“Moving Out of Low Poverty Trap:
Investing at the Bottom of the Pyramid”
A. Q. M. Golam Mawla
General Manager, PKSF
Dhaka, Bangladesh
29 October 2014
4/8/2015
1
Extreme Poverty (EP) in Bangladesh
food-energy intake: <1,805 Kcal per day
Schematic representation of
different population segments
for inclusive financing
 per capita income: < TK. 1103 per month
 Around 17.5 million extreme poor
Near
poor
15 % above
PL
26 % below
PL
Mainstream microfinance
(540)
Poverty line
26%
Very poor program
(12.4%)
Bottom
12.4%
4/8/2015
EP communities (in million)
• Dalit, & socially excluded
communities (5.5)
• Tribal/ethnic communities (1.2)
• Tea garden labourers (0.1- 0.3)
• Beggars (0.7)
• Domestic help (0.42)
• Physically handicapped
population (10.6%, WHO)
• Street children (tokai)
• Economically insolvent elderly
people (appx 7% of total
population)
• Extreme poor living in ‘haors’
(5.5)
• Extreme poor living in climate
change vulnerable areas/Chars
 Insufficient economic
opportunities
 Poor access to public services
& transfer
 Vulnerable to external shocks
 Face health and nutrition
vulnerability
 Gender inequity and
marginalised group specific
risks & vulnerabilities are also
prominent
 Extreme poverty is often
chronic – it passes down from
one generation to the next.
4/8/2015
3
Occupational Distribution of extreme poor
Salient characteristics
 Not homogeneous
 Vulnerable, limited access
to basic needs
 Mostly unskilled
 Highly dependent on day
labor/wages (low-paid wage
labor)
 Often excluded from the
society
Occupational Distribution of 1 million
participants of PKSF’s UPP programme
Traditional Beggars, 0.70%
Jobholders,
3.84%
Others, 7.95%
Day Labourers
(on-farm),
35.92%
Domestic Help,
2.49%
Small
Entrepreneurs,
17.10%
Rickshaw/Van
Pullers, 13.18%
4/8/2015
Sex-workers,
0.07%
Day Labourers
(off-farm),
18.76%
Need to Address the Multidimensional Aspects
of Poverty
“A condition characterized by
severe deprivation of basic
human needs, including food,
safe drinking water, sanitation
facilities, health, shelter,
education and information. It
depends not only on income
but also on access to services.”
– UN, 1995
 Dimensions
+ Indicators
 Income
+ Food poverty line
 Health
+ Daily protein intake
Multidimensional Poverty
Index (MPI) of UNDP measures
not only income, but also basic
needs and living standard
Living Standard + Type of toilet
+ Living space
In Bangladesh, 58%
population are MPI poor
+ Source of water for
drinking, cooking, and daily work, etc.)
Education
+ Years of schooling
+ School attendance
+ Electricity, etc.
Access to safety net
+ Cash/food for work
+ Elderly benefits/ allowances, etc
4/8/2015
Income poverty improved but
nutritional status still remain
alarming!
Nutritional status of mother
and
under-5 children (per cent)
41
36
24
16
• 41% of children under age
5 are stunted,
• 16% are wasted, and
• 36% are underweight
• 24% of women have BMI
<18.5
6
Key drivers for EP eradication in Bangladesh
• Remittance inflow – Nearly 8 million migrant workers
contributing $12.5 billion/year
• Microfinance – As of 2011 , 34.36 million HHs availing US$
5.83 billion as microcredit
• Ready Made Garments (RMG) – Employ over 4.5 million worker
mostly women and contribute 10.5% of GDP
• Many fold increase in Agricultural production – Employ nearly
23 million people (nearly 48% of the employment)
• Expansion of Social Safety Net Programme – Covering 9.04
million man month at a cost US$ 3.25 billion
• Human capacity development – Education, Vocational & Skill
Training, Woman empowerment
7
Related Issues
 MDGs Achievements
 Reducing poverty
 Child mortality reduction (own UN award)
 Attaining gender equality
 Maternal Health improvement
 Universal primary education
 Post-2015 Sustainable Development Goals (SDGs)
 Bangladesh resets its goal of ending extreme poverty by
2022
 Targets to be middle income country (MIC) – reaching
threshold per capita income of $1,130 – by 2021
4/8/2015
8
Productivity
 Productivity is an average measure of the efficiency of
production - i.e. output per unit of input. The production
performance can be measured as an average or an
absolute income.
 Productivity is a crucial factor in production performance of
firms/ economic activities. Increased productivity helps
raising living standards because more real income improves
people's ability to purchase (i.e. higher purchasing power).
Productivity growth also helps businesses to be more
profitable.
