Digital money helps poverty in Bangladesh

BANGLADESH — The non-governmental organization BRAC has created a digital cash transfer program to help poor Bangladeshi families in need during the COVID-19 pandemic. BRAC will provide a digital cash transfer to 200,000 families living in poverty in Bangladesh, including “the urban poor living on daily wages and ultra-poor families living in rural areas”. BRAC has opted for a digital cash option to quickly and securely get much-needed funds to vulnerable populations amid the pandemic.

Although Bangladesh’s poverty rate has fallen by 30% since 1991, 14% of the country’s 161 million people live on less than $1.90 a day. In April 2020, 85% of the working population in Bangladesh earned $6 or less for a day’s work. A BRAC survey found that 35% of Bangladeshi families have seen at least one member lose their job since March 2020 due to the COVID-19 pandemic. The average household has reported a loss of nearly 74% of their family’s income since the start of the pandemic.

What is BRAC?

Bangladeshi accountant Sir Fazle Abed founded BRAC in 1972. BRAC (then known as the Bangladesh Rehabilitation Services Committee) originally aimed to help war refugees in Bangladesh. It has since evolved to address poverty of all kinds through a variety of programs. BRAC’s website describes its mission as “to empower people and communities experiencing poverty”.

The NGO fights poverty through various tactics, such as community empowerment programs, legal services, and teaching finance to vulnerable populations. Over the years, BRAC has grown to become one of the largest NGOs in the world with a presence in Bangladesh and 10 other countries in Africa and Asia. In 2018 alone, BRAC loans benefited nearly eight million people living in poverty.

How digital money is helping poverty in Bangladesh

With the government shutdown causing many Bangladeshis to become unemployed, cash transfers can provide households with the cash they need to survive until they can return to their jobs or find a new job. Digital money transfers are considered safer and more secure than cash during the pandemic. In fact, the World Health Organization (WHO) recommends contactless payment methods over paper money because there is a risk of COVID-19 transmission through surfaces.

About 87% of Bangladeshi workers operate in the so-called “informal sector”, i.e. the sector of the economy that is not officially controlled and regulated by the government. These employees do not receive paid vacation, health insurance or other benefits through their employer. Since the start of the government shutdown caused by COVID-19, one million workers in Bangladesh’s garment industry alone have lost their jobs. Where workers have no benefits or savings, digital cash transfers provide Bangladeshi households with the funds needed to survive until they can return to work or find another job.

In the first installment of payments in April, BRAC provided approximately 100,000 families with $18 each. In Bangladesh, this is enough to feed a family of four for at least two weeks. Later, BRAC provided more than 170,000 families with $3.2 million in grants. It also provided insurance and savings benefits to those in need.

Although the COVID-19-induced government shutdowns have caused uncertainty for many households, BRAC’s digital money transfer initiative has provided more than 150,000 families with a financial boost to help them get through these difficult times. This initiative will help reduce the number of people who will fall into poverty in Bangladesh.

Jackie McMahon
Photo: Flickr

Comments are closed.