Bangladesh is widely recognised for its disaster management successes. Temporary relocation of people to storm shelters during cyclones, feeding the flood-victims through mass gathering, and distribution of basic necessities during natural calamities are areas of work where Bangladesh has developed proven expertise of mobilisation and support delivery mechanisms. However, Covid -19 poses an entirely different kind of challenge where the conventional methods of mobilisation and service delivery would fuel community transmission of the disease. Given the social distancing requirements, a cash transfer programme directly to the targeted households based on the Digital Financial Service (DFS) infrastructure is a practical and perhaps the most suitable option. The basic principle of the proposed approach is unconditional regular cash transfer to Covid-19 affected households through the government-to-person (G2P) approach, utilising the existing DFS infrastructure. In this respect, our proposals are the following:
- Establish a new unconditional 'Emergency Cash Allowance Programme (ECAP)' for the 10-12.6 million families that can be operationalised by the Finance Division of the Ministry of Finance. Set the monthly transfer amount of Tk 3,000 per family or household. Payments should be made through mobile phone accounts using any DFS providers such as bKash, Rocket, Nagad, SureCash etc.
- Households in need of the assistance should self-identify or self-register for the allowances. Notify the citizens through print and electronic media about the maximum monthly allowances (of Tk 3,000) with the stipulation that only the Covid-19 affected most vulnerable households are eligible for this state support.
- Citizens will be asked to self-identify or self-register themselves into the programme though calling/dialling/sending SMS to dedicated mobile numbers. The registration process should be simple enough so that most potential beneficiaries can apply for without needing much assistance. During the registration, they may be asked to name the head of the household, address, and all NID numbers for household members or their birth dates based on Union Parishad provided birth certificates. Information on their preferred DFS account will also be required for making the payments.
- The registration process can automatically generate a database of households seeking assistance under the Emergency Cash Allowance Programme. We believe a database comprising 10-12 million households can be created within two to four weeks.
- It is understood that many households will need support in registering. Our suggestion in this respect is to make use of the services of MFS agents. As mentioned above, there are as many as close to one million such agents scattered all over the country. The agents should be provided clear instructions about how to help the applicants while observing social distancing (e.g., people can queue up with a minimum distance of six feet; people to use masks; agents to use hand sanitisers frequently as they are helping with the registration process).
- Given the availability of several service providers, one issue is how to select any particularly ones for delivering this cash assistance scheme. Our preference is to let the potential recipients decide rather than the service providers being picked up by the government. This will be in line with the principles of the general market mechanism and can encourage competition among the service providers. For the agents, some service charges should be fixed by the government. The charges can be negotiated with the MFS providers and can be provided directly by the government or shared with the recipients.
- It is most likely that many potential applicants currently do not have MFS accounts. Currently, e-KYC is in operation in Bangladesh. This allows opening such accounts using NIDs within a few minutes. The MFS agents can also offer assistance in opening new accounts.
- At present, the Bangladesh NID system has data of about 90.0 million adults. It is our view that an overwhelming majority of the potential beneficiaries will be captured through this existing database. The use of NIDs will help identify duplicate applications.
- It is possible that certain beneficiaries either do not have their NIDs or have misplaced/lost them. Under those circumstances, they may be registered using their birth certificates. Opening of e-KYC accounts without NIDs can be temporarily allowed, as it is currently being allowed for the garment workers for receiving their wages. If needed, these accounts can be terminated after some months (e.g., by the end of the year). There are already some solid examples of the currently existing MFS infrastructure being an efficient means to delivering cash transfers. Between April 6 and 20, 2020, about 2.6 million garment workers could open their MFS accounts to receive their salaries. Under a social security scheme, the Primary Education Stipend Programme (PESP), some 14.4 million primary students are enrolled and their 10 million plus mothers receive monthly allowances through MFS (the programme provides a stipend of Tk 100 per month per child with a ceiling of Tk 300 with four or more children). Therefore, opening accounts using MFS and delivering cash assistance are already well-established in the country.
