Part Two

Renewable energy for off-grid electrification


Shahiduzzaman Khan


BANGLADESH is now evenly poised to depend on renewable energy sources -- solar, wind, biomass and biogas -- amid growing concerns over a steady decline of non-renewable resources such as fossil fuel, which has prompted many countries to seek alternative sources of energy to meet their future needs. It is anticipated that the renewable energy will play a vital role in future for off-grid electrification in the country.


Bangladesh is now reeling under acute energy crisis with the electricity generation hovering around 3,700 mw against the demand for over 5,500 megawatt (mw). Renewable energy sources contribute less than 1.0 per cent of the total electricity generation. But the government has targeted to augment contribution of the renewable energy sources to 5.0 per cent by 2015 to generate around 450 mw and 10 per cent by 2020 to generate a total of 1600 mw from renewable sources. By installing wind turbines, the government has planned to generate at least 200 mw of electricity by 2013. It has targeted to generate around 100 mw of electricity from solar power projects by 2013 next.


According to statistics, the country's electricity demand has been growing by 7.50 per cent annually since 1990. Around 40 per cent of its population has access to electricity -- one of the lowest in the world. As of June 2009, Bangladesh's electricity consumer-base reached 11 million. The country has now 8,000 kilometres of electricity transmission lines, 256,000 kilometres of distribution lines. Augmenting electricity generation is, however, a top priority of the Awami League government. It has pledged to generate 5,000 mw of power by 2011, and 7,000 mw by 2013.


The country is more or less dependent on non-renewable resources such as petroleum and natural gas to meet energy needs. Efficient utilisation of renewable energy resources is yet to assume a commercial dimension and hence rational policy dissemination on renewable energy usage is essential. To increase their contribution, the government had earlier taken steps to finance installation of Solar Home Systems (SHSs) in the off-grid rural areas under a project named 'Rural Electrification and Renewable Energy Development Project', financed by global lending agencies.


The government has also taken steps to encourage generation of energy through biomass, and biogas due to the availability of rice-husk, crop residue, woods, jute stick and animal waste. With a view to encouraging renewable energy, the government has adopted a policy, which recommended establishment of an institution named Sustainable Energy Development Agency (SEDA). SEDA is scheduled to support establishment of small and medium renewable energy enterprises and providers, create a market opportunity and start-up business models, the draft says. To encourage private sector investment, the policy favoured providing appropriate subsidy for installation of solar, wind and biomass utilities. Renewable energy project sponsors, public or private, have been exempted from corporate income tax for a period of 15 years. The project sponsors are free to import equipment without payment of customs duties, VAT and any other surcharges and import permit fees, provided the equipment is not produced locally.


The main renewable energy resources in Bangladesh are biomass, solar, wind and hydropower. The hydropower potential of Bangladesh is low due to the relative flatness of the country. Wind power generation in Bangladesh has certain limitations due to the lack of reliable wind speed data and the remarkable seasonal variation of wind speed. The country has good prospects of utilising solar photovoltaic (PV) systems for electricity generation, but the high capital investment cost is a big barrier for adopting such systems. Biomass is the major energy source in Bangladesh and biomass utilisation systems represent a proven environment-friendly option for small to medium-scale decentralised electricity generation.


Bangladesh's per capita energy consumption is very low. According to Power Division the 2008 energy consumption value stands at about 250 kgOE(oil equivalent), compared to 550 kgOE for India, 515 kgOE for Pakistan, and 430 kgOE for Sri Lanka. Total primary energy consumption in 2008 was 33.50 MTOE (million ton oil equivalent) and the energy consumption mix was estimated as: indigenous biomass 62 percent, indigenous natural gas 25 percent, imported oil 12 percent, imported coal and hydrocarbon together about 1.0 percent.


Reports say contribution of biomass in total primary energy consumption of Bangladesh is around 60 per cent. The major sources of traditional biomass are agricultural residues, wood and wood wastes, and animal dung, and their shares in energy supply are approximately 45 per cent, 35 per cent and 20 per cent, respectively. Industrial and commercial use of biomass accounts for 14 per cent of total energy consumption. 63 per cent of energy required in the industrial sector comes from biomass fuel. Natural gas, liquefied petroleum gas (LPG), electricity, kerosene and biomass fuels are used for cooking. In areas without natural gas and electricity, biomass is used to meet the household cooking needs.


Agricultural crops generate large quantities of residues. Such residues represent an important source of energy both for domestic as well as industrial purposes. Other sources of biomass in the country are farm-animal waste and poultry droppings produced by the national herds, fuel wood from existing forests, tree residues and saw dust from the forestry industry. Although the consumption of biomass for non-energy purposes is negligible, the annual available biomass energy potential for electricity generation in Bangladesh is remarkably high.


Against this backdrop, there is a huge possibility to produce electricity using biogas in Bangladesh, if proper research is carried out by research agencies, professionals and the implementing authority. According to the Infrastructure Development Company Limited (IDCOL), -- a government agency, Bangladesh has 215,000 poultry farms and 15,000 cattle farms. By establishing biogas plants in these farms, electricity could be generated. So far 35,000 biogas plants have been established across the country and these plants are producing gas, which is being used for cooking purposes in the rural areas. 


Meanwhile, Bangladesh has taken a fresh move for setting up a US$1.0 billion nuclear power plant to meet the growing demand for electricity. Normally, it needs eight to nine years to set up a 600-1000 megawatt (MW) power plant. The country plans to set up at least a 1000MW nuclear power plant within a decade.


Until now, consumption of renewable energy in the country is limited to people mainly in remote areas under the assistance from several public, private and non-government organisations. As has been stated, the renewable energy contributes less than 1.0 per cent of the country's total electricity generation. The country is more dependent on non-renewable resources of energy, such as petroleum and natural gas, to meet the demand for power.


In exploring variable options, the government should target that by the year 2020, 10 per cent of total electricity will come from renewable resources. Also, there is a need to increase the number of solar system installations in the country. Biogas plants should be made more popular in rural areas. Further steps should be taken to popularise the proven solar water heating system, solar cooker or solar dryer. It requires proper planning from the government and the non-government organisations (NGOs) at the grassroots level.


If foreign investment can be ensured, Bangladesh should go all-out to set up a nuclear power plant which is definitely a viable option. Side by side, the country must exploit renewable energy resources to generate electricity as mush as possible. With fast depletion of natural gas reserve, these options must be diligently weighed to meet the nagging energy demand of the country.


 
szkhan@thefinancialexpress-bd.com


 
 
 
 
Conflict over legacies of Mujib and Zia defines national politics


N.M. Harun


PARLIAMENTARY politics is party politics -- parties fighting among themselves or reaching consensus on certain issues, in parliament or outside, based on their respective political and ideological lines. But 'bipartisanism', a distinctive feature of American presidential system, has become a buzzword in our parliamentary system of politics. From pundits in political science to an ordinary citizen usually tend to judge the country's political health on the yardstick of bipartisanism. For them, the coming year, 2010, will be one more year of disappointment.


The new year will open with the fourth session of the ninth parliament, scheduled to meet on January 4. The Bangladesh Nationalist Party (BNP) has already indicated that it will continue to boycott the House from which it staged walk-out during the first session, in February 2009. The only other opposition party in parliament, Jamaat-e-Islami, which belongs to the BNP-led Four-Party Alliance, will naturally follow the BNP, as it did in the past, in boycotting the parliament session.


January may become politically significant for two other developments. Prime Minister Sheikh Hasina is scheduled to fly to New Delhi on January 10 on her first state visit to India during her present term in office. And the government is scheduled to announce a new education policy, also, in January. The BNP, the Jamaat-e-Islami and other opposition parties have long been criticising Hasina government's policy of warming up relations with India.


The opposition parties, particularly the Jamaat and other Islamic and Islamist parties and outfits have already denounced the avowedly secular draft education policy recommended by the Education Policy Formulation Committee. The twin issues of Bangladesh-India relations and the education  policy will thus create scopes for the Islam-pasand parties, from the BNP to the recently-banned Islamist Hizb-ut-Tahiri, to take politics to the streets.


January may also see the execution of death sentences of the killers of Sheikh Mujibur Rahman. This will be an epochal development in the contemporary politics of the country which is, broadly, defined by the antagonistic relations between the Awami League and the BNP -- the former upholding the political legacies of Sheikh Mujibur Rahman and the latter upholding the legacies of General Ziaur Rahman. Sending the killers of Mujib to gallows will mean the full recovery of the Awami League from the trauma of August 15 counter-revolution of 1975.  This will initiate the final phase of the party's struggle to reconstruct the nation on the basis of Mujib's legacies and, simultaneously, to erase the legacies of Zia.


As the year progresses, the government and the ruling Awami League will unleash its offensive against the BNP-led politico-ideological structures in parliament, in the court and in the streets. Zia will be depicted as the real villain of the August 15 counter-revolution, the war crimes trial will begin, all the sensitive cases like the August 21, 2004 grenade attack on Hasina and 10-truck arms and ammunition haul of April 1, 2004 will be vigorously pursued. Khaleda Zia and her sons, Tarique Rahman and Arafat Rahman, will come under increasing polemical and legal attacks.


Under the circumstances, the BNP will have no alternative to confront the Awami League and the Hasina government through any means, fair or foul, to  defend the legacies of Zia -- from the naming of institutions in his name and the reputation of his family to the post-1975 Islam-pasand polity he founded and established, constitutionally, through the Fifth Amendment to the Constitution.


The war of attrition between the Awami League and the BNP, which began with the founding of the BNP in 1979, will possibly escalate into an open conflict in 2010. This will eventually lead to the final battle of the polities -- the government initiating, at an opportune moment, legal and legislative moves to replace the current Bangladeshi Islam-pasand post-'75 polity with a restored version of the pre-'75 secular-socialist polity based on Bengali nationalism.


Attempts to smoothen the rough edges of the politico-ideological conflict between the Awami League and the BNP began in the mid-1980s. Quarters at home and abroad have since been suggesting the political leadership to transcend the political and political differences among the parties and develop consensus on nation-building. They have particularly been urging the Awami League and the BNP to practise bipartisanism in running the government.


But the fact is that the political and ideological issues, underlying the protracted conflict between the Awami League and BNP, make the real politics of the country. These issues are conflictual in nature. The scope of political and ideological accommodation between the Awami League and the Awami League-led government on the one side and the BNP-led opposition, on the other, has been narrowing with every passing day.


Consensus on nation-building or the practice of bipartisanism between the government and the opposition is not politics- and ideology-neutral but is rather rooted in the national consensus on the polity of the country concerned. In America, there is now unanimity among the ruling classes on the issue of the capitalist polity as established by the constitution of the country. The Democratic Party and the Republican Party are two faces of the same polity; they are constitutional alternatives to each other. But the Americans did fight a civil war in 1861-65 when the national consensus on the polity broke down on the issue of slavery.


Here, in Bangladesh, a national consensus on the polity was established in the wake of the War of Independence in 1971 and it was enshrined in the Constitution of 1972. This national consensus on a secular-socialist polity based on Bengali nationalism was broken in 1975 but a new national consensus on the Bangladeshi Islam-pasand polity could not be built as the Spirit of '71/the Spirit of the Liberation War has remained alive all through these years. The Awami League and the BNP are not constitutional alternatives to each other; their relationship is antagonistic. A civil war-like conflict bedevils the polity.          


........................................


harun1943@gmail.com


 
 
 
Policy challenges on poverty reduction


Mustafa K. Mujeri


Reducing poverty and hunger is a formidable challenge for Bangladesh. Although economic growth has improved in recent years, the better economic performance has not been translated into satisfactory poverty and hunger reduction. In view of this disjuncture between the country's record on economic growth and progress in poverty and hunger reduction, an important issue on the country's policy agenda is to identify ways of ensuring the flow of increasingly larger share of the benefits of economic growth to the poor for improving their well being.


Poverty and hunger


Despite relatively high economic growth since the 1990s, nearly a half of Bangladesh's population subsist on less than $1.25 a day (2005 international prices adjusted for PPP) and remain preoccupied with survival since hunger is a hard reality in their everyday lives. For these people, poverty is not simply having low income and inadequate food; but also a situation of living in a multidimensional trap with deprivations in all aspects of human well being including undernutrition, lack of access to education and basic health services, social discrimination, physical insecurity and vulnerability, and degraded citizenship.


The proportion of people living on less than $1.25 a day uses lack of consumption (or income) as the measure of poverty, although poverty and deprivation are multidimensional realities. The measure, however, provides a good proxy for many other aspects of deprivations and well being since income (or consumption) poverty and other aspects of deprivations are closely linked. The poor and hungry people tend to have little access to education and basic health services, suffer from high child and maternal mortality, are plagued with livelihood and social insecurity, and have little capacities and opportunities to fight basic needs, failure and exclusion. 


It is also important to recognise that the poor are not a distinct or homogeneous group. There exists significant heterogeneity among the poor in terms of socio-economic and other characteristics including incomes and assets, work opportunities, human development indicators, persistent insecurity, social discrimination, spatial disadvantages, and limited citizenship. In many contexts, it is important to distinguish between various poor groups to understand their life trajectories and household poverty dynamics in order to identify the main drivers of change and draw implications for policy.


