POVERTY

Concept of poverty and livelihood

Poverty is a multidimensional concept. The concept of poverty, its causes and consequences, vary from country to country and society to society. Therefore, definitions of poverty, its causes and associated factors were generally dealt with from different socioeconomic viewpoints by various authors.

Krishna (2004) studied the causes of poverty in India. The author observed that there were three major reasons for the Indian households to fall in poverty. According to the author, the reasons were (i) burden of health expenses (e.g. illness, accident etc), (ii) borrowing at high interest rate (e.g. borrowing from local money-lenders), and (iii) social expenses (e.g. expenses on death feast or marriage).

Aliber (2003) conducted a study on the causes of poverty in South Africa. The author pointed out that inter-generational poverty (poverty transmitted from generation to next generation) in South Africa, is not caused by colonialism, but due to lack of infrastructure facilities, people living in rural areas without economic prospects and lack of opportunity to accumulate human and other capitals. The author stated that in the context of South Africa, many households were stuck in the rural areas without land and resources for agricultural activities. The author also indicated that elderly people and female-headed households were mainly the victims of chronic poverty.

Hulme and Shepherd (2003) conducted a study on the Least Developing Countries (LDCs) like Bangladesh, Pakistan, India. They focused on the concept of chronic poverty and its causes in the LDCs. From their viewpoint, chronic poverty can be termed as the significant deprivation of individual capabilities for five or more years. They showed evidence that poverty had multidimensional perspectives. According to them, poverty was caused by various social, economic, political factors like lack of assets, low per capita consumption, lack of human development, living in inaccessible areas and inherited poverty.

Mckay and Lawson (2003) assessed the extent and nature of chronic poverty in lowincome countries. They indicated that chronic poverty was positively associated with the various factors like lack of human capital (such as illiteracy), higher dependency ratio, lack of physical assets, and locations. They found that chronic poverty was more prevalent in the rural areas than urban areas. On the other hand, according to them, transient poverty was related to lower level of assets base, inability of the households to insure themselves against fluctuations due to household shocks (such as death or illness) or external shocks (for instance, price fluctuation and job unavailability etc).

Mitlin (2003) studied urban poverty in some cities of Asia and Africa. The author pointed out that the issues like lack of income, lack of assets, inadequate shelter, lack of infrastructure facilities, lack of basic services (e.g. training, health care, school etc), law enforcement, limited or no security in ensuring consumption when income falls, limited

civil rights, violence and powerlessness within the political system and state bureaucratic structure must be included in the concept of poverty.

Sen (2003) conducted a survey on 379 rural households in Bangladesh. The author identified several causes of poverty for the rural households which were; (i) people living in remote areas, (ii) unfavorable agricultural environment, (iii) lack of rural infrastructure facilities, (iv) illiteracy, (v) involvement in agricultural wage labor and (vii) lack of assets among households. The author emphasised on providing credit facility to the poor, enhancing food production, agricultural diversification, development of non-farm sector and human capacity in terms of health care, education and nutritional aspects are important in reducing poverty.

Khan (2000) conducted a study on the poverty of developing countries like Bangladesh and Sub-Saharan countries. The author identified several sources of persistent and high level of rural poverty in developing countries. According to the author, small size and poor quality of agricultural land, unfair tenancy arrangement, unstable employment opportunities and low returns to labor inputs, inadequate access to financial capital (credit) to meet investment and consumption needs, inadequate and poor quality of physical and social infrastructures and absence of safety nets were the main sources of poverty in developing countries.

Smith et al. (2000) conducted a study on the causes of food insecurity in developing countries. According to them, people living in absolute poverty could not cater their

food needs in a sustainable way. They also stated that, people having income less than 1 USD per day need to be treated as absolute poor.

Srinivasan (2000) studied the poverty of several South Asian countires such as Bangladesh, India, Srilanka, Pakistan and Nepal. The author mentioned that an individual would be considered poor if he or she could not afford to meet the minimum requirement of food, clothing and shelter to sustain life.

Zeller and Sharma (2000) conducted a study on the poverty of Asian and African countries like Malawi, Madagascar, Nepal and Bangladesh. They observed that in Malawi, Madagascar, Nepal and Bangladesh more than half of the sampled households were living below the poverty line due to low level of income to secure their basic needs. According to them, majority of the poor lack education and inadequate land for cultivation. The authors also mentioned that the low income they (sampled households) derived from agricultural activities was not sufficient to support their large families.

