Finance Adviser's invitation to NGOs
Tuesday, 26 June 2007
Qazi Azad
WHILE talking on the proposed budget at a meet, arranged by the Economic Reporters' Forum in Dhaka last Thursday, the Finance Adviser Dr. Mirza Azizul Islam responded to a proposal by some former law-makers and former ministers for having an alternative supply mechanism by extending an invitation to the NGOs for being involved in the mechanism. He has thus thrown a big challenge to the local NGOs to prove their concern for the consumers and also their worth in meeting a specific social need at a critical time.
Obviously, he did it consciously, being aware of the limitation of the government under the rules of the market economy and the unrestricted freedom of the NGOs under the system to get directly involved in productivity and business promotion.
The local NGOs, which are not few in number, carry on a wide variety of welfare and development oriented activities. Many of them are involved in micro-credit. A few NGOs have extensive networks of clients. Some of them occasionally faced criticism for allegedly charging high interest on their loans. Some people have even said that the NGOs, which are involved in micro-credit, have replaced the old moneylenders, who were uprooted by law by late Sher-e-Bangla A.K. Fazlul Haq to end the exploitation of the helpless.
The Finance Adviser has offered all NGOs an opportunity to demonstrate in wide public view that they are indeed a great productive force, ready to rise up to any big challenge confronting the society. The big NGOs, like the Grameen Bank, the BRAC, the ASA and others, which extend micro-credit, may establish farmers' co-operatives as production units and supply chains for helping the nation at this time by organising their clients. Similarly, they can set up marketing outlets within the country to meet the domestic demand. They may also organise import of essential commodities, which are now in short supply and sell them at nominal profit through their offices around the country to demonstrate that they do indeed work for public good.
The BRAC, which became famous for organising contract farming for vegetable production for purpose of export, may become the pioneer in production, distribution and sale of daily essentials in the home market to set an encouraging example. Other NGOs worth their names may follow it and set their own examples of social responsibility. Since neither rules of the free economy nor their organisational structures would stand as any bar to restrict the big NGOs from doing so, they may get involved in it to acquire a much wider acceptance within the society.
As Bangladeshis living outside are growing in number and they are creating demand for Bangladeshi products abroad, the export volumes of home products, particularly vegetables and fishes, will rise progressively. The demonstration effect of their consumption may also create some demand for such items among genuine foreigners. It means that the integration of the local economy with the global market will increase steadily. While it may create temporary supply distortions in the domestic market, it assures that local agriculture will gradually receive increased boost from foreign demand. From the business point of view, it is an opportunity, which the NGOs can exploit optimally by organising co-operatives of their clients.
We may accept that high prices of some vegetables and fishes in our domestic market could be partly the manifestation of a kind of market distortion which has resulted from the export of these commodities. Exporters, who do their business for their own profit, send out goods abroad whenever they find foreign buyers willing to pay lucrative prices for them. They are neither expected to bother nor they actually consider whether the supplies of those goods are plenty to leave surpluses for export after meeting the domestic demand.
Countries, which export essential local products without having enough surpluses to meet domestic demand, inevitably confront such distortions initially in their home markets. But it cannot be said that exporters harm the interest of their countries by carrying on their businesses without regard for the domestic demand of locally produced commodities. They rather help their countries in growing economically. By enhancing the overall demand for such commodities through their export activities, which inevitably lead to temporary to medium-term price spirals, they in fact raise the producers' motivation for increased productivity. Its ultimate effect is higher economic growth.
Managing the distortions as noted above, in the conventional way of procuring commodities for augmenting domestic supply to reduce prices is no more the job of the government under the free economy. The market forces need to be stimulated under such situations by the government to augment supply without being directly involved in trade. If the market is intervened by the government or its agencies by way of direct involvement in trade continuously, there is always a possibility of resistance from the donor agencies and the World Trade Organisation. They may, however, overlook a short-term state involvement in trade in a difficult situation.
But direct involvement of a government in trade over a long time, for whatever reason, is not desirable in a nation's collective interest. It not only resists perfection of the market forces in the domestic front but also negates or substantially impedes the exploitation of individuals' motive to earn profit which is the greatest productive force. This creative force normally bolsters an economy with increasingly higher domestic production.
An alternative supply mechanism for a short-run in this country with government involvement to augment supply at this time of price escalations may be desirable or even ideal. It may bring some relief to the hard-pressed consumers who are now paying more than expected or beyond their individual paying capacity to buy their daily needs. But putting in place an alternative supply mechanism with an elaborate network of procurement and distribution would not be justified as a short-run measure.
The preparations to be taken for it and the huge investments to be made on would not support that a short-term measure should involve such high costs. At the fag end-after the measure has ran out of its utility, it may be seen by bewildered state auditors that costs have far exceeded benefits. Should the government then adopt passivity about the existing uncomfortable market situation as a policy and let the consumers suffer and generate anger in them for an ultimate outburst?
The government may advise the NGO Bureau to start consultation with the NGOs in this regard. The Finance Adviser may himself start the dialogue by having a meeting immediately with the chiefs of the local NGOs. Brainstorming in such a meeting may also generate other inputs for putting in place an alternative mechanism for augmenting the supply.
In a republic, citizens are supposed to share responsibilities. The local NGOs, which are expectedly being led by enlightened individuals with firm commitments to the society, should not ignore a felt and growing social need. They may positively respond to the Finance Adviser's open invitation.