Just as poverty is multidimensional, hunger has many faces relating to inadequate energy intake, undernutrition, increased vulnerability to diseases and disability, and premature death. The incidence of hunger is related to household food security, the key determinant of which is poverty. Poor households do not have the capacity to ensure food security and lack the resources to meet nutrition and health care needs. Even if the poor households may succeed in securing some food, the quality of their diet is more likely to lack essential micronutrients. 


It is likely, therefore, that poverty and hunger are entwined in a vicious cycle since undernourished people would be less productive, would have lower lifetime earnings, and would be more prone to chronic illness and disability. For the children in the poor households, malnutrition can have severe and permanent consequences for their physical and intellectual development and they will never make up for the nutritional shortfalls at the beginning of their lives. Given the close links between poverty and hunger, it is more likely that these two aspects of deprivation would move in a similar manner.


One should, however, note that the process of transmission of poverty into hunger is complex. There are several dimensions of hunger such as insufficient availability of food as compared with requirements, shortfalls in nutritional status, and premature mortality, directly or indirectly, due to undernutrition. Moreover, sufficient dietary availability at the household level does not guarantee that food intake meets the dietary requirements of individual household members (especially children and women) nor does it imply that health status permits the biological utilisation of food. Along with income to raise the level of food consumption, reducing hunger needs investments in other areas including basic health and education services, sanitation and safe water, and changes in health knowledge and behaviours, especially of women and care givers. In addition, the relationship between food and nonfood prices may influence how poverty translates into hunger.


Thus while poverty and hunger do overlap, these two aspects of deprivation are not identical. All poor people may not be hungry; similarly, all hungry people may not be poor. According to one estimate, the incidence of hunger among the poor is 73.5 percent in Bangladesh. On the other hand, the incidence of poverty among the hungry is 59.9 percent in Bangladesh. These results show that even a hungry person may not necessarily be poor. A non-poor person may be hungry because of inadequate access to or supply of food due to natural disasters, conflicts, market fragmentation or other reasons. Hunger can thus provide a broader measure of deprivation than consumption cut-off points since households having higher incomes than the cut-off point may still face tight income constraints and may not have the ability to buy enough food in order to meet other basic necessities or they may choose to temporarily reduce food consumption below the threshold level in order to develop productive assets (e.g. education of children) for the future. Overall, one may conclude that although poverty and hunger are closely related, there are many factors which may weaken the relationship between the two and these should be taken into account in devising appropriate strategies to combat poverty and hunger. Thus the policies to reduce poverty as measured by consumption (income) threshold may not be adequate to alleviate hunger for all groups.  


Identifying the poorest and the hungriest


For policy purposes, it is important to identify who are the poor and the hungry people, what are their characteristics and constraints, and how to assist these people to avail the opportunities to improve their well being. This is especially true for the poorest and the hungriest since they need to be effectively targeted and reached especially in view of the existence of a significant number of such people in Bangladesh.


It is obvious that there exists a high concentration of hunger in the ultra poor group. One also notices some difference in rural disadvantage between poverty and hunger. In the case of poverty, the rural areas are at a disadvantage; but when it comes to hunger, the urban areas are disadvantaged. There exist many reasons for the disadvantageous position of the urban poor people in respect of access to food. Despite higher incomes, the urban poor face greater challenges in gaining access to sufficient food because of their higher dependency on the market compared with the rural poor. The urban poor also face sharper tradeoffs among competing needs for their disposable incomes (e.g. food, housing, transport, education and other nonfood basic needs). Thus urban-rural differences in the case of hunger are not as sharp as or could be different from poverty.   


Despite the trend towards a rising share of the poor in urban areas, the incidence of poverty is higher in the rural areas. Overall, there is a tendency towards greater rural-urban differences as poverty deepens.  Some groups who are different from the majority show consistently higher prevalence of poverty and hunger.  This ethnic dimension of poverty is observed among indigenous people and marginalised groups. Poverty assessments point out that the poorest and the hungriest households are located furthest from roads, markets, schools, and health services. The lack of access to electricity, a composite indicator of development, is a common characteristic of these households. The lack of access to electricity also broadly indicates their limited access to roads, markets, and communication infrastructure including technology, income earning opportunities, and public services.


The ownership of and control over productive assets is vital for livelihood. In the rural economy, land is an important productive asset. Consequently, the association between poverty and landlessness is high. In the rural areas, those who are landless are also the poorest. It is seen that nearly 80 percent of the ultra poor in rural Bangladesh do not own any land. The poorest also lack complementary assets (e.g. draft animals, agricultural implements) so that they are also constrained to work as sharecroppers and hence these households are mostly dependent on wage labour in farm and nonfarm activities for livelihood.


Education is universally recognised as an effective tool to reduce poverty. Investments in education help reduce the intergenerational transmission of poverty. Although the share of the people who are educated is low in Bangladesh, it is seen that, for both women and men, the poorest are less likely to be educated. The gender gap is also considerable. Moreover, children from poorer households are less likely to go to school.  There also exist considerable variations in net enrollment rates for children from poor households. Many children from the poorest households do not attend school because they have to work to support the earnings of the households. Although education for girls has high economic and social benefits for both households and society, the enrollment rates for the poor girls are still low.


Several intra household characteristics may also be identified for the poorest and the hungriest groups. In general, larger sized households tend to be poorer than the smaller ones and the poorest households have higher dependency ratios (nonworking age members e.g. children aged 0-14 years and elderly aged over 60 years who need to be supported by household's working members). These associations, however, are governed by many other dynamic and complex links. Many studies bring out that poverty rates among the elderly are particularly high. Similarly, children are found to belong to poor households in high proportions. There are certain groups of children who are more vulnerable to poverty such as orphans and street children. These groups are also more prone to hunger and diseases. Poverty in childhood is also much more likely to perpetuate throughout the life of a poor child.


Similarly, female-headed households are more likely to live in ultra poverty which is partly explained by lower access to assets and resources. Another important aspect of gender dimension of poverty is the lower level of welfare of women and girls relative to their male family members within the male headed households. In addition, women usually receive less food and less 'high' quality food (e.g. fish, meat, eggs) within poor households.          


The budget shares of households show that poorer households, especially those living in rural areas, spend a high share of their budget on food. In Bangladesh, the share of food in total expenditure of poor households is nearly 66 percent in rural areas and 60 percent in urban areas. The shares are somewhat higher for the poorest. One notable feature is the low shares devoted to education (around 1 percent) and health (2-3 percent). Moreover, the share of expenditure on health falls (or does not change) as poverty rises which is worrisome since ill health is more prevalent among the poorest. This shows the importance of health shocks in causing and perpetuating poverty especially among the poorest.


Persistence of poverty and hunger


Understanding the causes of why poverty and hunger persist is important for policy, especially since the underlying causes could be very different in actual ground conditions. The location of a household in a particular geographic area could have significant impact on its poverty status. Similarly, the country's speed and quality of economic growth; degree of access to services, infrastructure, and markets; agro-ecological conditions, environmental and climate change impacts; access to technologies; peace, stability, and capacity to withstand shocks and uncertainties; and many such factors are important in understanding the persistent nature of poverty and hunger.


Economic growth and inequality


Past experience shows that poverty reduction is more likely to take place in countries that experience economic growth. It is estimated that, on average across countries, 1 percent of growth will bring a 2-3 percent reduction in the number of people living below the poverty line. Although growth is good for the poor, it is not equally good in all countries. It is estimated that growth explains only a quarter of the variation in reductions in poverty across a sample of poor countries. Many factors influence a country's speed and quality of economic growth including resource endowments, infrastructures, institutions, markets, and policies.


The relationship between growth and poverty is strongly determined by what happens to inequality. Growth is likely to have less impact on poverty, if inequality is high or rising. This shows that in countries where inequality is high, the poorest and the hungriest not only have the least share of resources, but they are also least likely to benefit from growth. It is clear that the growth in sectors in which the poor and hungry reside (e.g. rural sectors including agriculture) would benefit them the most.





The reductions of inequality through a pattern of growth that benefits the poor more than the nonpoor or through prudent redistributive measures are congenial to reducing poverty. Moreover, the dampening impact of inequality on poverty reduction may vary with types of inequality that exist in the country. Inequalities that result from disparities in education, exclusion of poor groups due to ethnicity or similar grounds, or limited access to credit and services are hard for the poorest to overcome and improve welfare. On the other hand, removing market restrictions may compress labour returns to schooling that ultimately would help reduce inequality.


Vulnerability and shocks


Shocks or unexpected events (e.g. that causes loss of income or assets, or bad health) are important determinants of poverty and hunger. There are various types of shocks, both idiosyncratic and covariate, which affect the lives of the poorest. Such events hit harder if the household is already poor and make hunger and poverty persistent for the household. Many poor households may never recover from the adverse consequences of a natural disaster with hunger firming up its grip. This is reflected in much wider fluctuations in consumption of the bottom income deciles compared with upper income deciles. With limited ability to withstand shocks and unexpected misfortunes, any such event leaves a permanent effect on the poor household's welfare that persists for long after the event with a very slow pace of recovery, if at all. One reason for this is the loss of productive assets (e.g. distress sale of land or livestock in order to survive the hardship) that reduces the opportunities of earning incomes making poverty and hunger more persistent. Similarly, with other types of shocks such as ill health or death of an earning member, the household directly loses its earning ability that causes households to remain in poverty. The impact of ill health on poorer households is worse since they have to incur additional expenses for health care due to their limited access to health facilities. In many cases, physical and mental disability acts as a source of social exclusion for the poor households and disabled children suffer from greater deprivations. There is also evidence of higher incidence of poverty and hunger among the elderly people due to exclusion and dependence, especially if the extended family itself is poor.


Other coping mechanisms, such as cut-back on consumption due to reduced income or higher food prices can have long term adverse consequences as well. This may lead to cut-back of consumption of children especially of women and girls, pulling children out of schools, and similar other coping measures resulting in intergenerational transmission of poverty and hunger. There are many other types of shocks (e.g. droughts, floods, sudden drop in prices of cash crops, macroeconomic instability) that may also lead to severe deprivations. 


Intergenerational transmission of


poverty and hunger


The intergenerational transmission of poverty and hunger is prominent among the poorest and the hungriest. More often child poverty creates intergeneration impact as it affects the health and education outcomes of the child adversely influencing his/her future earning potential. Shortfalls in consumption and nutrition requirements have severe impact on young children, especially on their physical and cognitive development. There is much empirical evidence to conclude that low levels of income affect investments in education, result in high dropout rates, and raise the opportunity cost of children (especially of girls) going to school relative to undertaking productive or household work. Some evidence shows that when poor households experience sudden or unexpected fall in incomes, children are forced to spend less time in schools, repeat grades, or withdraw altogether from schools. This is especially true for girls. Similarly, lack of productive assets (e.g. land) is another channel of transmission of poverty from parents to children. In particular, the hunger trap contributes to maintaining poverty in later years for the victims who are young and children.


Orphanhood results not only in lower current consumption of poor children, but also stunting and lower educational attainment causing poverty and hunger to persist in adult life as well. Orphaned children, especially teenage female orphans, are also vulnerable to risks of abuse and exploitation. Poor orphaned children are more likely to end up in streets with no shelter and education, and much more exposed to health risks and crime.  


Education and assets


The lack of education and skills increases the likelihood of experiencing poverty and hunger in a number of ways. Education is fundamental to increasing capabilities in all respects including engaging in decent employment, accessing social network, using basic services, and enhancing political participation. As the children and adults in poor families are less educated, they are less able to raise and diversify incomes, and end up in poverty and hunger over generations.


An important aspect of the education poverty interface is the returns to education.  Education has a greater impact on reducing poverty and hunger in the urban areas because of greater labour market opportunities and higher returns compared with rural areas. Moreover, if discrimination is present based on gender or caste or ethnicity, the ability of education to improve welfare of these disadvantaged groups becomes correspondingly limited.


On the other hand, a lack of assets can result in persistent traps for poor households to remain in poverty and hunger. For the poorest and the hungriest, being assetless means being landless. In addition to low income, the poor households are constrained in accessing land due to lack of access to credit and savings, weak land rental market, and other social factors. The poor households are often excluded from the formal financial markets especially due to lack of land or other assets for collateral. Without access to the credit market and in the absence of own savings, the poor households lack the capacity to take advantage of the economic opportunities created by economic growth. Thus there seems to exist asset based poverty traps for the poorest. This also encourages the poorest to limit their exposure to risks as a self insurance mechanism which tends to lower their average incomes and reinforce long term poverty.


The asset poor households also are more likely to remain excluded from existing social networks. These households usually have little access to income smoothing or information networks, and social structures which tend to perpetuate exclusion mechanisms associated with persistent poverty of these households. It is more usual that better networked and well-off people dominate political and social processes with the most disadvantaged left out or remain marginalised in such processes.


Gender and group discrimination


In earlier discussions, it has been pointed out that gender discrimination persists not only between male and female-headed households but also within households headed by men where the welfare of women and girls is often lower than the male family members. It is observed that cultural practices are a strong determinant of higher poverty among women than men. The high poverty and lack of empowerment impact the well being of women and have a strong impact on the future outcomes of their children. 


