Upazila credit scheme for rural employment generation
Friday, 20 November 2009
IN a departure from its traditional role as a financial sector regulator, the Bangladesh Bank (BB) has decided to play a proactive role in employment generation at the grassroots level. Thus, the country's central bank will, as the report said, introduce a loan scheme, styled, 'one banking product in each upazila', throughout the country under a five-year strategic plan to be announced in January next. The basic aim of this plan, as a high central bank official explained the other day, will be to ensure the availability of banking services at the doorstep of the vast majority of the rural population who have so far remained outside the banking coverage. In line with the objectives of its plan strategy, the bank will give a befitting emphasis on small and medium enterprises (SMEs), besides agriculture.
How the BB would like the banking services to be expanded to the village level would be known only when the details of the plan come out. While drafting the plan, the central bank has had some valuable interactions with various stakeholders, including the ministries concerned, donor agencies and business bodies. Available indications suggest that the BB would try to introduce low interest-bearing loan schemes at the upazila (sub-district) level for facilitating economic activities specific to various localities. The ultimate outcome of this scheme will depend on how effectively it will be able to address so many 'ifs' and 'buts'. Yet then, the move will certainly be considered "innovative" and "positive", considering the present deplorable state of employment generation in rural areas.
As things stand now, the urban centers including that of Dhaka city are not in a position to take the load of an unending stream of rural migrants rushing to a few cities and towns in search of employment opportunities. The urban job market is already over-saturated on the supply side. Most migrants from rural to urban areas, failing to find suitable jobs, pick up different trades involving hard manual works. No matter how difficult the conditions are for survival in urban centres, such migrants do hardly go back to their village homes. One major reason for this is that the life in rural areas for the unemployed people is far more difficult.
The agriculture sector is losing its capacity to absorb even a fraction of the new entrants to the rural job market. There has so far been hardly any meaningful step for creating new jobs employing adequate public resources in rural areas. The vast unemployed rural labour force has, thus, been left with no option other than making an uncertain journey towards urban centers. To help arrest this trend about migration of the vulnerable section of the rural population to cities and large towns, it is vitally important to create opportunities round-the-year employment or self-employment opportunities for in the rural areas. Supporting the growth of the upazilas as economic growth centers will be a step in the right direction. Here actions, not words, can only make the difference.
In this backdrop, all concerned would expect that the latest move by the central bank plan to make credits available to SMEs in upazilas and villages would lead to creation of self-employment opportunities in the countryside. The availability of the services of scheduled banks, having extensive network in rural areas, will be critical for the success of this move. For that matter, the involvement of the Bangladesh Krishi Bank (BKB) and the state-owned commercial banks will be of pivotal importance. But a great deal for promotion of the SMEs with the support of bank credits will depend on proper management and supervision of fund flows by the banks themselves. Without such supervision, bank credits may go to wrong hands and for wrong purposes. Diversion of credits to activities other than the intended ones is fraught with many risks and dangers to which the economy at its present stage of growth should better be not exposed. Hence, the central bank will need to ensure adequate measures for improving and strengthening supervision and management operations before launching its afore-mentioned special scheme for generation of rural employment opportunities.
How the BB would like the banking services to be expanded to the village level would be known only when the details of the plan come out. While drafting the plan, the central bank has had some valuable interactions with various stakeholders, including the ministries concerned, donor agencies and business bodies. Available indications suggest that the BB would try to introduce low interest-bearing loan schemes at the upazila (sub-district) level for facilitating economic activities specific to various localities. The ultimate outcome of this scheme will depend on how effectively it will be able to address so many 'ifs' and 'buts'. Yet then, the move will certainly be considered "innovative" and "positive", considering the present deplorable state of employment generation in rural areas.
As things stand now, the urban centers including that of Dhaka city are not in a position to take the load of an unending stream of rural migrants rushing to a few cities and towns in search of employment opportunities. The urban job market is already over-saturated on the supply side. Most migrants from rural to urban areas, failing to find suitable jobs, pick up different trades involving hard manual works. No matter how difficult the conditions are for survival in urban centres, such migrants do hardly go back to their village homes. One major reason for this is that the life in rural areas for the unemployed people is far more difficult.
The agriculture sector is losing its capacity to absorb even a fraction of the new entrants to the rural job market. There has so far been hardly any meaningful step for creating new jobs employing adequate public resources in rural areas. The vast unemployed rural labour force has, thus, been left with no option other than making an uncertain journey towards urban centers. To help arrest this trend about migration of the vulnerable section of the rural population to cities and large towns, it is vitally important to create opportunities round-the-year employment or self-employment opportunities for in the rural areas. Supporting the growth of the upazilas as economic growth centers will be a step in the right direction. Here actions, not words, can only make the difference.
In this backdrop, all concerned would expect that the latest move by the central bank plan to make credits available to SMEs in upazilas and villages would lead to creation of self-employment opportunities in the countryside. The availability of the services of scheduled banks, having extensive network in rural areas, will be critical for the success of this move. For that matter, the involvement of the Bangladesh Krishi Bank (BKB) and the state-owned commercial banks will be of pivotal importance. But a great deal for promotion of the SMEs with the support of bank credits will depend on proper management and supervision of fund flows by the banks themselves. Without such supervision, bank credits may go to wrong hands and for wrong purposes. Diversion of credits to activities other than the intended ones is fraught with many risks and dangers to which the economy at its present stage of growth should better be not exposed. Hence, the central bank will need to ensure adequate measures for improving and strengthening supervision and management operations before launching its afore-mentioned special scheme for generation of rural employment opportunities.