- It is possible to prioritise women as the household recipient for the transfer. There is overwhelming evidence from numerous empirical studies that women's access to resources leads to better utilisation, improving welfare of children and elderly members within the households. In some cases although women are found to have not much say on spending decisions, direct delivery to women is likely to generate greater beneficial outcomes. Many women-headed housholds might be more vulnerable during this crisis and they need to be given special consideration.
- Verification of eligibility of the applicants (for receiving emergency cash assistance) is an issue to consider. It is possible for the government to involve local level representatives, officials, NGOs as well as military personnel doing some spot checks. If the transfers are to be made on a monthly basis, the process of spot checks/verification can be a continuous process. If MFS agents are being engaged to help with the registration process, local level representatives and army personnel can help with the spot checks.
- We are of the view that the cash allowances are paid on a monthly basis. There are some international experiences when some countries have made such transfers for several months as a one-off payment. Given the low financial literacy of most of our poor people, regular monthly payments could help with a better management of the crisis.
- It is understood that the government is also contemplating to introduce a food ration system covering 0.5 million recipients. It may take time to install a ration system and we do think that direct cash support is a more efficient approach. However, if it is eventually introduced, the ration beneficiaries can be cross-checked and excluded from the suggested cash allowance programme.
- Once we have the database of beneficiaries and their MFS accounts, we believe Bangladesh has the existing DFS infrastructure to handle the cash payments to those 10-12 million households smoothly. It may require quick establishment of data storing and payment protocols involving DFS providers, Bangladesh Bank, A2i and the Ministry of Finance.
- Social security support programmes for the urban poor has been very weak in Bangladesh. Many people are of the view that a large number of informal sector workers who have been hit hardest by Covid-19 live in semi-urban and urban areas. Therefore, any support mechanism for them would be extremely important.
- Effecting a perfect system for cash transfer perhaps will not be possible. It is true that MFS system can reduce corrupt practices but other types of fraudulent practices cannot be ruled out. International practices show short surveys of a random sample of beneficiaries to verify the procedures and gather feedback to improve the services further. In Bangladesh, a grievance redress mechanism can be thought of either using mobile phone services or through local representatives. It is important to acknowledge some scope of leakages/mistargeting, although the cost of such leakages will be much less than the same under an extensive food distribution programme. Nevertheless, to minimise the extent of leakage, we suggest that the amount of transfer should be low. It is most likely that the measures suggested above will need further refinements to make them operational. But, we strongly believe that implementing such a broad-based support measure is doable and is the most important intervention that the government should pursue urgently.
- Finally, the proposed cash assistance programme should be regarded as complimentary to the already declared intervention measures. In fact, it will make the government support mechanisms comprehensive. The expansion of the safety net programmes, as announced by the government, should be implemented in addition to the cash assistance programme to make the overall support system more impactful.
CONCLUSION: The unprecedented challenge of supporting a very large number of people should be dealt with through a well thought-out, timely and apt policy interventions. Millions of people have lost their jobs and livelihood opportunities and are in need of immediate support for their basic needs. The crisis inflicted by Covid-19 is going to be a protracted one and economic recovery may not take place any time soon. This means poor and vulnerable households - now much bigger than that of the pre-crisis situation - are likely to require assistance for several months.
The government has already announced the stimulus package related to economic recovery. What now needs more attention is providing direct income support to the poor and vulnerable people. Hunger and deprivation of bare minimum needs could spark social unrest, potentially undermining our hard-earned socio-economic progress over the past decades. Lockdown and social distancing can only be effectively enforced when people have basic means to stave off hunger.
It is possible to reach out to the poor and vulnerable population groups through direct cash assistance. The use of the digital financial mechanism provides an already proven route for such intervention. The proposal suggested in the article shows that implementing a cash assistance programme, offering some reasonable assistance for basic needs, for 10 -12 million people is very much within our fiscal and technological means and thus should be pursued immediately.
Dr Ahsan H Mansur, Executive Director, Policy Research Institute of Bangladesh (PRI); [email protected];