In addition to gender, the poorest and the hungriest are trapped in unequal social relations that give very limited opportunities for upward economic and social mobility for these disadvantaged groups. Such disadvantages may work at national, local, community, or even at household levels. The ethnic minorities, hill tribes, scheduled castes, and indigenous groups are in such category. Unequal asset ownership, lower returns to assets owned and products sold, wage discrimination in the labour market, and many other discriminatory practices put these groups into perpetual poverty and hunger that cannot be explained by differences in asset ownership and productive characteristics.


Group membership can have strong influence on changing aspirations and perceptions with beneficial impact on education, occupational choice, employment level, health behaviour, food consumption pattern, income expanding livelihoods, and other elements that can make significant differences in poverty and hunger status of a household. Obviously, the poorest and the hungriest are constrained in developing such relationships and reinforcing behavioural changes for improving welfare.  


Adverse ecology, remoteness, and access to services


The regional pattern of extreme poverty and hunger is striking as reflected in the fact that around two-thirds of the poor live in rural areas and the poorest are concentrated in certain geographical areas characterised by adverse ecology and remoteness. Areas such as hills, coastal regions, and other ecologically disadvantaged locations are characterised by harsh living conditions, low productivity, difficult livelihood activities, and health and social hazards. As a result of low returns to economic activities, greater health and social risks, and higher prevalence of natural disasters, majority of the people living in these areas are more likely to remain extreme poor. The poorest areas are not only ecologically disadvantaged but also tend to be the most remote with long travelling time to the country's capital or major centres of economic activity. Frequently, the poorest and most food insecure households live furthest from roads, markets, schools, and health centres. For these households, costs of buying or selling goods rises greatly resulting in lower consumption and welfare. 


Remoteness also reduces access to public services. Due to their remote location, the poorest have to travel the longest distance to access basic health or education services. This reduces the likelihood of accessing these services by them due to higher financial costs and long travel times. The absence of stable environments also deters households to escape poverty and hunger. The disruption of roads, markets, food crops, and other institutions resulting from disasters and conflicts bring immediate and long term impact on poverty and hunger. Thus peace, economic growth, and creation of an equitable society are important cornerstones of an effective poverty and hunger reduction strategy.  


Policy implications


The above analysis highlights the multidimensional factors that underlie the persistence of poverty and hunger in Bangladesh. This makes it important to deepen our understanding of poverty dynamics in order to improve the effectiveness of poverty and hunger reduction policies. For policy purposes, the need is to analyse the complexities of poverty and hunger in terms of how these deprivations evolve over time, what determines this evolution, and how the pattern of evolution matches with the country's socioeconomic characteristics.


For policy purposes, one important element of poverty and hunger is that these two dimensions of deprivation are very context-specific and should not be abstracted from location specific realities in which they exist. The evidence that the poorest and the hungriest have benefited the least from the past pattern of economic growth (which was reasonable in terms of rates of growth in recent years) points out the reality that these extremely deprived groups not only suffer from low level of endowments but also there exist mismatches between their structure of endowments and the opportunities created by the process of growth itself. Thus there are two important dimensions of policy: first, enhance the endowments and capabilities of the poorest and the hungriest groups; and second, minimise the mismatches between newly created opportunities by the growth process and the level and structure of endowments of the poorest groups.


The policies, therefore, should be directed to raise economic growth since high economic growth is necessary to reduce both extreme poverty and hunger. However, it may not be adequate to help the most disadvantaged groups by growth alone. This would require context specific complementary policies to remove the constraints that prevent them to access and benefit from the emerging opportunities.


For instance, many macro level constraints (e. g limited size of the market) facing the poorest can be relaxed through stimulating economic growth that would expand their opportunities and enable them to earn higher returns from available endowments. It would also be necessary to create a pattern of growth that may lead to relaxation of structural constraints emerging from the availability of a limited basket of endowments to the poorest. Depending on specific characteristics, such policies may encompass changing the sectoral pattern of growth, balancing its geographical distribution, making choice of appropriate technologies, and undertaking similar measures that would change the nature and distribution of opportunities created by growth in a manner that the poorest would be able to avail an increasingly larger share of the opportunities.


At the other end, policies are also needed to address the issues relating to limited endowments of the poorest. This may cover a wide array of measures depending on locational characteristics and the nature of the constraints of specific groups of the poor and hungry people. This would include measures to enhance the quantity and quality of endowments of the poor groups, e.g. expanding ownership and access to productive assets through improving credit markets, implementing redistributive policies, and removing entry barriers; expanding human capital through access to education and skills; reducing vulnerability and enhancing capacity to absorb shocks through introducing insurance programmes for the poor and expanding health services; reducing gender discrimination and empowering women; providing social security and safety nets; and undertaking targeted measures of various kinds. Such measures should be directed to change the structure of endowments of the poor households through multiple avenues e.g. enabling to accumulate physical assets over time; helping to maintain the asset base in times of shocks; permitting to invest in human capital; and developing social networks and accessing institutions to sustain upward transitions.


More attention is needed to the poorest and the hungriest for which comprehensive, sustainable, and inclusive development is the priority to support their efforts to improve the situation. As opposed to the narrow view of social protection as safety nets and short term response to crises and shocks, a broader perspective to social protection is necessary, involving both social protection and livelihood promotion. Such a view envisages social protection as having both short and long term roles helping people conserve and accumulate assets and developing socioeconomic relationships in order to seize emerging opportunities. The strategic thrust of social protection needs to focus on addressing the causal factors underlying specific contexts ingrained in multiple hazards and risks faced by them and in their vulnerability to the impact of these on their well being, and developing the capacity of the poorest to deal with such events. Such a social protection strategy can reduce poverty directly and raise the chances of the poorest to take advantage of the opportunities created by economic growth.


The important policy concern is to make GDP growth more effective in reducing poverty and hunger. This requires a qualitative change in the pattern of growth such as that it does not remain concentrated in few sectors and regions while most poor and hungry women and men can neither participate in and contribute to nor benefit from growth.  Along with expanding their endowments, measures are needed to relax their constraints and reduce their risks and vulnerabilities in engaging in markets. The poorest are often forced to engage in low productivity activities, because these are less risky relative to high productivity alternatives. Reducing risks also minimises their chances of falling back on coping strategies that can lead to their falling into poverty traps, e.g. selling of land and other assets, and children deprived of food, schooling, and health services.


Policies also need to put emphasis on reducing the high and rising levels of inequality in assets, opportunities, social networks, and participation. High inequality reduces the poverty impact of economic growth and creates social and political tension that hinders sustainable and inclusive growth. In this context, gender is an important dimension of inequality. Rising inequality is not an inevitable consequence of economic growth. The need is to adopt a mix of policies that addresses both growth and distributional concerns, strengthens empowerment, and deals with gender, ethnicity, and other biases.  


Another important concern is to strengthen the employment nexus between economic growth and poverty and hunger reduction in Bangladesh. Along with high economic growth, this requires improvements in the quantity and quality of employment and integration of the poor with employment opportunities created through economic growth. For this, growth sectors need to be employment-intensive and closely linked to the rest of the economy. It is evident that Bangladesh is yet to generate sufficient productive nonfarm employment to absorb the growing labour force seeking employment outside the agriculture sector. In addition, poor workers need to have the health, education and skills, and resources to gain access to such expanded employment opportunities. This implies that macroeconomic, structural, and equity-focused policies need to be well-integrated to create a rapid expansion of poverty reducing employment. Since informal employment is the main source of employment of the poor workers, an integrated policy response is needed taking into account the diversity and heterogeneity of the informal economy. The goal should be to design appropriate regulations of both informal enterprises and employment relations that balance economic efficiency and social goals. Policies are also needed to raise the productivity of informal enterprises through access to capital, business development services, infrastructures, and supportive regulations and policies.  In promoting such policies, public investment has to play a key role in growth and development along with massive programmes to strengthen education and training as well as in providing social protection, ensuring representative voice, legal identity and rights, and health services. 


Bangladesh needs to recognise the new contexts of development with trade liberalization creating new challenges as well as new opportunities, technological revolution in ICT bringing in new dimensions of knowledge in development, and the increasing role of migration and remittances in domestic development.  In this respect, the important element of national action is to build and maintain a social compact where the state is committed to reduce the poor's risks through ensuring law and order, maintaining macroeconomic stability, providing basic services and institutions, and securing citizenship.


(The writer is director general of Bangladesh Institute of Development Studies (BIDS)


 
 
 
 
People and the state of our political management: An overview


Shamsher Chowdhury


Considering that 15 crore people are crammed in a land that measures 155 thousand kilometers, it is my belief that we have done fairly well for ourselves. Given the paucity of our resources, we have braved most of the adversities and calamities that befell us, be they manmade or natural (calamites such as the frequent cyclones and the tidal bores that recently devastated some coastal areas of the country). Our people who live in the rural and the coastal areas of the country are one of the best specimens of mankind that one can find anywhere in the world. Along with them, those belonging to the lower middle class and below, whether engaged in agricultural works or small jobs and businesses, are not only down-to-earth honest but also highly friendly and hospitable. As a matter of fact, Bengalis in general have a legacy (and the reputation) of being hospitable. Bangladeshis have a kind of wisdom often beyond their educational and professional calling. Most of them may turn out to be unduly volatile and abrupt at times, but they are generally hardworking, kind, and open minded. Our people in the rural areas and the countryside have a bond of brotherhood that binds them together during good and bad times.


The people of Bangladesh have a unique history of bravery. Our ancestors put up a heroic resistance against the colonial rulers time and again. Bangladeshis and Bengalis also have the legacy of staging crusades against all kinds of social injustices and oppression by autocrats and dictators alike. Our war of liberation bears testimony to this fact.


Our love for our mother tongue is famously known and respected all over the world. It has in turn enhanced our image worldwide. UNESCO has recognized 21st February, our language martyrs' anniversary as the International Mother Language Day. People of this country, the majority of them, are simple and as good as they come anywhere in the world.


At times, however, they tend to be unduly emotional and euphoric and often get embroiled in activities that are unwarranted and rather destructive. It is my impression that the people of this country are slowly and surely stepping into a kind of mob culture. The kind of picketing on the streets and violence they indulge in bear testimony to that. It is however important to recognise violent street protests are no longer confined to third world countries alone; one sees violence of no less magnitude in France and India too, including some north American states. In this context, I recall a statement once made by one of the expatriate consultants working for a collaborative project here in Dhaka: "You see, Shamsher, when I leave Bangladesh what I shall most miss is the chaos and confusion".


One of the other unique features of Bangladesh is that its poor, the disadvantaged and downtrodden (even the day laborers who work in urban areas or those engaged in agricultural work) are as politically conscious as anyone else in this country. 


Against this backdrop, politics and political management in Bangladesh have so far been far below the desired level. Ours is a parliamentary democracy and the government consists of a party winning two thirds of the 300 seat- parliament through direct franchise. Some thirty nine years have passed since we gained our independence, but we are yet to duly institutionalize democracy and democratic practices, although there is much talk about it within the parliament as well as in the media (particularly through talk shows).


One of the major reasons for the regressive mindset of political leadership is the people in general because they time and again vote for the same set of individuals whose track record has already been tested and proven, good or bad. More than most of the time an elected party and its lawmakers have been self-serving and fiercely partisan. Things have been further marred by periodic interventions into civil administration and political management of the country by some over ambitious and powerful extraneous elements.


On the other hand, what has further complicated the scenario is the absence of a democratic culture within the political parties. The present election commission however is trying to address that issue through a standardized RPO for political parties to follow. In the meantime, there is much to be said about the functioning of the election commission itself. In order to bring about a qualitative change in our political culture, the commission needs to be further empowered and turned into an independent, effective and powerful organization.


We should take lessons from the operational legacy of the election commission of our neighbor, India, the largest working democracy in the world. There are yet a number other historical factors that have slowed down the growth and development of democracy and democratic practices in our country. First, one has to remember that Bangladesh was born through an armed struggle, the scars of which still continue to haunt the nation. Besides, even to this day, our political parties and our leadership continue to exploit the situation to serve their partisan interests. I do not wish to go into the details of all this; they are murky and highly controversial and likely to deviate from my focus on the subject I am presently deliberating.


Second, the fallout of all these practices has left the people of the country fragmented and confused. Not only that, they have given birth to controversies and conflicts that are having a negative impact on our overall economy and development interventions.


Third, there has to be a drastic change in the way our parliament functions. Our lawmakers and the political leaderships have to understand that it is not only a platform for introducing bills and passing them into laws, but that the parliament is also the symbol of the voice of the people. It should not be used or abused for narrow partisan interests, no mater how noble they might be.


Fourth, and finally, there has to be a change in the way our lawmakers deliberate on the floor of the parliament They should be more civil and moderate in the way they conduct their business. It is my observation that often much valuable time has been lost debating and deliberating on some petty issues or advancing a personal agenda.


Admittedly, during these 39 years since our Independence we have been underachievers; however, I believe that there is no cause for despair. Bangladesh has all the potential to turn into a fine country--both economically and socially--in the next 15/20 years, provided we come to a consensus and rise above petty conflicts among the various segments of our society. What we also need is to be more disciplined in our approach to life as a whole.


