Economic recovery of the new poor created by COVID-19: evidence from Bangladesh

Abstract

ABSTRACTThe COVID-19 shock resulted in a large number of people becoming newly poor in Bangladesh, for whom recovery was slow and difficult. In response, BRAC implemented a nationwide program – credit, business planning support, and mentoring – targeting the economic recovery of the new poor. This paper estimates its impact using a mixed method and finds that the program had a significant positive effect on employment, income, and assets, indicating a faster economic recovery of program participants. The learnings from this program can have major policy implications for future disaster responses targeting livelihood recovery, specifically during the time-sensitive transitory phase from relief to long-term development.KEYWORDS: Poverty; economic recovery; livelihood; development; Bangladesh Acknowledgement of author’s positionalityThe authors work at the BRAC Institute of Governance and Development (BIGD), a research institute of Brac University. Brac University is an independent entity under the University Grants Commission (UGC) of the Government of Bangladesh. On the other hand, the intervention was designed and executed by the BRAC NGO, which is not affiliated with BIGD. Therefore, the author’s role at BIGD is free from any biases or interests in promoting BRAC, and rather, their role as independent researchers requires them to conduct impartial research.Disclosure statementNo potential conflict of interest was reported by the authors.Ethical declarationThis study uses primary data collected through in-person surveys. All respondents of this survey were members of the BRAC UPG program. BRAC UPG also reviewed the questionnaire extensively and provided essential feedback, which was duly addressed by BIGD. Being well aware of the research scope, BRAC UPG provided BIGD with the necessary approval and contact details of the members of BRAC UPG program to conduct the survey. All respondents were surveyed upon their verbal consent and no respondent was surveyed without his/her stated permission.Notes1 People whose income dropped below the poverty line for the first time due to a certain event.2 Asset sale, savings depletion, major cut downs on expenditures, indebtedness from high-interest informal loans (Vatsa Citation2004).3 People who are by definition non-poor (with income above the upper poverty line) but vulnerable to poverty (with income below the national median income and close to the poverty line).4 In Bangladesh, about 85 per cent of the MFIs experienced a deterioration of their outstanding credit portfolios, 80 per cent faced high rates of savings withdrawals, and more than 73 per cent had inadequate equity capital to cope with the COVID-19 crisis (Mujeri et al. Citation2020).5 A situation where people seem to be caught between two stages and are unclear what will happen next.6 According to Grant et al. (Citation2004), several terms are used to identify those who experience poverty most intensely – ultra-poor, extremely poor, hard-core poor, destitute, poorest of the poor, and declining poor. The ultra-poor are those who experience extreme poverty. Their income falls below the poverty line of $2.15 USD per day, and they encounter multifaceted issues due to their poverty status.7 Factors such as roofing materials, children's education status, stable income sources, and productive assets are considered to assess the economic conditions.8 Those who did not participate in the program, but belong to a similar economic group as the participating households.9 About 95.79 per cent of the treatment group faced an income loss of 40 per cent or more compared to 94.96t per cen ofthe comparison group.10 About 53.51 per cent of the treatment group faced an asset loss of 40 per cent or more compared to 44.57 per cent of the comparison group.11 The comparison groups have more men members as the men-to-women ratio is higher than in the treatment group.12 Household head’s monthly income (BDT), per capita monthly income (BDT), value of cows (BDT), value of business capital (BDT), value of all productive assets (BDT).Additional informationNotes on contributorsMohima GomesMohima Gomes is working as a research associate at BRAC Institute of Governance and Development (BIGD), BRAC University. She completed her Bachelor's in economics from the Asian University for Women (AUW), Bangladesh with distinction. She has experience in conducting research that focuses on poverty, skills development, and social development programmes.Nusrat JahanNusrat Jahan is the head of Business Development and Knowledge Management of BIGD, BRAC University. She holds a Master's degree in Public Administration-Development Practice from the School of International and Public Affairs (SIPA), Columbia University. Before joining BIGD, she worked as a research coordinator at the Bangladesh Office of Innovations for Poverty Action (IPA).Tanvir ShatilTanvir Shatil is an anthropologist by training and completed his Bachelor's and Master's degrees from Jahangirnagar University, Bangladesh. He is currently working as a research coordinator at BIGD, BRAC University and has a good command over qualitative research methods.Nabila TahsinNabila Tahsin is working as a research associate at BIGD, BRAC University and completed her Bachelor's and Master's in economics from the University of Dhaka, Bangladesh. She has experience working on research focusing on poverty, disability, and the evaluation of development programmes.Narayan DasDr. Narayan Das is a development economist working as a senior research fellow at BRAC Institute of Governance and Development (BIGD), BRAC University. He has a PhD in Agricultural and Resource Economics from the University of California at Berkeley. His research focuses on poverty analysis, quantitative analysis of development policies, and impact assessment of social programmes and labour markets.Imran MatinDr. Imran Matin currently serves as the executive director of the BRAC Institute of Governance and Development (BIGD), a research and post-graduate education institute at BRAC University. Dr. Matin holds a PhD in Economics from the University of Sussex, UK. Before assuming his current role, he worked with BRAC, Save the Children International and Innovations for Poverty Action.