There is very little disagreement to the observation that the incidence of poverty in Bangladesh has declined as per both upper and lower poverty lines. Rural poverty has declined but at a slower pace than urban poverty. Sitting on the good news, the question that can be raised is: have the rural people been able to accumulate assets over time to impact on poverty? If so, what types of assets, and to whom the assets matter? We need to know the answers in the interest of sustainability of poverty reduction programmes.
Based on the repeat sample household surveys, we observe that the endowment of owned land of households has declined over time. Obviously, this could be due to fragmentation of holdings due to inheritance, especially among large and medium land owners. However, the decrease in land was, to some extent, made up by the growing endowment of other components of natural capital - such as irrigated land, land under tenancy, and cultivated land etc. Land under tenancy increased the quantity of land under possession while access to irrigation increased quality of land. Fortunately, both have increased over time for the poor land owning group, not for the medium and larger ones. This implies that despite a downward trend in land endowment, rural households were up on account of quality and change in ownership of land assets. On the other hand, increase in average schooling years increased the overall human capital base, reduction in household size decreased dependency ratios, and increased non-agricultural workers boosted income to effect on poverty. The disparity between poor and non-poor in the realm of resource endowment still exists because of the dominance of the upper echelon in the base period, but the good news is that the difference seems to be subsiding over time.
Level of poverty should be pitted against not only land endowment but also against non-land assets. We observe that accumulation of physical capital has increased substantially over time to reason a part of the poverty reduction trend. At present, a typical rural household has physical capital worth $1,294. This compares with $500 in 2000 thus implying that over time, average real growth of physical assets was remarkable. More importantly, it has increased from $206 to about $800 for the poor households (owning up to 50 decimals)! In fact, accumulation of physical capital between the poor and non-poor groups increased almost at the same pace. How could that be possible?
As mentioned earlier, access to tenancy market and irrigation helped the poor more than the non-poor. In fact, four-fifths of the poor farm households (operating up to 100 decimals) now have access to irrigation - broadly speaking to High Yielding Varieties (HYV). Instead of 5-10 maunds per bigha from traditional varieties earlier, they now fetch home 10-20 maunds from HYVs. Advent of HYVs has augmented land endowment. Added to this is the remittance factor and increased enrolment of girls and boys in schools. The surplus generated in the agricultural fields along with the receipt of remittances and education was instrumental in the accumulation of non-land physical assets. In the same line of reasoning, possession of non-durable consumption items have also gone up. Education made possible the improvement in the quality of Labour. Let us pick up few statistics from a recent large-scale household survey (2014). It is no wonder that one-thirds of rural households have at least a bi-cycle compared to one-fifths a decade back; 87 per cent have cell phones compared with a negligible share a decade back, 13 per cent of households have irrigation equipment compared to 6 per cent before; about 10 per cent have motor-cycle against none before; 34 per cent have televisions against very few in the past, 16 per cent have refrigerators compared to almost none before. By and large, about one-thirds of rural households have agricultural equipment like shallow machine, tractor, spray machine etc compared to 10 per cent before.
Leaving aside physical capital, the growing access to financial capital reasons well with the visible improvement of rural households. About half of rural households from absolute and functionally landless groups access credit from institutional sources, and about one-thirds from non-institutional sources. It could also be observed that about 40 per cent of rural households had access to NGOs in 2014 as compared to about 26 per cent in 2000. But the average gain hides the disaggregated dynamics. Especially, very poor households (owning land up to 50 decimals) could significantly increase their participations during that comparable period; roughly four-fifths of poor households have taken shelter under the umbrella of the NGOs that provide access to credit and other services. This might have played a role for the accumulation of other assets like rickshaw vans, livestock or pumps for this group. Thus, access to financial institutions influence livelihoods by enabling the accumulation of other assets.
Expanded social safety net programmes, communication networks and health facilities provided by the government and NGOs also helped the poor by increasing their mobility to access non-farm jobs and internal migration. Between 2000 and 2014, the share of 'developed village' - with access to paved roads and electricity - has gone up thus linking villages with semi-urban growth centres. Expansion of non-farm activities and communication contributed to the tightening of the labour market in rural areas to narrow down the wage differential between rural and urban areas. And finally, the food security situation in terms of both availability and entitlement has tremendously improved over time although nutritional concerns still loom large.
Abdul Bayes is Professor of Economics, Jahangirnagar University; Mahabub Hossain is Distinguished Professor of BRAC University; Mahfuzur Rahman is Data Manager, BRAC.
abdulbayes@yahoo.com
Explaining the reduction in rural poverty
write Abdul Bayes, Mahabub Hossain and Mahfuzur Rahman | Published: December 18, 2015 00:00:00 | Updated: February 01, 2018 00:00:00
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