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E-mail: caa342@yahoo.com


 Agricultural financing system in Bangladesh: Facts and facets
Haradhan Sarker
A growing number of World Bank economists are now convinced that most of the poor nations need a healthy farm sector as the basis of a robust economy (Source: An article published in the Wall Street Journal, June 10, 2008). In the 21st century, agriculture continues to be a fundamental instrument for sustainable development and poverty reduction (World Development Report 2008). This is obviously true for a poor country like ours. As voiced in National Agriculture Policy Draft 2009, agriculture is considered to be the dominant economic activity in Bangladesh and regarded as the lifeline of her economy.
A National Strategic Plan (NSP) is a prerequisite for accelerating the sustainable growth of agricultural production and productivity while an effective agricultural financing system would constitute an integral component of NSP for agriculture including all the sub sectors. Little is known about detailed policy framework on the prevailing agricultural financing system from the existing National Agriculture Policy (Draft-5) June 2009.
As observed from several studies, our agricultural sector is characterized by the lack of small and medium farmers' access to adequate formal credit at an affordable cost, and to full financial intermediation services, and the poor size of infrastructural fund impeding balanced as well as accelerated agricultural development. World Development Report 2008 categorically reveals the fact that financial constraints are more pervasive in agriculture than in many other sectors.
Designing an effective agro-financing system is of critical importance to overcome the financial barriers to the growth of production and productivity in the agricultural sector. With a system approach to financing, we can pave the way for forging ahead in a desired way. Unfortunately, we are yet to be blessed with a minimally workable agricultural financing system. However, for system designing purpose, the following facets to agricultural financing admit of careful consideration:
01. Concepts and forms of agricultural financing: The term 'credit' rather than financing or finance is widely used. Farmers are provided with financial support in many forms. They embrace loan /credit (cash or kind), fund, finance, subsidy, public spending and grant and aid. Financing refers to all of them despite their differences in both denotations and connotations, but crystallization of all these terms is necessary for practical reasons. Financing is a broader term than credit. The whole concept of financing involves fund required for total investment (both working capital and fixed capital) for carrying out agricultural production. This capital is composed of fund not only for production but also for consumption, extension services, research, training, disaster management, insurance coverage, etc. Farmers, government/ govt. agencies, banks, NGO-MFIs, BRDB, BSBL, credit unions, individuals are all engaged in financing the agricultural sector in either refundable or non-refundable form. The purposes, terms and conditions of financial flows vary according to the practical concept and form of financing. So they need to be defined operationally for policy making as to designing the system of financing. The concepts of agricultural and rural finance have been merged and thus made blurred undermining the reinvigorated importance of agriculture and proper financing therefor.
02. Time frame of Financing: Period of repayment, installment size, and installment interval are important variables which should be placed subjected to appropriate regulations considering the nature and purposes of financing and the timing of income generation. It is reported that some NGO-MFIs extend credit to agricultural sector but the borrowers are compelled to repay on weekly installment basis regardless of the time and the extent of output and income generation. How they procure fund to repay loans claims for an empirical investigation. Fixed capital components, their timing of funding as well as that of repayment along with the components of working capital financing also have to be ascertained. Time frame is really a very important issue to be addressed given the borrowers' size and nature of operations, income generating time and capacity. There are cases where some borrowers are reported to take loans from other informal sources or NGO- MFIs to repay the weekly installment dues. It is, therefore, the repayment-timing factor that matters a lot to presume the dynamics of the multiple debt-trap in which a large number of poor loanees are caught.
03. Sub sectors for financing: Our ministry of agriculture formulates NAP policy for the crop sector only while the ministry is to be responsible for the whole agricultural sector. Agricultural sub sectors are not considered together for the purpose of financing. Here lies the lack of synchronization among the sub sectoral activities as well as programs. This being a great shortcoming of NSP, financing a poor farmer/farm only for a single sector (for example: only crop financing or fishery financing or livestock financing) is not usually viable. Therefore a balanced approach to the sectors is very crucial. Here we may consider composite financing, financing more than one sub sector at a time on a project basis.
04. Cost of Financing: It is a very important facet of financing because it determines demand for and use of credit and the profitability of agricultural production and productivity. Cost of credit calculation is not so simple. Various concepts are there such as nominal rate, effective rate, overall cost rate. The components of costs of financing include interest cost, processing/transaction cost, opportunity cost, etc. Reportedly, the farmers of Bangladesh still have to bear the exorbitant cost of fund and as a result, most of them fail to reach the breakeven level of production. Informal market is still dominant in rural areas and they are preferred as their transaction cost is low and credit is easily available although effective interest rate is much higher than that of formal sources. Policy guidelines regarding the ways and means of minimization and regulation of effective overall cost of credit are essential.
05. Purposes of Financing: The following broad purposes of fund utilization should be considered and financing needs to be tagged with the specific purpose and also there should allow for a variable cost of fund depending on the purpose and the size of farm :
a) Production (fixed and variable inputs) b) Consumption / land buying ,development , & lease rental c) Disaster Fund Accumulation d) Irrigation infrastructure
d) Research & Development e) Storage f) Extension Services/training/education
g) Training of farm holders h) Disease Control
i) Electricity/machinery/ equipment j) Pond digging/ reforms/working capital)
Fund allocation policies compatible with the stated purpose should be framed up .
06. Size and nature of farms: It is very important to define the size of farms/farmers: small, medium, and large based on the type of crop, fish, dairy, poultry, nursery, etc, production capacity, land ownership, sharecropping pattern, investment size and tenancy. Credit /finance needs are to be assessed on those bases as it is reported that small and medium farms dominate the agricultural sector but are deprived of financing.
07. Idetifying institutional, individual and functional sources of financing: They include farmers/ sharecroppers/ farms, government, NGO-MFIs, BKB, RAKUB, BSBL, CBs, input dealers (fuel, fertilizer, Insecticides, Seeds, etc) irrigation service providers, tilling service providers, advance sale of crops, BRDB /other government agency, moneylenders, friends and relatives, diversion of loans taken from NGO -MFIs, cooperative societies, foreign donors, warehouse or cold storage owners, wage earnings . Policy guidelines concerning the terms and conditions, cost of fund, programs and role of each source of financing are very essential. Complete and classified statistics on all these sources of agricultural financing are not available now.
08. Credit /funding Programs, Policies, Processes, Terms & Conditions: An outline of
credit /funding programs, policies, processes, terms & conditions of each formal source and also the predicted as well as required equity investment level of farms/farmers are to be given in NSPA since they are the vital components of financing system. Advance information /report from all financing entities concerned needs to be gathered. In this regard the programs and policy framework of Bangladesh Bank are also to be considered and integrated with the overall financing system to be inserted in NSP for agricultural sector.
09. Monitoring & Evaluation: A subsystem of monitoring & evaluation of plan, policies and programs on agricultural financing must be devised to ensure proper implementation.
11. Farm Financial Management Practices: Agricultural project making format and basic financial decision making tools should be identified and proper training for carefully selected farmers/farms should be designed and imparted on a time plan basis. Hence, policy guidelines are needed.
12. Approaches to channeling fund to farms: How the fund will be provided to farms is a highly controversial issue. This channeling may be direct to individual farmer/farm or through groups or through cooperatives. Pragmatic decisions are needed and to be incorporated in NSP in light of the experiences from home and abroad.
13. Institutional model or framework to channel fund to farms: Policy directives on What type of institutional structure or framework will befit the direct and indirect needs of farmers and all the subsectors of agriculture are to be formulated .Cooperatives, BKB ,BSBL, CBs, or a special institutional framework or any other type of hybrid institutional set-up may be taken into consideration with due emphasis upon ensuring good governance . However, the criteria for a viable and agro-friendly rural financial institution need to be determined in designing the system.
14. Credit Recovery and Recycling of Investment: The issues regarding loan recovery system, calculation of recovery rate, reinvestment of surplus and its incentives, recovery, new credit, and creditworthiness are to be considered as there are many reports of low recovery of agricultural credit.
15. Rural Financial Intermediation (Deposit from and Lending to farms): Rural financial intermediation status, performance, prospects and challenges must be taken into account. Only lending is not viable. It is claimed that smallholders also can save or they should be encouraged to save so that their equity and loanable fund can be enhanced. We do not know from the current published statistics how much deposits flow from the different sizes of farmers or farms. It is also necessary to determine whether lending and deposit should be tied together or not. This facet should have its proper place in the agricultural financing system to be developed.
16. Credit Needs Assessment: The credit needs vary from farm to farm and by type of agro-activity. There are also regional differences in terms of farm practices and differentiated input pricing. So a practical and flexible method or a specific formula should be devised to accurately assess the actual needs of farmers/farms on a case-by-case basis to minimize the demand gap. Very importantly, unmet demand for credit is highly costly in terms of loss of output and income. This is one of the most critical facets of agricultural financing in our country. There should be provision for regular assessment of loss of production resulting in a huge deprivation of farm income.
17. NGO-MFIs and agricultural financing: The role of NGO-MFIs in agricultural financing should be defined and subjected to regulations. They should be requested to regularly publish detailed reports /statistics on agricultural financing. Bangladesh bank may monitor this aspect for better coordination as well as policy implications. Classified statistics are now hardly available from the publications of NGO-MFIs. Weekly repayment obligation for agricultural credit extended by them is extremely impractical and incompatible as discussed earlier. All these sensitive issues should be weighed properly.
In fact, agricultural financing efforts, programs, policies should be systemized to smoothen the way to sustainable growth of production and productivity in the farm sector of Bangladesh. This article is devoted to contributing towards the development of an effective system of agricultural financing as an integral part of National Strategic Plan (NSP) for agriculture.
(The writer is a PhD Fellow at Jahanginagar University)