4/8/2015
9
Low Productivity Trap
Low Human
Capital
Low financial
resources
• No/little education
• No/little technical skill
•Little productive assets
•Difficult and adequate access to
financial resources
•Little risk coverage
Little/no access to • No/little access to land, water
natural resources and other natural resources
High vulnerability
Poor market
accessibility
• Vulnerable to climatic/manmade disaster
Low
investment
/input
No/little
marketable
products
• Remote geographic location
• Subjected to social
Little social capital discrimination
4/8/2015
Low
Productivity
Extreme
poverty
No/Little
income
Strategies for Removing the Trap
Expanding Opportunities (i.e. promoting
sustainable livelihoods)
 Facilitating Empowerment (enhancing
access to services)
 Ensuring Protection (both covariant and
idiosyncratic - need to be addressed)
4/8/2015
11
Promoting Sustainable Livelihoods
 A livelihood is sustainable when it can cope with and
recover from stresses and shocks, maintain or enhance its
capabilities or assets, while not undermining the natural
resource base
 Livelihood strategies
Reduced reliance on day-labour
Creating ‘livelihood ladders’
Enhanced regular income from market-based IGAs
 Livelihood outcome
o More income & increased well-being
o Reduced vulnerability & improved food security
o More sustainable use of NR base
 Key questions:
What will be transforming structures and process?
What will be role of government/private sector/MFIs?
4/8/2015
12
Removing constraints of the bottom poor –
Demand Side Issues
 Technical know-how and demand-driven technical
services
 Appropriate financial services
 Market linkage - quality assurance, knowledge on market
demand
 Potential areas of investment
o Farming (Livestock)
• Goat (Black Bengal, Boer, Jamnapari) or sheep
(Chotanagpur, Dmarah, Suffolk) farming : Buck center,
Small breeding unit,
• Dairying (Fresian cross - at least 8 litter average milk)
• Beef (Crossbred bull calves, Pabna/shahiwal)
o Land leased based farming specially in char area
o High value commercial vegetable gardening
o Off-farming- Small business, vocational trades, tailoring
4/8/2015
13
Homestead Gardening
Traditional gardens are scattered,
seasonal
Investment
Net profit
BDT 530-650/Total investment BDT
decimal year.
60-80/per
Provide vegetable
decimal/year.)
42.89 gm/person/day.
Traditional vegetable garden
Developed gardens produce vegetables
throughout the year, produce more varieties
of vegetables and are on fixed plot of land
(bed system-Robi, Kharif-1, Kharif-2).
Investment
Total
investment
BDT 180-200/- per
decimal/year.)
Net profit
 BDT 2,350-2,600//dec/year.
Provide vegetable
364.56 gm/person/day.
Developed vegetable garden
Small Scale nursery
Investment/1decimal
Total
investment
(seed,
tree/fruit sapling, fertilizer etc.)
BDT 25,400/- per decimal/year.)
Income
Income BDT 53,600/- per
decimal land/year.
Native Shing/Magur, Tengra, Koi fish culture
 Magure/Shing culture/2decimal pond
Investment
Net profit
Total
investment
BDT 13,800/- per
decimal pond/year (2
crops/year.)
BDT 18,200./- per
decimal/year (2
harvest/year)
 Thai koi culture/2 decimal pond
Investment
Total
investment
BDT 5,500/- per
decimal pond/year (2
crops/year.)
Net profit
BDT 8,500/- per
decimal/year (2
crops/year)
16
Fish Culture (Crab fattening)
Traditional method crab fattening- encircle
earthen area (Pond/Gher)-
Investment
Total investment BDT
45,800/- per decimal
pond (20 crops/year.)
Net profit
BDT 11,000/- per
decimal pond (20
crops/year)
Crab fattening pond
Scientific method crab fattening -bamboo
made floating caseInvestment
 Total investment BDT
2,64,770/- from 30 cage
(40m2 area) within 12
crops (12 days/crop)
Net profit
BDT 91,630/- from
30 cage (40m2 area)
within 12 crops (12
days/crop)
Reference: M. Begum et. al 2009
Crab fattening bamboo made case
Black Bengal Goat (BBG) rearing
LIFT Intervention at WAVE
a) Total HH (BBG rearer): 6382
b) Total goat: 44895
60000
50000
40000
30000
20000
10000
0
Traditional
a) Non descriptive housing
b) flock size: 1-2 doe
c) No attention to health
d) Small litter size (less than 2)
e) High mortality
Investment (yearly)
Goat & treatment: 8000/--10000/Income: Kid: 3500/-5500/Net profit: 2500/-3500/-(2 cycle)
Asset: Doe-5000/--6000/-
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
No. Goat
HH's
Improved
a) Maccha rearing
b) flock size: 4 doe
c) Regular vaccination & deworming
d) Good litter size (2 or more than 2)
e) Low mortality
Investment (yearly)
Housing, Goat, feed & treatment: 25000/--30000/Income: Kid & doe- 42,000/--45000/Net profit: 15000/--18000/- (2 cycle/year)
Asset: Doe & house-17000/-19000/-
Buck Service Centre
Feature:
a) Maccha housing
b) flock size: 4 buck
c) Regular vaccination & deworming
d) Natural Insemination once daily
e) Ensure trabis
f) Natural Insemination (NI)charge-100/Investment (yearly):
Housing, Buck, feed & treatment:
50000/--55000/Income:
NI charge- 1,00,000/--1,10,000/Net profit:
45000/--50000/- (3500/--4000/- monthly)
Asset:
Buck & house-28,000/-30,000/-
Toward new technology
Vermicompost Production (semi-commercial)
Feature:
a) Produced by the worm (cow dung, kitchen
waste)
b) Improves soil organic matter (5%) content
c) Improves germination rate, crop’s growth &
yield
Investment (yearly):
1. Rings (10 no’s):
2500/2. Vermin (20000 no’s):
20000/3. Cow dung (12000kg): (self)
4. Sac, sieve, net:
1700/Total: 24,200/Income:
Vermicompost (4800kg) &
Vermin (80000 no’s): 1,37,600/Net profit:
113400/- (8 batch/year) i.e. or 9450/- monthly
PRIME Intervention
 No. of farm established: 18045
(Small & semi-commercial)
 Total investment: 42.8 million
 Total Production: 14454 ton/year
 Income: 173 million (except vermin)
Quail (layer) Production
Feature:
a) Need Low Investment
b) Starts laying at six to seven weeks of age
c) Laying 280 to 295 eggs/year.