WHILE talking on the proposed budget at a meet, arranged by the Economic Reporters' Forum in Dhaka last Thursday, the Finance Adviser Dr. Mirza Azizul Islam responded to a proposal by some former law-makers and former ministers for having an alternative supply mechanism by extending an invitation to the NGOs for being involved in the mechanism. He has thus thrown a big challenge to the local NGOs to prove their concern for the consumers and also their worth in meeting a specific social need at a critical time.
Obviously, he did it consciously, being aware of the limitation of the government under the rules of the market economy and the unrestricted freedom of the NGOs under the system to get directly involved in productivity and business promotion.
The local NGOs, which are not few in number, carry on a wide variety of welfare and development oriented activities. Many of them are involved in micro-credit. A few NGOs have extensive networks of clients. Some of them occasionally faced criticism for allegedly charging high interest on their loans. Some people have even said that the NGOs, which are involved in micro-credit, have replaced the old moneylenders, who were uprooted by law by late Sher-e-Bangla A.K. Fazlul Haq to end the exploitation of the helpless.
The Finance Adviser has offered all NGOs an opportunity to demonstrate in wide public view that they are indeed a great productive force, ready to rise up to any big challenge confronting the society. The big NGOs, like the Grameen Bank, the BRAC, the ASA and others, which extend micro-credit, may establish farmers' co-operatives as production units and supply chains for helping the nation at this time by organising their clients. Similarly, they can set up marketing outlets within the country to meet the domestic demand. They may also organise import of essential commodities, which are now in short supply and sell them at nominal profit through their offices around the country to demonstrate that they do indeed work for public good.
The BRAC, which became famous for organising contract farming for vegetable production for purpose of export, may become the pioneer in production, distribution and sale of daily essentials in the home market to set an encouraging example. Other NGOs worth their names may follow it and set their own examples of social responsibility. Since neither rules of the free economy nor their organisational structures would stand as any bar to restrict the big NGOs from doing so, they may get involved in it to acquire a much wider acceptance within the society.
As Bangladeshis living outside are growing in number and they are creating demand for Bangladeshi products abroad, the export volumes of home products, particularly vegetables and fishes, will rise progressively. The demonstration effect of their consumption may also create some demand for such items among genuine foreigners. It means that the integration of the local economy with the global market will increase steadily. While it may create temporary supply distortions in the domestic market, it assures that local agriculture will gradually receive increased boost from foreign demand. From the business point of view, it is an opportunity, which the NGOs can exploit optimally by organising co-operatives of their clients.
We may accept that high prices of some vegetables and fishes in our domestic market could be partly the manifestation of a kind of market distortion which has resulted from the export of these commodities. Exporters, who do their business for their own profit, send out goods abroad whenever they find foreign buyers willing to pay lucrative prices for them. They are neither expected to bother nor they actually consider whether the supplies of those goods are plenty to leave surpluses for export after meeting the domestic demand.
Countries, which export essential local products without having enough surpluses to meet domestic demand, inevitably confront such distortions initially in their home markets. But it cannot be said that exporters harm the interest of their countries by carrying on their businesses without regard for the domestic demand of locally produced commodities. They rather help their countries in growing economically. By enhancing the overall demand for such commodities through their export activities, which inevitably lead to temporary to medium-term price spirals, they in fact raise the producers' motivation for increased productivity. Its ultimate effect is higher economic growth.
Managing the distortions as noted above, in the conventional way of procuring commodities for augmenting domestic supply to reduce prices is no more the job of the government under the free economy. The market forces need to be stimulated under such situations by the government to augment supply without being directly involved in trade. If the market is intervened by the government or its agencies by way of direct involvement in trade continuously, there is always a possibility of resistance from the donor agencies and the World Trade Organisation. They may, however, overlook a short-term state involvement in trade in a difficult situation.
But direct involvement of a government in trade over a long time, for whatever reason, is not desirable in a nation's collective interest. It not only resists perfection of the market forces in the domestic front but also negates or substantially impedes the exploitation of individuals' motive to earn profit which is the greatest productive force. This creative force normally bolsters an economy with increasingly higher domestic production.
An alternative supply mechanism for a short-run in this country with government involvement to augment supply at this time of price escalations may be desirable or even ideal. It may bring some relief to the hard-pressed consumers who are now paying more than expected or beyond their individual paying capacity to buy their daily needs. But putting in place an alternative supply mechanism with an elaborate network of procurement and distribution would not be justified as a short-run measure.
The preparations to be taken for it and the huge investments to be made on would not support that a short-term measure should involve such high costs. At the fag end-after the measure has ran out of its utility, it may be seen by bewildered state auditors that costs have far exceeded benefits. Should the government then adopt passivity about the existing uncomfortable market situation as a policy and let the consumers suffer and generate anger in them for an ultimate outburst?
The government may advise the NGO Bureau to start consultation with the NGOs in this regard. The Finance Adviser may himself start the dialogue by having a meeting immediately with the chiefs of the local NGOs. Brainstorming in such a meeting may also generate other inputs for putting in place an alternative mechanism for augmenting the supply.
In a republic, citizens are supposed to share responsibilities. The local NGOs, which are expectedly being led by enlightened individuals with firm commitments to the society, should not ignore a felt and growing social need. They may positively respond to the Finance Adviser's open invitation.