For those who have nothing
Md Tabibur Rahman
Approximately 30,000 million dollars annually would be enough to save the world from poverty and hunger, according to the UN Food and Agriculture Organisation (FAO). But, there is never enough for the have- nots. FAO states the central banks of the USA, European Union or EU, Japan, Canada, the UK and Switzerland poured 180 billion dollars to save private banks. The US alone spent 13 trillion dollars, until September on its rescue efforts.
Facing such a situation, we are confronted with two alternatives: to be a demagogue or to be a realist. The world's demand for bread is greater than for plastic surgery. And the demand for the treatment of malaria is greater than for apparel of haute couture. For suggesting the holding of a referendum on whether the people in any country would support the use of monetary reserves to save lives or to save banks, I one would be accused of being a demagogue. But for supporting stimulus packages for banks and insurance and opposing feeding the world's hungry children, or giving aid to victims of a Tsunami or a SIDR, or curing the dengue, the same person will be considered a realist.
Unfortunately, one has to accept the world as it is. And the world is accustomed to the reality that there is never enough for those who have nothing and that everything is for those who have everything. FAO estimates that a fraction of 13 trillion dollars would be enough to eliminate hunger from the world for 460 years.
Would not a misery-free world better for everyone, including the banks?
Besides poverty, climate, a new concern, is endangering the planet. A exponential increase in pollution due to human action changed global climate, affecting all mankind. Depletion of key resources like fresh water, genetic resources, forests, fisheries and wildlife is aggravating environmental problems.
Recently I had an opportunity to discuss this issue with Professor Dr. Manfred Arthur Max-Neef at an academic seminar in Germany. A Chilean economist and environmentalist, known for his human development model based on fundamental human needs, Max-Neef started his career as a teacher of economics at the University of California at Berkeley in early 1960s. He won the Right Livelihood Award, known as the Alternative Nobel Prize, for his work in poverty-stricken developing countries.
The root causes of quadruple crisis, afflicting the world include rapid economic growth at any cost, stimulating corporate greed, uncontrolled use of fossil fuels, consumerism, replacement of traditional cultures with industrial models, depletion of global resources and unchecked population growth.
All these factors could dangerously degrade environment involving high social costs. Global warming is causing loss of soil productivity. It is also responsible for rising sea level, desertification and frequent storms and flooding, which create social and economic problems, especially for the poorer countries.
The crisis of humanity facing the world simply humbles its economic and financial crises. Possibly never before in history so many crises afflicted humanity simultaneously. Earlier, it was easier for the world to tackle a crisis because all the problems would not come at a time to create a monumental challenge.
According to Prof. Max-Neef, with whom a group of researchers including myself met in Germany in September 2009 to discuss the problems, possible solutions could be found in new development models, that accept the limits of the carrying capacity of the earth. The approach would require moving away from efficiency to sufficiency and well-being. It would also be necessary to end the existing economic imbalances and inequities. Without equity, no peaceful solution would be possible. The world has to replace the dominant values of greed, competition and accumulation with solidarity, cooperation and compassion.
The paradigm shift requires turning away from economic growth at any cost. Transition must be towards societies that can adjust to reduced level of production and consumption to favour localised systems of economic organisation. Each society needs to look to inward again.
The existing economic models and systems, though challenged in debates, continue to create problems for the world.
Theorists created half a dozen myths to sustain globalisation as the dominant model of economic development.
The myth number one brainwashed the world with a contested but much propagated idea, "Globalization is the only effective route to development".
Between 1960 and 1980 the majority of the developing countries, especially in Latin America, adopted the principle of "import substitution", which allowed a significant industrial development. During that period per capita income grew in Latin America by 73 per cent and in Africa 34 per cent. For 20 years, Latin Americas could achieve an annual economic growth of 6.0 per cent. Economic growth in Africa declined by 23 per cent over the same period.
The period of 1980 - 2000 saw a replacement of import substitution by deregulation, privatisation, elimination of trade barriers to open economies to foreign investment. Inward-looking economies started looking outward. For the poorest countries, the result was a decline in per capita growth from 1.9 per cent a year from 1960 to 1980 to 0.5 per cent from 1980 to 2000. The middle income countries did worse, with their annual growth declining from 3.6 per cent to less than 1.0 per cent after 1980. The economies of the world's wealthy countries also slowed down.
The economies of South Korea and Taiwan, the examples of development cited to developing countries, grew during the era of trade barriers. The big banks under state ownership and export subsidies of patents and intellectual property created no problems for South Korea and Taiwan to reach where they are now. Their restrictions on capital flows including direct foreign investment (FDI) also did not prove to be areas of problems. No country would be allowed to replicate the strategy now. The regulations of the World Trade Organisation (WTO) and the International Monetary Fund (IMF) gave no headache to South Korea or Taiwan.
The 'myth number two' created by the theorists of globalisation states, "Greater integration into the world economy is good for the poor." It requires the poor countries to adapt to the rules and restrictions created by international organisations, which promote globalisation. The rules prompt the poor countries to divert human resources, administrative capacities and political capital away from education, public health and industrial capacity building.
In 1965, the average per capita income of the Group of Seven (G7) countries was 20 times that of the seven poorest countries. In 1995 it became 39 times larger, and now it is over 50 times. In practically all developing countries that have adapted to rapid trade liberalisation, the income inequality has increased, and real incomes have declined for people by between 20 and 30 per cent.
For more than 80 countries the real per capita income fell from where it was one or two decades ago. The paradox is that the countries that have fully integrated themselves into the global economy have been more marginalised.
The 'myth number three' states, "Comparative advantage is the most efficient way to ensure a prosperous world". It has become a principle of modern politics not to question the much published need for global free trade. To doubt its benefits is an act of heresy. However, in spite of its supposed greater efficiency, compared with other systems of economic organisation, global free trade is notoriously inefficient in real terms. By giving greater priority to large scale production for export over small and medium scale production for local needs and by generating competition between communities, consumer product prices could be brought down but at an enormous social and environmental cost.
There is still a dominant belief about the benefits of adhering to comparative advantages. But, according to the model of David Ricardo, the creator of the concept, the system functions as long as there is no transnational mobility of capital. Internally, capital searches for the most adequate niche that gives it the comparative advantage. However, when capital is granted full transnational mobility, it will look for countries that offer absolute advantages by way of lower wages and taxes and less of environmental regulations. "When capital is transnationally mobile it will seek its absolute advantage by migrating to countries where the environmental and social costs of enterprises are lowest and profits are highest. Both in theory and practice, the effect of global capital mobility is to nullify the Ricardian doctrine of comparative advantage. Yet it is on that flimsy foundation that the edifice of unregulated global free trade still stands", wrote John Gray in his book "False Dawn: The Delusions of Global Capitalism", published in London in 1998.
The example of Nike Corporation, the footwear makers, illustrates the point. To remain competitive, it needs to reduce its standards. So, Nike moved to Indonesia where, its contractors say young girls earn no more than 10 to 15 cents per hour for shoe making.
"Most of the production is outsourced from Indonesia, where making a pair of Nikes costs at about 5.60 dollars, but sells for $73 to $135 in the US or Europe. The workers, housed in company barracks, have no right to trade union. Overtime is often mandatory. And if there is a strike, the military may be called in to break it up. The $20 million that basketball star Michael Jordan reportedly received in 1992 for promoting Nike shoes exceeded the entire annual payrole of the Indonesian factories that made them."
Is the situation in the ready-made garments industry in Bangladesh any different?
"More Globalisations means more jobs", is what 'myth number four states. But in 2000 there were 150 million unemployed in the world and 1,000 million under-employed, show the statistics of the International Labour Organisation (ILO). It means one third of the world's working force remained unemployed or underemployed under globalisation. The situation could deteriorate, predicts ILO.
Outsourcing, a necessity for the big corporations to remain competitive, generates unemployment in the places of origin, and underemployment in the countries of arrival.
The 'myth number five about globalisation proclaims, "The World Trade Organisation is democratic and accountable."
Many decisions affecting peoples' daily lives are no more taken by local and national governments. Instead, the decisions are taken by a group of unelected trade bureaucrats sitting behind closed doors of Geneva-based WTO. The WTO bureaucrats are empowered to decide whether or not the European Union (EU) has the right to ban the use of dangerous biotech materials in the food it imports. It is also for the WTO to decide whether or not people in California can prevent the destruction of their last virgin forests, and whether or not European countries have the right to ban cruelly-trapped fur.
The WTO rules allows a transnational corporation to force host country to replace or amend its laws and regulations to suit its investment.
The WTO rules are silent about workers' right.
Though WTO has no rules it prescribes what a developing country has to do with its child labour. Everything, in its by-laws, is shaped to provide advantage to corporations. During the Uruguay Round of discussions which created WTO, the controversial issue of intellectual property rights, for instance, was put on the agenda by 13 major companies including General Motors and Monsanto. In the negotiations that followed, 96 out of the 111 members of the US delegation working on property rights were from the private sector. It is no wonder that the final agreement serves the corporate interests and undermines poor countries' access to knowledge and technology. A dramatic case in point is that poor countries are not allowed to produce their own inexpensive generic medicines. They are forced to buy the medicines produced by pharmaceutical corporations at high prices. The consequences have been particularly tragic for HIV patients in Africa as the corporate prices are far beyond their purchasing power.
In short, the WTO should be recognised for what it does, not for what is said to create a positive image for it. It shows the interests of the corporations.
Myth number six states, "Globalisation is inevitable", so that the people across the world accepts it as a fate accompli.
Renato Ruggiero, former director general of the WTO, used to say that "trying to stop globalisation is tantamount to trying to stop the rotation of the earth". Bill Clinton maintained that "Globalisation is not a political option; it is a fact". Tony Blair identified globalisation as "irreversible and irresistible". Margaret Thatcher glorified the WTO stating, "there is no alternative". All the champions took a fundamentalist approach to defend the WTO, in order to make the model 'a pseudo-religion'.
Alternatives are obviously possible. The point is that the WTO as the dominant model emerged despite opposition from the majority of countries due to their reluctance to give up the control over their economies. Of course, any condition that originates in political decisions is obviously reversible.
The agreement that any change would mean chaos is, of course, absurd. A change to facilitate increased re-localisation of economies would be an improvement. It would humanitise global economy.
A possible alternative could be a new economy based on five postulates and one fundamental value principle proposed by Max-Neef.
Postulate1: "The economy is to serve the people and not the people to serve the economy"
Postulate2: "Development is about people and not about objects".
Postulate3: "Growth is not the same as development, and development does not necessarily require growth"
Postulate4: "No economy is possible in the absence of ecosystem services".
Postulate5: "The economy is a sub-system of a larger and finite system, the biosphere, hence permanent growth is impossible".
Value Principle: No economic interest, under any circumstance, can be above the reverence for life.
To assume that an economy based on these postulates is not feasible is absurd. Already, many countries adopted it at the micro level.
Exactly the opposite is that the world now has as a system.
The human-scale economy could facilitate the transition from the existing economic system based on greed, competition and accumulation, to one, based on solidarity, cooperation and compassion. The transition could bring greater happiness to the marginalised, as well as the champions of globalisation, responsible for the marginalisation of many.
Some of the new rules may be the following:
1) Monetary localisation, so that it flows and circulates as much as possible in its place of origin. It can be shown by economic models that if money circulates at least five times in its place of origin, it may generate a small economic boom.
2) Produce locally and regionally everything possible, in order to bring consumption closer to the market.
3) Protection of local economies through tariffs and quotas.
4) Local competition in order to curb monopolies.
5) Ecological taxes on energy, pollution, and other negatives. Now people are taxed for good, and not for their bad acts.
6) A greater democratic commitment to insure effectiveness and equity in the transition towards local economies.
Continuation of the existing system would facilitate concentration of wealth to increase poverty.
Already a billion people live in hunger and poverty and three billion live with less than 1.5 dollars a day. The 400 richest US Americans accumulated a fortune of 1.75 trillion dollars. Each of them has an average of 3.9 billion. The monetary wealth of these people is more than twice the GDP of Sub-Saharan Africa, home to 800 million people. Globalisation would continue to widen the rich-poor gap to pauperise many more people across the world.
Today´s rich do not contribute to the growth of the real economy, like in the days of Carnegie, Rockefeller and Ford. Now fortune is made by destroying the real economy.
Of the world's 400 multibillionaires, 65 come from finance, 51 from speculative investments, 36 from entertainment, 35 from real estate speculation, 30 from computer technologies, 28 from gas and petroleum, 20 from retail, and the like. Only five out of the 400 are in industrial production. It demonstrates the transcendental characteristic of globalisation, the dominant paradigm. It generates capitalists, who are no better than social parasites.
A drastic change is not only urgent, but also inevitable!!

A development planner, the writer is now a PhD student




Lighting up remote villages with solar power
Mehdi Musharraf Bhuiyan
Sleek smart solar panels lighting up the remote village huts now seem not to be a distant dream but the high procurement and installation cost involved in setting up such panels stands in the way of using the untapped solar energy to mitigate the age old power crisis in rural Bangladesh.
According to insiders in the renewable energy sector, it costs around US$ 440, which is equal to almost Tk. 30,000.00, to set up a complete Solar Home System (SHS), which can help run the quintessential electronic devices like four electric bulbs, one television and one mobile charger at a time.
However, experts have opined that that hefty amount sounds reasonably out of reach for majority of the population of a country where the percapita GDP now stands at US$ 620 while around 40 per cent of its population live under the poverty line.
"Much of the target population who would likely avail the solar energy solutions live in the off-grid areas- rural areas with no access to grid electricity," said an insider in the renewable energy sector with wide experience about the solar power solutions.
"Therefore, the income and actual affordability of that particular segment have to be kept in mind to ensure their easy access to this solution", he added.
The potential of solar power as a possible energy solution was put forward as only 40 percent of the population has access to electricity against the backdrop of frequent loadshedding and power outage while demand for electricity is growing by over 500MW a year.
Since 1997, there have been meager initiatives at public and private levels to tap the potential of solar energy but the serious attempts started from 2003 when a number of private ventures started to receive government funding and support.
Homegrown renewable energy firms like Grameen Shakti and Rahimafrooz along with a number of smaller entities have come forward with innovative solar power solutions in the recent times to meet the acute energy shortage in urban and rural areas.
According to statistics, the number of installed SHSs in the country went up from less than 50,000 in 2004 to almost 300,000 in 2008.
From the government side, the state-run Infrastructure Development Company Limited (IDCOL) initiated numerous renewable energy projects to finance and promote Solar Home Systems (SHSs) under its REREDP programme.
"IDCOL's initial target in 2004 was to finance 50,000 SHSs with financial assistance from the World Bank and GEF by the end of June 2008", said an official of the non-bank financial institution.
"The target was actually achieved by September 2005, 3 years ahead of schedule with spending of US $ 2.0 million, for below the estimated project cost," he added.
"Now we have a revised target of financing 200,000 SHSs by the year 2009 with additional assistance from the World Bank, KfW and GTZ".
The government has already mooted a plan to install one million Solar Home Systems (SHSs) in the country by the year 2012.
However, identifying the high setup cost as a major backlog, the insiders also observed that the high longevity of the solar panels at the end of the day has been proven to pay off the huge investment in the long term.
"Much of the solar panel equipment at the moment comes with a 20 year warranty," said an official of Grameen Shakti, the leader in the renewable energy sector.
"Statistics show that given the amount of energy that is saved through solar power, the return on investment comes within three years", he added.
Industry insiders also observe that recent private sector initiatives from various local and joint venture entrepreneurs to manufacture solar panels locally can go a long way to reduce the cost of such equipment in Bangladeshi market.
"The government has already waived the duty on import of solar panel equipment - now, if such panel equipment can be manufactured locally, the price and setup cost would come down a great deal automatically", said an expert with Rahimafrooz Energy, another leader in the sector.
"We are already providing soft loan facility for procurement of a solar plant" said an official of IDCOL, "Apart from that, the government is also offering a substantial amount of subsidy on the price of solar panel to reduce the actual cost", he added.
IDCOL promotes its Solar Home Systems (SHSs) under its REREDP through 15 partner organisations (POs). Its Solar Energy Programme is now claimed to be one of the fastest growing renewable energy programmes in the world.
Earlier this year, a local company named Star Group struck a joint venture deal with an expatriate Bangladeshi to set up the country's first solar panel plant to provide a backbone for the fast-growing renewable energy sector.
The government is also playing its part in such a trend. It has already been reported that the Ministry of Education would ask all the non-government and private schools and colleges in the capital city to install solar panel on an effort to ease pressure on grid power.
Such moves, the industry insiders believe, would not only mitigate the energy shortage in the country, but would also tap a highly potential manufacturing industry based on solar panel equipment in the country.
Recently, there have also been some vigorous initiatives within the country's telecom sector to use solar power as a possible energy solution. According to some statistics, this hi tech sector accounts for less than 1 percent of total carbon emission in the country.
Leader in the telecom sector Grameenphone has already started adopting solar energy solutions for its base stations, an official of the company said. Beginning from 2007, two of its hybrid solar-powered base stations at Habiganj went on air.
"In 2009 alone, GP has set up 12 more solar -- powered sites and our plan is to run all of the 200 off-grid sites with solar panels by 2011, which would save 1.2 million kWh of electricity each year amounting to reduction of 700 tonnes of CO2", the official added.



