that of reality. What is the number of SMEs in the country? According to Bangladesh Small and Cottage Industries' Corporation, there are around 40, 000 small and medium industrial units in Bangladesh. Add to those the tens of thousands of micro-enterprises run by families and self-employed individuals and groups. Short of reliable statistics, one can still say that more than 80 per cent of the country's total industrial labour force is employed in the SME sector. What is of greater importance is that the enterprises in this sector spread over the length and breadth of the country unlike the larger industrial units. The larger ones, on the contrary, are concentrated in the major urban centres of the country. So, a more generous approach to the SMEs can only serve to develop the economy in a more balanced manner. And well, any balanced growth of the economy goes a long way towards mitigating poverty. But then again, with money getting scarcer though with diminished buying power, the banks will become doubly hesitant to extend their funds to the SMEs with their unproven track records. And mere exhortations will not suffice to encourage them. The central bank governor, however, has instructed the commercial banks to keep 40 per cent of their finance for the SMEs. It is certainly a good move, which still would take years before its results might see the light of day.
So, the task of facing the immediate threat of penury and hunger will continue to haunt the policymakers indefinitely. And the most worrisome part of the problem is that the rich countries, which would once come with their generous aid to help the least developed and poverty-stricken countries like Bangladesh out of the crisis have meanwhile become shy of coming out as generously as before, for they themselves are smarting from the curse of recession, credit crunch and high oil and food price. And there is also no easy way out of the crisis. Nothing rather than rhetoric really did come out of the summit that the richest countries of the world hold every year. Unlike in the past such summits when British Prime Minister Tony Blair would commit billions of dollars to buy out global poverty, the latest summit, for understandable reasons, have ended on a whimper. So, with no fresh hope for the global poor including those of Bangladesh held out by the rich of the world, the country will have to face its poverty and other congenital problems on its own. The government will have to accept facts, not just wish them away, and brace for the hard days ahead.
He, however, mentioned the enhanced allocation for the social safety net programme in the current budget, which he thinks would help the most vulnerable section of the population survive the onslaught of poverty.
Needless to say, rising food price in the global market resulting from a complex mix of factors ranging from high costs of agricultural inputs to crop loss having its reason rooted in what is called climate change is a phenomenon of recent origin. All the factors that one can point one's finger at for this strange behaviour of food grains market can again be traced back to the sin of squandering the nature's reserve of non-renewable fossil energy.
It is not that the countries basically responsible for this gradual depletion of the world's energy reserve were not aware of the looming danger. They were and the scientific literatures on the gloomy prospects of such spendthrift manner of using up Mother Nature's reserves were available since the middle of the last century. But the consumption pattern of industrial capitalism being itself at fault for this spendthrift way of life of modern man, the scientists could do little to change it overnight by issuing their sombre warnings from time to time. Meanwhile, the world has come to a point of no return. The problems have come to a head. And as it has always happened in human history, it is always the innocent and the unsuspecting who are caught in the crossfire and have to pay the ultimate price for the sin of the powerful and the rich. So, Bangladesh as one of the third world victims of the global warming, high energy price and high food cost, is struggling hard to cope up with this threat to its survival.
Again, at home the same old syndromes of original sin is being enacted, though in a different form. It is the local rich and the powerful who recklessly consumed and exploited the country's resources, while the poor are being forced to pay the ultimate price. But they have only one way to pay it-through embracing more poverty.
Consider the problems being thrown at them one after another. First, the prices of food grains and other essentials, which are now flying too high for them to reach. Their income opportunities are shrinking as few instances of fresh business ventures and investments are visible within their reach especially in the rural context. The general ambience in the surrounding is also not that much encouraging for starting new business ventures. The inflation, which cannot anymore be termed as moderate or tolerable, has eroded the value of money. But the paradox is that even that cheap money is in short supply due to contractionary monetary policy of the Bangladesh bank. Meanwhile, in the face of economic slump in the US and other rich nations on both the sides of the Atlantic compounded by runaway inflation, the International Monetary Fund (IMF) has asked Bangladesh to further tighten its monetary policy. So, the flow of money in the market, which had already shrunk significantly will now turn into a trickle.
But guess who is to get the real drubbing with this further cut in the money flow? The brotherhood of the rich and the powerful will be able to live through this fresh move of the government to further tighten the money supply in the market. This in other words means that relatively better off section of society both in the urban and the rural backgrounds will become shier about spending their money. Then how would the poor get the money to survive the onslaught of the fresh spate of penury?
The finance adviser, however, has held out the hope that there would be increased allocation in the social safety net programme. Instructions, on the other hand, has been sent by the central bank to the commercial banks to extend their credit facilities to the Small and Medium Enterprises (SMEs). The hope is it would go a long way towards creating more job opportunities for the poor.
But these are only the hopes to be materialised in the future. But how are they going to survive the deadly blows of skyrocketing price of food grains and other essential commodities with their empty pockets when the limited income people are growingly finding it hard to meet their food costs? One cannot after all live on hope only.
However, the suggestion of enhanced credit facilities for the SMEs is undoubtedly a very reassuring one at this critical juncture of national life. But there is a catch here. It is not for the first time that the successive governments have been laying stress on the importance of the SMEs in job creation and their commitments to develop this sector of the industry. But in spite of all these assurances, the results have remained unknown to the man in the street. For thus far, the SME has not been able to cross the barrier of abstraction into that of reality. What is the number of SMEs in the country? According to Bangladesh Small and Cottage Industries' Corporation, there are around 40, 000 small and medium industrial units in Bangladesh. Add to those the tens of thousands of micro-enterprises run by families and self-employed individuals and groups. Short of reliable statistics, one can still say that more than 80 per cent of the country's total industrial labour force is employed in the SME sector. What is of greater importance is that the enterprises in this sector spread over the length and breadth of the country unlike the larger industrial units. The larger ones, on the contrary, are concentrated in the major urban centres of the country. So, a more generous approach to the SMEs can only serve to develop the economy in a more balanced manner. And well, any balanced growth of the economy goes a long way towards mitigating poverty. But then again, with money getting scarcer though with diminished buying power, the banks will become doubly hesitant to extend their funds to the SMEs with their unproven track records. And mere exhortations will not suffice to encourage them. The central bank governor, however, has instructed the commercial banks to keep 40 per cent of their finance for the SMEs. It is certainly a good move, which still would take years before its results might see the light of day.
So, the task of facing the immediate threat of penury and hunger will continue to haunt the policymakers indefinitely. And the most worrisome part of the problem is that the rich countries, which would once come with their generous aid to help the least developed and poverty-stricken countries like Bangladesh out of the crisis have meanwhile become shy of coming out as generously as before, for they themselves are smarting from the curse of recession, credit crunch and high oil and food price. And there is also no easy way out of the crisis. Nothing rather than rhetoric really did come out of the summit that the richest countries of the world hold every year. Unlike in the past such summits when British Prime Minister Tony Blair would commit billions of dollars to buy out global poverty, the latest summit, for understandable reasons, have ended on a whimper. So, with no fresh hope for the global poor including those of Bangladesh held out by the rich of the world, the country will have to face its poverty and other congenital problems on its own. The government will have to accept facts, not just wish them away, and brace for the hard days ahead.