Investment: Cage, Quail, feed & other: 48,000/Income: Egg, Quail & other: 67,000/Net profit: 16,000/--18,000/- (one year)
Asset: cage & equipment- 5,000/-
Rabbit Production
Feature:
a) Short gestation period (30-32 days)
b) Give birth 6-8 time per year
c) Addressing the tribe
Investment: Cage, rabbit, feed & other: 23,000/Income: Rabbit: 31,500/Net return: 7000/--8000/- (7 kitting/year)
Asset: Rabbit, cage & equipment- 8,000/-
Off-farm Activities
Mat making
Basket making
Investment
Investment
 Total investment 20,400.00 BDT
(training, equipments, cloth etc.)
 Total investment 5,400.00 BDT
(training, materials etc.)
Income
Income
Income 2,600.00-3,200.00
BDT/month
Monthly income 3,500.005,500.00 BDT/month
Off-farm Activities
Omanian cap
Investment
 Total investment 3,000.00
(Training, cloth, thread etc)
Income
BDT
Monthly income 2,000.002,500.00 BDT (4 cap/month)
Off-farm Activities
Tailoring
Investment
Stitching
Investment
 Total investment 25,000.00 BDT
(training-6months, machine, cloth,
etc.)
 Total investment 8,000.00 BDT
(training)
Income
Income
Monthly income 2,500.003,500.00 BDT
Monthly income 2,500.003,000.00 BDT
24
Vocational Activities
Mobile Servicing
Hosiery
Investment
 Total investment 8,140.00 BDT
(training)
Income
Monthly income 6,000.0010,000.00 BDT
Investment
 Total investment 70,600.00 BDT
(training,
machine,
equipments,
computer etc.)
Income
Monthly income 10,000.0015,000.00 BDT
Vocational Activities
Mechanic
Electrical
Investment
Investment
 Total investment 30,500/-BDT
(training, equipments etc.)
 Total investment 22,600.00 BDT
(training)
Income
income
Monthly income 6,000.00-8000.00
BDT
Monthly income 6,000.0010,000.00 BDT
Education Program
ENRICH
• Total Centres- 3239
• Total
86,745
Students-
• Each SK has on the
average
26
students per centre.
• 53% of students are
girls.
• Low cost:
Cost/Centre/Year-Tk.
26,250/• Ultra-poor and poor
students are achieved good
results in their school exam.
•% of dropped-out: 7%
• High appreciation from the
society
Moving Forward
 Living remains no more a daily struggle
 Attaining qualitative economic security. It’s a result of
many small qualitative changes in livelihoods
 New livelihood strategies have to contribute in increasing
the purchasing power of the households
 Considering heterogeneity, need further stratification
within the extreme poor
 Expanding economic opportunities to create ‘livelihood
ladders’
 Promoting high earning livelihood strategy
 Identifying and exploiting new income generating
activities and making markets work for the extreme poor
 Growth of homestead economy as a source of cash
income
 Acquiring new skill to enhance the scale of operation
4/8/2015
28
Removing constraints of the bottom poor –
Supply Side Issues
• Mind-set of development agencies yet to be re-oriented
toward addressing the bottom poor. Besides, they are not
technically and financially equipped to address the bottom
poor issues. Furthermore, they do not have sufficient
trained staff to handle the issues of bottom poor.
• Absence of targeted, long-term, flexible programme for
the bottom-poor
• Both government and non-government agencies are
shying away from the poor of vulnerable disaster prone
areas.
4/8/2015
29
Conclusion
 PKSF attempts to expand growth-oriented marketbased activities for the poorest
 Multidimensional aspect of poverty must be
addressed
 Making sufficient investment for enhancing human
and social capital
 A more focused and programmatic approach has to
be undertaken
 Expanding employment opportunities in both formal
and informal sector is crucial
 Identify and expand market linkages for the poor
4/8/2015
30
Thanks
4/8/2015
31