Hurricane!
Imtiaz Firdousi
(as told to Ishrat Firdousi)

May 29, 1991, at Cox' Bazar started out bright and sunny betraying little sign of the calamity to come. We had a noisy breakfast along with the touring Unicef team who left soon afterwards.
At around 10:00 the weather started to change. The sky had grown darker and there was as light drizzle as thunder booming in the distance. Then the breeze started to blow strongly. Some auto-rickshaws with loudspeakers were announcing something. It was the cyclone warning. They were asking people to shift to safer shelters.
Rain was falling steadily when we reached the Biman office. The plane was still on schedule, so we went to grab some lunch. When we returned to the Biman office, they told us the flight had not been cancelled (as far as they knew!). So, we trekked back to the hotel to check out.
When we returned to the airport a little after 4:00 in the afternoon, it was windy and raining heavily. The wait at the lounge was uneventful. An hour and a quarter later they finally declared the flight cancelled. Cursing our luck we returned to the Saibal.
There weren't too many guests at the hotel. Besides the five of us, there was a foreigner and his wife and another Bangladeshi couple with a child. Our party got two rooms. It continued to rain heavily as the wind increased. After putting away our stuff we settled down in the veranda (behind us were the rooms and beyond that, the sea). By now the sky had grown really dark but we didn't give it much thought and sang and traded jokes.
Suddenly, the electrical power went off plunging the place into an inky blackness. The radium-enhanced digits on my watch told me it was 6:45. The wind howled as the driving rain swirled around us and in the lightning flashes we could see the trees swaying violently. We went in to grab some dinner but were back on the veranda and continued where we had left off.
Suddenly, there was a crash! It was a window in one of our rooms. A member of the hotel staff arrived to register his protest. We were certain we had closed and latched all the windows.
It was no longer possible for us to hang out in the veranda as the wind and the rain were now lashing us from all sides. We went inside and settled down.
I could not sleep and listened to the sound of the wind and the rain. Iqbal was dozing on the other bed. Murad was possibly gossiping in the other room. At around a quarter after ten the wind suddenly went into top gear. Within fifteen minutes its speed must have gone up by 100 kph! I felt the building starting to shake and shudder under the onslaught! I sat up. Yes, the building was shaking all right. It was pitch dark with flashes of lightning. How much more such battering could the hotel take?
I shook Iqbal awake. He was an engineer. I rebuked him for sleeping while the world was coming to an end. "Don't worry," he said after a while, still a little groggy. "The structure will hold. Try to sleep."
I couldn't imagine how anyone could sleep on a night like that. I got up, lit a candle and placed it in a corner of the room safe from any wind. Then I went to a window and peered out towards the sea. There was just a thin wire mesh between the curtains and the glass panes. There were little cracks and holes in the window frame and the wind that raged outside blew in through those fissures in the process producing strange noises ranging from shrill whistling to trumpets to the deep groan of horns. Then I noticed a new sound, more ominous than the rest. It was the sea. The sea was angry. I had never heard such a sound before. It was a deep rumbling, as if the sea could not contain its fury any longer.
I didn't feel safe standing there, so I came back to my bed. Lightning flashed. Suddenly, with a noise like a rifle shot, a large piece of glass pane exploded in, sliced through the mesh and landed on Iqbal's bed! Luckily for him, he was under a thick blanket. He woke up with a start.
"What if the building doesn't hold," I inquired over the noise, trying to sound a matter-of-fact but failing "What would be the safest place in the hotel?"
"Under the staircase or a lift shaft, if they have one," he said grimly (this time he was wide awake). "Our best bet is the reception area."
We decided to check the place before we took the others down and gingerly opened the door, just a fraction, when it swung violently and crashed open! Wind rushed into the room howling like demons from the depth of hell. Our combined efforts failed to close the door again, so we left it and somehow made our way down to the reception.
We were surprised and a wee bit annoyed to discover that the other guests were already hunkered down comfortably on sofas and on the carpet. They had not even bothered to call us. Some members of the hotel staff were also there. All had worried looks on their faces.
We went up again to get the others. The wind in the corridor was stupendous. Remembering what had happened earlier with our door, I turned the door-handle of the other room carefully. I had just managed to open it. All three windows facing the sea exploded into the room. Someone screamed. The building rolled as if in an earthquake. Lightning flashed and the curtains flapped maniacally. In the flashes I could see the row of trees, hazy shadows in the driving rain, bent to an impossible angle. The roar of the sea could be heard over the wind and the rain. We grabbed blankets and with the rest of our companions made it down to the ground floor.
From somewhere, Iqbal conjured up a battery-powered transistor radio and had his ears glued to it. The signal was faint but he could hear the announcement: a hurricane was approaching our coast…move to safer places…maximum wind speed could exceed 250 kph…and there could be tidal surges of over twenty feet or more…"
I picked up a newspaper on the table. It was the first one I had looked at seriously in the past four days. The hurricane was going to hit us tonight! I felt a chill up my spine as the awful realisation sunk in. I turned to Iqbal.
"Up to what speed of the wind can a building such as this withstand?"
"180-200 kph, maybe more, depending…" his voice trailed off.
Someone was giving the azan, normally the call for prayers but also given during calamitous events. It sounded faint over the roar of the sea, the wind and the rain. Then there was another. In minutes, the calls of the azan filled the air mingling with other cries. It was a little after 11:30 pm. Suddenly, I noticed a face pressed against a windowpane. It was one of the guards I had befriended earlier. He was shouting something and gesticulating wildly. I opened the door and stepped out. The man was visibly agitated.
"Sir!" he shouted over the howling wind. "Sir, the sea is coming."
There was something in his voice that was beyond fear, beyond reason. I managed to reach the lawn for a better look. I saw a scene I will remember for the rest of my life. In that weird light of unearthly flashes, in the driving rain and hurricane wind, a wall of foam, 6-7 feet high stretching from horizon to horizon (width of the sea) was rushing in! It was still about 400 yards away and I stood and stared petrified for a few seconds. Before I could react I was ankle deep in cold water (which at first I thought was rain). The guard and I scrambled for the door.
Once inside I told Iqbal what I had just seen and that we had to move to a higher place, perhaps the top floor. There was no time to lose. By then a dozen others had materialised from other parts of the hotel and together, some twenty of us, started making our way to the top floor. Suddenly, a large pane of glass broke free just ahead of us and fell on the side of the staircase smashing into pieces! The ladies screamed. Luckily no one was hurt.
At that moment all I could think of was this is it! This is the big one! For an odd moment I thought of the movie 'Hurricane'. Thankfully, there was no panic in our ranks. Not yet, anyway. We assured ourselves we were as safe as could be. For the time being. We were all huddled in a corner of the top floor. There was just a solitary door leading to the roof.
People prayed as the elements raged all around. I decided to try and get some bed-sheets, to tie ourselves to the railing or something in the event we were struck by the worst. At least our mortal remains would be found. I also wanted to see the level of the water.
It was a foolhardy decision and it's a wonder I wasn't swept off my feet by the titanic wind or hit by some flying object. The second and first floor corridors were wet and strewn with leaves, twigs and pieces of shards. From one of the rooms I was able to grab some sheets and a few blankets as well. Then, I hazarded a look at the ground floor. The place was flooded and water had reached halfway to the ceiling. I returned to our refuge.
Some more people had joined the group. I deposited the sheets and blankets, then decided to continue my investigation-vigil and went back down.
Some of the guards were also there. As the wind raged in the night the guards kept flashing their lights on the water below, the beams crisscrossing each other in the darkness.
Pitiful cries from near and far rent the air of that terrible night. "Oh Allah, save us! Help us, oh Allah!" Some desperate voices were cut off so abruptly and with such utter finality that it left no doubt in our minds what was happening out there. I returned to the top floor.
It was a little after midnight and we continued to pray in hope and despair. I decided to go down again and borrowed a flashlight from a guard.
The rooms looked terrible. Everything was wet. Furniture was overturned and debris was everywhere. The windows were gone and the curtains were fluttering violently in the raging wind. The rows of pines outside, what was left of them above the sea line were being battered by the wind and the sea. I was told later that it was those trees, between us and the sea, that had absorbed part of the assault thus sparing the hotel and us.
The hurricane continued with unabated fury. A window broke somewhere in the building. Outside, what looked like three vehicles were struggling slowly up the main road. We learnt later they were trying to pick up survivors. One of the drivers was the same person who had brought us from Chittagong.
We had plenty of cigarettes, matches, lighters and candles. We spoke to each other with unusual candour. It was a moment of great emotion and oddly, clarity. Would we survive this tempest? Would we see our loved ones again? We huddled and we prayed. And we talked. No danger seemed improbable. What if some of those monster-100-foot waves hit us? Surely, not an impossibility. Our hotel was the nearest structure to the sea with just the pines between us.
A little after 2:00 am I came down to see the water level. My heart skipped a beat. The debris on the water below was slowly (but surely) moving out, seawards. The water was receding. But the awful wind continued.
Fifteen minutes later I came down again. Yes, the water was definitely receding but the reception area was still under three feet of water. It was then that I saw a body floating by in the darkness towards the sea. A pair of arms and legs. I felt a chill, shivering involuntarily, and switched off the light,. We were not out of it yet.
When I checked half an hour later, the water had receded a foot further and we could convince a brave soul from among the hotel staff to fetch the keys to the other rooms.
Most rooms in were a mess and perhaps they had taken pity on us when they opened for us the pride of the Saibal --- the Royal Suite, which was more or less intact. There was no potable water so we 'royals' had to drink from the tap. Then we rested our tired bodies and spirits. The wind still blew but with diminishing fury. We dozed.
When I woke up the storm had died down. It was 5:30 pm. A gentle breeze was blowing but the sky was still overcast.




Presenting a full front on climate change
Raihan M Chowdhury
An under-water meeting of the cabinet ministers of the government of the Maldives on October 19 last and another cabinet meeting of the Nepalese government at the base of the Everest on December 4 attracted international attention to the dangers of global warming.
Both the unusual meetings took place ahead of the recently-held UN Climate Change Conference in Copenhagen.
The Maldives, located southwest of Sri Lanka, has become a vocal campaigner in the battle to halt rising sea levels.
In 2007, the UN's Intergovernmental Panel on Climate Change warned that a rise of the sea level by seven to 24 inches by 2100 would be enough to make the country virtually uninhabitable.
On the other hand, the Himalayas has an important role in the world's environmental balance.
The melting of the glaciers on the mountains due to global warming would bring about a scarcity of water in the river systems in South Asia, affecting more than a billion people in Nepal, India, Pakistan, Bangladesh and China, according to experts.
Bangladesh cabinet members may arrange a similar meeting on boats or ravaged premises of a cyclone-hit house as floods and cyclones are common natural disasters in the country.
People might say these are gimmicks and stunts but it is the reality that poor and small countries like Bangladesh are bearing the brunt of climate change.
The Copenhagen Conference tried to work out a way forward for the world to act together to preserve the thin envelope of atmosphere, soil and sea which surround the planet and enable us to live, in the face of rising temperatures.
The onslaught of natural disaster, a consequence of climate change, has already hit hard the livelihoods of millions of Bangladeshis over the years.
Already recurrent extreme climate events such as floods, droughts and cyclones in Bangladesh have seriously affected agriculture, food security, access to water and natural resources, tourism, housing and infrastructure. The country suffers big losses in life and property almost every year because of various natural disasters. A new study confirms that just 1.0m rise of the sea level would displace 13 million people, hit 16 per cent of national rice production in Bangladesh as well as cause extinction of valuable flora and fauna of the mangrove forest Sundarbans.
A natural disaster survey group has recorded 140 cyclones and 66 floods in Bangladesh between 1907 and 2008, and the estimated loss is worth approximately 30 billion US dollars.
The cyclone Sidr, which hit 30 out of 64 districts of the country on November 15, 2007, claimed about 4,000 lives and severely affected around 9.0 million people, leaving trails of devastation in Barisal, Pirojpur, Jhalakati, Bhola, Barguna, Patuakhali, Bagerhat, Satkhira, Khulna, Lakshmipur, Chittagong, Cox's Bazar, Noakhali, Chandpur and Feni districts. On May 25, 2009, another cyclone, Aila, ravaged the country's southern coastal belt-mainly Khulna and Barisal regions-affecting lives and property in, at least, 12 districts. It caused a financial loss of Tk 18.85 billion as estimated by eight ministries, according to Food Secretary Mokhlesur Rahman. About 190 people lost their lives and 3.4 million people were badly affected, official record shows.
Climate change is real and adapting to it is an urgent issue for all-particularly for least developed countries including Bangladesh and small-island developing states.
They have contributed least to the emission of green house gases, but they are the most vulnerable to the adverse effects of climate change. They will suffer from possible increases in natural disasters such as floods and droughts due to climate change. They also have the least capacity to adapt to climate change, as they lack knowledge, institutions, and resources to deal with its negative impacts.
Climate change is a cross-cutting challenge. Both exposure to climate risk and the capacity to adapt are closely related to sustainable development. The adaptation challenge cuts across key economic sectors and, consequently, a wide range of policy areas.

