BANGLADESH — The non-government organization BRAC has created a digital cash transfer program to help impoverished Bangladeshi families in need during the COVID-19 pandemic. BRAC will give 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 get much-needed funds to vulnerable populations quickly and safely amid the pandemic.
Though Bangladesh’s poverty rate has decreased by 30% since 1991, 14% of the country’s 161 million population is living with under $1.90 per day. As of April 2020, 85% of the working population in Bangladesh earns $6 or less for a day’s work. A BRAC survey found that 35% of Bangladeshi families have had at least one member lose their job since March 2020 due to the COVID-19 pandemic. The average household has reported a loss of almost 74% of their family’s income since the pandemic began.
What is BRAC?
Bangladeshi accountant Sir Fazle Abed founded BRAC in 1972. BRAC (then known as the Bangladesh Rehabilitation Services Committee) originally meant to help war refugees in Bangladesh. It has since evolved to fight poverty of all kinds through a variety of programs. The BRAC website describes its mission as “to empower people and communities in situations of 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 Cash Helps Poverty in Bangladesh
With the government shutdown resulting in many Bangladeshis out of work, cash transfers can provide households with the money they need to survive until they can return to their employment or find a new job. Digital cash transfers are considered more secure and safer 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 being transmitted through surfaces.
Around 87% of Bangladeshi workers operate in the so-called “informal sector,” meaning the sector of the economy that is not formally monitored and regulated by the government. These employees do not receive paid leave, health insurance or other benefits through their employer. Since the COVID-19 induced government shutdown began, a million employees in the Bangladeshi garment industry alone lost their jobs. When workers do not have employer benefits or savings, digital cash transfers provide Bangladeshi households with the necessary funds to survive until they can go back to work or find another job.
In the first installment of payments in April, BRAC provided around 100,000 families with $18 each. In Bangladesh, that is enough to feed a family of four for at least two weeks. Later on, BRAC provided more than 170,000 families with $3.2 million in grants. It has also provided insurance and savings benefits to those in need.
Though COVID-19 induced government shutdowns have caused uncertainty for many households, BRAC’s digital cash transfer initiative has provided more than 150,000 families with a financial boost to help them through these difficult times. This initiative will help reduce the number of people who will fall into poverty in Bangladesh.
– Jackie McMahon