In the absence of explicit adaptation policy, a country's de facto response to climate risks is a reflection of other policies and priorities. A strategic response to the increased risk of climate change must take into consideration agricultural, water, resource, health, economic and trade policy, among others. To be addressed successfully, and as cost-effectively as possible, adaptation concerns and priorities must be integrated across the full breadth of economic and development decision-making.
Experts suggested that changing the crop species, alter the cropping patterns, improving the irrigation systems, establishing vegetative buffers, harvesting and storing more water, improving disaster preparedness, strengthening health care systems, providing insurance, designing flexible infrastructure and establishing early warning system will be the possible remedies to fight the climate change challenges.
Drought-resistant crops, water conservation technologies, improved farming systems/practices have been cited as structural measures while the non-structural steps were strengthening risk and vulnerability assessment, weather data collection and forecasts, early warning systems, effective policy coordination and institutional arrangements.
"Awareness and capacity building is essential for the success of adaptation," said Quazi Kholiquzzaman, an economist and also an environmentalist.
Bangladesh, however, needs adequate technology and human resources to cope with the growing adaptation needs against the backdrop of frequent natural disasters.
Efforts are already underway to procure Doppler radar as well as seismic, agri-weather, automatic synoptic weather and river transport forecasting equipment to forecast weather and related matters more accurately and promptly.
The Jatiya Sangsad (parliament) was recently told that the procurement process of the equipment under various ongoing projects would be completed by June next.
Another priority that has not received sufficient attention is regional coordination in adaptation planning. Most adaptation plans are at the national level while many impacts cut across national boundaries."Sharing of climate data, from flood control to droughts and best practices at regional level could help countries in the region identify the appropriate mechanism to mainstream climate change adaptation in developmental planning as well as specific adaptation measures that are best suited to their local conditions," said V Anbumozhi, an Asian Development Bank Institute expert on climate change.
Bangladesh thus needs 'climate diplomacy' to successfully tackle the issue, State Minister for Forests and Environment Hasan Mahmud said on December 22 after returning from the Copenhagen summit acknowledging that the summit did not achieve the best possible outcome.
During a news briefing held at the ministry office the day after returning from Copenhagen, the state minister observed, "It cannot be said that Bangladesh is fully satisfied with the outcome of the conference."
Mr Hasan said it was established during the summit that Bangladesh is the country most vulnerable to climate change and that it would therefore seek 15 per cent of the $30 billion adaptation fund, which will become operational in January.
"We have boldly told the conference that we must receive compensation, because we are not responsible for global warming," he said.
Hasan said he also expected further bilateral assistance from countries with which Bangladesh has close ties.
The state minister said that the government could use the funds to set up a large number of cyclone shelter centres, to construct new coastal embankments and to repair 11,000 kilometres of embankments.
He gave the assurance that all the funds would be spent in a transparent manner.
Meanwhile, the recent move to draft a new law with stringent provisions for taking action against people responsible for rampant tree felling is a welcome move.
The new law will include a non-bailable section so that offenders cannot get bail from courts in cases filed in connection with tree felling.
Indiscriminate cutting of trees is a common scene in Bangladesh over the years. Felling of 30,000 full grown trees in Teknaf in last September is a simple testimony to this mayhem against the nature and livelihood.
Similar disgraceful dent in our tree canopy took place in Pirganj upazila of Rangpur and Sitakunda of Chittagong in recent times.
Bangladesh has one of the lowest forest coverages in the region. Forest canopy in the country is estimated to be around 15 per cent while in neighbouring Myanmar it is 49 per cent. India has a forest coverage of little more than 20 per cent and has taken up a one billion dollar project to increase the coverage nationwide. The north eastern region of India is enriched with 42 per cent forest coverage.
Forests are regarded as natural sinks for carbon dioxide, one of the major greenhouse gases responsible for global warming. Bangladesh is more vulnerable to the effects of global warming and climate change than any other country in the region.
Though forestry development has made progress in the country over the decade, it is still far below the desired level. Bangladesh is one of the most fortunate countries in having three main different kinds of forests. It is blessed with mangrove forests in the south western edge, hill forests in the south east and plain forests in the central region. However, due to carelessness, ignorance, corruption, encroachment, human settlement and industrialisation, forests were slowly but steadily lost. The vegetation map of the country will clearly show thick concentration of human habitat within or in close proximity of the forests, particularly the plain forests in the central region. Illegal logging in the Sundarbans has been rampant and spillage of oil from vessels calling at the Mongla port has been adding to the decay of the mangrove forest resources as well.
Forest or tree coverage is considered as great treasures not only in the context of ecology or their anthropogenic qualities but for economic benefits as well. Millions of people worldwide are dependent on forest resources for their livelihood. The tree branches and fallen leaves alone cater to the domestic needs of thousands of families. Besides, they offer the sanctuary to wildlife, flora and fauna.




Human resource accounting: Interests and conflicts
Prof Dr Feroz I Faruque FCS
A real loyal, dedicated, skilled, efficient and productive human resource availability to an organisation is indeed a very valuable asset but not reflected on the balance sheet. Human asset accounting or human resource accounting may be confined to the measurement and reporting of the cost and value of people as organisational resources. But it involves accounting for investment in people and their replacement costs, as well as accounting for economic value of people to an organisation.
Whether something that is not owned by the organisation can be regarded as an asset is a concern within the relative terminology of the accountancy, whereas accounting conventions and standards treat the employee, the real human capital inventory, as a variable cost of operation (production), with no value. This idea is challenged and there are suggested ways of measuring the value of an employee to the employing organisation. Question arises about what would be the satisfactory and commonly acceptable measure to overcome accounting concepts to establish a fair value to promote the perception of 'employees as an asset.'
The concept of "investment" in employees; the human capital of an organisation, pushes forward a view that one is looking for a profit to be gained from the investment and therefore the focus is on the development of employees for a specific purpose to gain monetary benefits. Optimising of profits would result only if the organisation develops clear and comprehensive strategies and initiatives for the training and development of its employees. Investment in professional training is often treated as an industrial relation activity, and not as an essential investment decision like in the event of a plant or technology. When we consider human assets accounting, the underlined idea is, we are considering the human inventory stock of a company incorporated and available to the organisation to perform the activities.
A company is a person or persons associated with other persons for trade. The Company Ordinance/Act provides and lays conditions to disclose the fair and true position of the state of affairs of the company, required to be certified by auditors, and concealment of any material fact is treated as a violation and a punishable offence. The inventory cost, its basis of valuation, the investment in shares, its marketable cost, and all that is necessary for financial evaluation are required to be disclosed, except the people, the human capital conducting the affairs of that company without which the company in factual terms is nothing but merely a title. The organisations of universal reputations are recognised, besides other factors, due to the persons working for the same, but this hard fact is missing from the Balance Sheet and financial statements. Trade and industrial historical studies indicate the human capital contributions to their respective organisations, without which the recognition at the global stage would not be possible.
The challenge
Until recently, the "value'' of an enterprise as measured within traditional balance sheets, e.g. buildings, production plant, etc., was viewed as a sufficient reflection of the enterprise's assets. However, with the growing emergence of the knowledge economy, this traditional valuation has been called into question due to the recognition that human capital is an increasingly important part of an enterprise's total value. This has led to two important questions:
l How to assess the value of human capital in addition to an enterprise's tangible assets, and
l How to improve the development of human capital in enterprises
The emergence of methods for accounting human resources aimed at measuring, developing and managing the human capital in an enterprise, can thus be said to reflect the need for improving measuring and accounting practices as well as human resource management.
Defining human resource accounting
Human resource accounting (HRA) as an approach was originally defined as the process of identifying, measuring and communicating information about human resources in order to facilitate effective management within an organisation. It is an extension of the accounting principles of matching costs and revenues and of organising data to communicate relevant information in financial terms.
The accounting of human resources can be seen as just as much a question of philosophy as of technique. This is one of the reasons behind the variety of approaches and is further underlined by the broad range of purposes, for which accounting human resources can be used, e.g. as an information tool for internal and/or external use (employees, customers, investors, etc.), and as a decision-making tool for human resource management (investments in human resources as well as personnel management in general).
Many unanswered questions
However, providing adequate and valid information on human resources in statistical terms and within traditional balance sheets has proved extremely difficult. Consequently, new approaches introduce financial as well as non-financial information in human resource accounting.
There are still immense problems to overcome before a coherent and reliable measuring technique is established. Part of the dilemma originates from basic questions such as:
l is HRA only for internal use in enterprises?
l should HRA have a standard format for comparability purposes?
l should HRA be included in traditional financial statements?
The following basic questions are followed by methodological and technical ones:
l is it possible to obtain data on human resources which are reliable and comparable across enterprises?
l will the costs of gathering and processing this information exceed the benefits of doing so?
l how to establish a coherent terminology?
l how to link reporting on human resources with improved human resource management?
Yet, despite the many problems and unanswered questions, the reasons for developing HRA methods can be summarised in the following six points:
l Inadequacy of traditional balance sheets in providing sufficient information on enterprise performance,
l Measuring problems derived from valuation of human resources,
l Redistribution of social responsibilities between the public and private sectors,
l Security versus flexibility in employment,
l Improved human resource management,
l Formal learning versus in-firm competency acquirement.
The policy dimension
The focus on HRA in enterprises has led to a growing interest in stakeholders who have started to identify and assess their positions. The main stakeholders, such as the enterprises, investors, employees, trade unions and governments, are therefore gradually becoming aware of the potential of HRA, albeit from different perspectives.
The basic questions in this perspective are:
l Should HRA be mandatory for enterprises alongside financial statements, i.e. should HRA be regulated by law and/or social partner agreements?
l if mandatory, what kind of information should be included in such statements?
l if voluntary, how to secure the interests of, say, the employees at the enterprise level?
Governments, notably in the Scandinavian countries, and the European Commission have identified public sector interests in HRA. This ranges from a desire to support further improvement of enterprise competitiveness to an interest in diminishing the public sector funding of vocational education and training and, more generally, the implementation of lifelong learning.
If, and this is still a big IF, the public sector, nationally or internationally, decides to promote HRA, three ways forward can be identified:
l the voluntary market-based method (the ISO standard method), i.e. develop a consistent framework which can be operational across sectors and countries and promote this through a rewarding and image campaign,
l the voluntary rewarding method (the Investing in People method in the United Kingdom), i.e. develop a consistent framework supported by rewarding mechanisms, once it is introduced and approved at enterprise level (enterprises pay for their training evaluation whether they meet the standard or not),
* the compulsory method (the Green accounting method in Denmark), i.e. identify disclosure on human resources as a societal concern and prepare (inter-)national regulations.
Human resource auditing
The term human resource auditing borrows its title and rationale from accountancy, it also makes use of the system and methods of the social and scientific information. Human Resources Management Audit, measures of human resource outputs and effectiveness under the given circumstances and the degree of utilisation of the human resources in the best possible manner conducive to the organisation. The audit of human assets is analytical rather than prescriptive. It aims, to encourage professional managers and executives to develop their own ways of measuring performance against targets and objectives developed from the experience and needs of their own particular unit, department and section. Executives should be encouraged to revise, adapt and apply the various diagnostic methods which are best suited to their own circumstances.
A cost-based financial manpower decision can provide a form of scenario analysis whereby various different inputs and outputs can be compared with the assistance of the computer spreadsheets. This analysis will organise the numerical and cost dimensions of human resource decisions in such a way which can emphasise contingencies and probability, rather than prescription and certainty. This analysis will compel the executives to clarify their own understanding on the way in which human capital is used and their value to the organisation assessed. Human resource audit is one of the method of gathering factual information of management controls and activities based on an unbiased assessment of objective evidences rather than subjective opinion.
Due to expansions and competition in the business, trading, and manufacturing cost, the management in particular intend to reduce the cost of production without deteriorating quality, which is possible by eliminating waste, avoiding breakdowns, bottlenecks and by utilising fully the human resources, along with other factors of production, for which human resource audit can be a useful tool and assistance for better and improved management controls. It is an independent appraisal study done at various management levels to ensure the fulfilment of the organisational objectives and implementation of policies and procedures. Human resource audit in its scope is beyond the conventional audit. The human resource audit is more clearly defined as a method to evaluate the efficiency of human resource at all levels throughout the organisation, in order to ascertain whether sound management prevails throughout, and to recommend its effectiveness where such is not the case.
Human resource audit can help the organisation to improve its systems and working and can assist;
(i) how to obtain the desired working efficiency out of the available human resources,
(ii) can suggest ways and means to the organisation on how to achieve the targeted objectives,
(iii) to improve the entire communication system,
(iv) can assist the organisation in constructing the basic policy frame work under a correct directive,
(v) human resource audit in relation to possible products/ service and labour market scenarios.
Leading organisations today recognise that their human capital as critical to their long term success as their physical and financial assets.

Source: The Chartered Secretary, a corporate professional journal published by the Institute of Chartered Secretaries and Managers of Bangladesh (ICSMB)




Corrupt practices in revenue collection
Md Zakir Hossain
We want to be the champion in many areas of our life. Nationally we want to see Bangladesh as the world champion in cricket, and we, of course, are the world champion in microcredit and socio-environmental adaptation against natural calamity. We are the textbook model in those fields. But unfortunately, we were also the world champion in corruption, and also at present, we are one of the top scorers in corruption. Revenue Administration has an important role in top scoring in corruption. To avoid ending up at the top of the list in corruption we need cumulative efforts in all sectors infected by corruption. In the present study, we concentrate on the revenue administration. The non-tax revenue administrations generally do not represent major sources, lead us to focus on the tax revenue administration consisting of National Board of Revenue (NBR) and taxpayers.
Definitions
The working denition used by the World Bank, Transparency International, and others is that corruption is the abuse of public power for private benefit. This defnition implies that corruption is a behaviour that deviates from the formal duties of one because of reasons (personal, close family, relatives) concerning wealth, power or status gains.
Forms of corruption
A classification of corruption that has practical applications to the revenue administration's working environment in Bangladesh are:
Petty and grand corruption: Corruption is often categorised into two broad types: petty corruption and grand corruption. Petty corruption is the everyday corruption that takes place at the implementation end of politics, where public officials meet the public. Sometimes it is referred to as 'routine' corruption, whereby - for instance - private importers of goods pay bribes to obtain a speedy completion of routine Customs procedures. Petty corruption is also described as 'survival' corruption; a form of corruption, which is pursued by junior or mid-level revenue officers, who may be grossly underpaid and who depend on relatively small but illegal rents to feed and house their families and pay for their children's education.
Grand corruption, on the other hand, may take place when tax policy (or amendments to tax laws and regulations) is made. It usually involves more senior officials and significant amounts of money. One example is the granting of discretionary tax exemptions to large companies by senior management. Accordingly, since petty corruption is perceived to be different from grand corruption, some observers argue that different strategies are required to deal with these two types of corruption. In practice, however, it is often hard to distinguish between these forms of corruption in the revenue administration.
Bribery: Bribery in the revenue administration includes:
(a) Payments to alter or reduce duty or taxation liabilities,
(b) Payments to ensure that revenue officers turn a blind eye to illegal activities,
(c) Payments or 'kickbacks' to ensure that an individual or a firm is successful in obtaining a lucrative tax exemption from normal administrative formalities, and
(d) Payments to secure or facilitate the issuance or processing of licences and clearances.
Misappropriation: Misappropriation includes a wide range of behaviours such as: falsification of records, misclassification of goods, misdeclaration of goods, misdeclaration of value (under and/or over-valued) and fraud. This form of corruption is a common factor in revenue administration.
Extortion: Extortion implies taking advantage of taxpayer's incomplete knowledge about tax legislation. Tax officials may threaten taxpayers to pay more than they are obliged to.
Patronage: Patronage and social obligations in the revenue administration can include such behaviours as selection, transfer or promotion of staff on the basis of kinship, tribal and other social relationships regardless of merit. A person in a position of power is expected to use that influence to help his or her kin and community of origin. Therefore, to accumulate, even in corrupt ways, is not necessarily perceived to be bad in itself. It is accumulation without distribution, which is considered unethical. Only someone, who accumulates can redistribute and be identified as 'a man of honour' or 'a big man'.
Parties involved in corruption in revenue administration
According to general perception, corruption affects one party and the other party gets benefit. But, in revenue sector, both parties are beneficiary of corruption. Both parties are involved in corruption and thus called first parties. Primarily the overnment and finally the public become victim of such a type of corruption. As first parties are beneficiaries, both are willing to engage in corruption. Specially, many taxpayers are willing to pay otherwise, because there is a socalled 1:3 principle of distribution of the cake. A revenue official gets one-fourth and a taxpayer gets three-fourths of the cake. There is another big but hidden party between the revenue official and the taxpayer. They are the tax brokers. They are named in different ways in different tax administrations such as tax consultant, tax advisor, tax law practitioner, clearing and forwarding agent, pre-shipment inspection agencies, etc. All of them are middlemen. In most cases, they get the biggest part of the cake. In this case the distribution ratio may be, according to public perception, 1:1:2.


Names Mechanism/Intensity
1. Unadulterated Tax Evasion (without the involvement of tax officers)
Smuggling Smuggling of goods (beer, spirits, soap, sugar, cooking oil, etc.). Border Guard is often involved. Common worldwide.
Taxable income/transactions are not reported or are underreported in accounts Several ledgers are often used, including one for taxation purposes that may show a deficit. Common within many businesses.
Underreporting of turnover To avoid higher rate and amount of taxes. Common within retail, wholesale and small manufacturing units.
Overreporting of expenditures An accounting trick to reduce tax burden. Common in direct tax.
Underreporting of the value of imports To avoid higher amount of taxes in case of ad velorem tax. A general problem in imports of goods.
Overreporting the value of export A general problem in case of export to get more drawback or cash incentives.
Hiding sell Common in most businesses.
Undue Credit Common in most business.
Misuse of bond facilities Common in most bonders.
Misuse of tax holidays Common in most bonders.
Misclassification of goods Import goods with high tax and duty rates are classified as goods with lower rates.
2. Collusion between revenue officers and taxpayers
Tax exemptions Tax officials who are in position to issue exemptions. In some cases, the taxpayer is not registered in the tax registers, but pays a lower tax privately to tax collectors.
VAT fraud Falsified claims for VAT refund, credit and drawback. Can occur with the help of collaborators within the tax administration.
Hiding Sell Common in most businesses.
False classification of goods Customs officers may be involved
Underreporting value of goods To avoid pre-shipment inspection of goods before shipment from the export country, a common method is to split the goods into units which individually are worth less than the minimum required to trigger inspection. The goods are therefore exempted from pre-shipment inspection.
3. Corruption without the direct involvement of taxpayers
Extortion By taking advantage of taxpayers’ incomplete knowledge of tax legislation, revenue officers threaten taxpayers to pay above rates.


Mode of corruption
In revenue administration, corruption results in tax evasion. The common modes of tax evasion are:
Result of corruption
Studies in various developing countries indicate that it is not uncommon that half or more than half of the taxes that should be collected cannot be traced by government treasuries due to corruption and tax evasion. This tax-base erosion is particularly damaging since insufficient domestic revenue mobilisation is considered the root of the adjustment and growth problems faced by many developing countries. These are some examples of the adverse effects of corruption on a country's revenue administration:
(a) Significant revenue leakages impact on the funding available for public service provision;
(b) Reduction of voluntary compliance with tax laws and regulations through bribe-paying for tax evasion;
(c) Resistance to reforming the tax structure;
(d) Erosion of public trust and confidence in government institutions - undermining the legitimacy of government;
(e) Increased costs for individual taxpayers and businesses are often borne by the poorest sectors of the community;
(f) Maintaining barriers to international trade and economic growth.
Why corruption?
Corruption in revenue administration is caused by the aggregate effects of numerous decisions by taxpayers, revenue officers and political decision makers.
Taxpayers: Tax structure and regulations matter: Taxpayer behaviour is influenced by factors such as the difference between the amount of tax that is to be paid without evasion and that with (which determines the benefits of evasion), as well as the probability of detection and the resulting penalties (which determine the costs). Hence, several factors - partly interlinked - explain tax evasion:
(a) Opportunities for evasion are often related to the complexity of tax systems, the discretionary powers of politicians and tax officers to grant exemptions, etc
(b) Likelihood of detection and punishment
(c) Effect of high taxes as well as cumbersome tax regulations and procedures
(d) Taxpayers' trust in the government is related to the government's capacity to deliver services for taxes paid, and to the perceived compliance by fellow taxpayers
(e) Maintaining barriers to international trade and economic growth
Revenue officers: As illustrated in the Table attached, corruption in revenue administration takes many different forms - with or without the collusion of taxpayers - and is often conducted in well organised networks. The most basic motivation for revenue officers to engage in corruption is personal financial gain. The individual revenue officer's motivation is influenced by a number of social as well as non-social factors like corruption networks, corruption of other people, nature and complexity of the tax structure and legislation, low wages, likelihood of detection and punishment of corruption.
Patrimonial networks and social obligations: Patrimonial networks may have a strong influence on the behaviour of both tax officers and taxpayers - as well as on politicians by impacting on their motivations and opportunities for corruption. The technocratic remedies supported by donors appear to have underplayed the degree to which progress in tax administration depends upon, a thorough 'cultural change' in the public service. This is due to the fact that the motives of individual actors are often inextricably linked to the interests of the social groups to which they belong.
What are the remadies?
Much of the present policy debate on anti-corruption strategies in the revenue administration has at its roots the principal-agent theory of corruption. Robert Klitgaard's popularisation of this approach has been widely promoted and applied in a number of developing countries during the last decade. According to Klitgaard's approach, corruption is most likely to occur
- when agents (tax officials) enjoy monopoly power over clients (taxpayers)
- when agents enjoy discretionary decision power over provision of services (for instance, assessment, physical enforcement)
- when the level of accountability is low.
Klitgaard's work has also been used extensively in the development of the World Customs Organisation (WCO)'s Revised Arusha Declaration on Integrity in Customs. The international customs community - through the WCO - commenced work in the mid to late 1980s to formulate a comprehensive integrity/anti-corruption strategy. In 1992 this work resulted in the unanimous adoption by WCO members of the Arusha Declaration on Integrity in Customs. Since that time, this declaration has become the principal anti-corruption framework for the WCO's 162 Member Customs administrations. However, progress with stemming corruption in Customs was slow. In reaction, the WCO called for a comprehensive review of the Declaration and its practical implementation in member administrations, which led to the preparation of the Revised Arusha Declaration - unanimously endorsed by the WCO Council in June 2003.
The Revised Arusha Declaration on Integrity in Customs consists of ten distinct but interrelated elements, considered essential for development and implementation of a comprehensive and sustainable anti-corruption and integrity enhancement programme.
The ten elements of the Revised Declaration are as follows:
1. Leadership and Commitment
2. Regulatory Framework
3. Transparency
4. Automation
5. Reform and Modernisation
6. Audit and Investigation
7. Code of Conduct
8. Human Resource Management
9. Morale and Organisational Culture
10. Relationship with the private Sector.
The ten key elements are designed to reduce corruption of all parties mentioned earlier, especially to reduce the monopoly discretionary power of a tax official, a strong procedure to identify evasion and vigorous punishment after identification of corruption of a taxpayer and tax officials as well as tax brokers. Though the Revised Arusha Decleration was designed for customs administration, it is equally effective in consumer tax and direct tax.
In Bangladesh, a lot of scattered measures were taken to combat the corruption in revenue administration. Revenue administrations are trying to minimise the corruption. But results are not visible in terms of revenue collection. Our tax-GDP ratio is one of the lowest in the world. Corruption in tax administration is reducing significantly, but tax-GDP ratio is stagnant at around 9 for a long period.
To increase productivity of tax administration, they have to take reform agenda covering tax officials, taxpayers and tax brokers. The Revised Arusha Decleration can be the guideline for meaningful reform.
The writer is a revenue officer



Creating an impact through CSR
Harun-ur-Rashid
It has been learnt that Aktel, a local mobile phone operator, has won the prestigious "Standard Chartered-Financial Express Corporate Social Responsibility Award-2006" in recognition of its Corporate Social Responsibility (CSR) effort.
On the other hand, the state-owned Janata Bank has taken some measures to carry out and maintain CSR efforts as promised in its charter. For instance, as part of its CSR programme the bank has recently donated a handsome amount of money to a freedom fighter.
These are indeed laudable pieces of information and we believe many other business entities of our country can follow the suit and can come forward with such initiatives in future also.
In fact, all good business organisations have their own goals or vision, to do something specific for the welfare of the society. But unfortunately, a few of them fail to keep their commitment due to their inclination to earning profit only or reasons best known to them.
Now what this Corporate Social Responsibility stands for is to be reckoned with first. As defined by an economist of international repute, CSR is how companies manage the business processes to produce an overall positive impact on the society.
Traditionally in the United States, CSR has been defined much more in terms of a philanthropic model. Companies make profits, unhindered by fulfilling their duty to pay taxes. Then they donate a certain share of the profits to charitable causes.
Meanwhile, the World Business Council for Sustainable Development in its publication on "Making Good Business Sense" by Lord Holme and Richard Watts has defined CSR as 'the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and the society at large.
Well, whatever the language of the definitions be, they have one thing in common - contributing something to the society. It is obvious that business houses will work for making profit as they have to survive in a very competitive world characterised by globalisation. Yet the question of CSR cannot be overlooked, because through carrying out CSR activities a company can uphold its ethical standards.
What we usually notice is that most of the big business houses hardly hesitate to sponsor things like sporting events or cultural programmes. And it is also true that doing this they are amply benefited as they get the much-coveted media coverage for their products and services. So they are very reluctant to offer any financial help in any field where there is no or little material gain.
This practice, however, cannot go on unabated for long. The government agencies to monitor the activities of the entities must be more active so that no organisation can avert contributing for betterment of the common people of the society, especially the suffering humanity.