Uzma et al.(1999) conducted a study on the urban slum of Dhaka city in Bangladesh to examine the health, nutritional status and health care seeking behaviors of women. They found that because of severe economic, environmental and social deprivation; the sampled women were having very poor health.

Chowdhury and Bhuiya (2004) examined the impact of microcredit program on the welfare of rural poor in Bangladesh. They mentioned that human welfare must be

conceptualized based on the multidimensional aspects. They identified seven dimensions which were closely linked with human well-being namely, (i) increased income or livelihood security, (ii) increased nutritional status, (iii) decreased morbidity, (iv) decreased mortality, (v) health or sustainable environment, (vi) control over fertility and (vii) improved womens livelihood.

Shrestha and Shivakoti (2003) mentioned that livelihood could be viewed as the combinations of five capitals such as human, natural, physical, financial and social capitals and these assets were closely linked to each other. They indicated that variations in accessing such assets provided different livelihood options.

Bebbington (1999) developed an analytical framework in the context of Latin America for analyzing the rural livelihood. The author indicated that the livelihood framework was developed based on the access to the five types of capital assets i.e natural, produced, human, social and cultural assets. Accroding to the author, access to diverse assets, peoples ability to defend and sustain assets, peoples ability to transform those assets, peoples ability to expand asset bases and peoples ability to enhance their capability for meaningful livelihood must be considered in the livelihood framework.

In light of the above discussion, it can be stated that the concept of poverty, livelihood and human welfare must be considered from different perspectives such as income, health, education, employment, ownership of assets and social security aspects. In fact, livelihood is the combination of different factors and such factors are closely interlinked

with each other. Poverty and livelihood patterns vary between individuals to places and times due to the heterogeneity of the socioeconomic, geographic and political factors.

Classification of Poverty

Poverty can be classified in different ways based on countrys culture, economic activities and physical environment. However, it can Broadly classified in to two categories such as :

i. Absolute poverty: Absolut poverty is a condition undeer which peole lack access to basic needs bundle of goods and services either through exchange entilement or otherwise. The implication of absolute poverty is reflected in a soiety in the form of famine, destitution, deprivation, landlessness, unemploymnet, child labor, illiteracy, illhealth and lack of access to basic needs.

ii. Relative poverty : The relative poverty is a condition under which people lack access to opportunities and choices to their fullest and consequently fail to contribute to the family , community and society with their best potentials. Under the condition of relative poverty people lack dignity, self esteem, entitlement, participation and gainful employment. Poverty can also be classefied based on the duration of poverty which were:

(i)

Chronic poverty : A farmer who had lost his harvest due to adverse weather might be poor in the year but the farmer would not be poor with the normal weather, such poverty can be treated as transient poverty (Srinivasan, 2000).

(ii)

Transient poverty. On the other hand, a farmer who had a small piece of land and failed to have the adequate harvest even with the ideal weather condition, such poverty was identified as chronic poverty (Srinivasan, 2000).

Causes of Poverty

A single factor may not be a cuase of poverty. Several factos are related for causing poverty and the causes of poverty vary place to place, time to time and society to society. The major causes of poverty could be : 1. Lack of productive resources such as agricultural land, finiancial capital etc. 2. Lack of food production and mal-distribution of food 3. Lack of employment opportunity 4. Illiteracy 5. Lack of healthcare facility 5. Lack of modern teachnology of crop cultivation 6. Lack of access to the finnacial facilities for pursuing income genearting activities 7. Political and social unerest such as war, revolution, terrorism etc 8. High rate of inflation 9. Corruption, lawlessness and nepothism in the socio-political system of the country 10. Environmenat hazzard 11. Lack of infastructural facilities. 12. Gender disparity

Consequences of Poverty

1. Low rate of GDP growth 2. Obstacles for inovation and modern techniuque of production system 3. Increases unskilled labor force 4. Increases the probability of political instability 5. Reduces life expectancy 6. Increases the chance of gender disparity 7. Increases the chance of corruption, nepotism, expolitation and racialism 8. Creates obstacle for increasing social, political and environmtal awareness 9. Increases the probability of social insecurity and vendalism. 10. Leads to lower level of living-standard.

Selected Economic and Demopraphic Indicators of Poverty

There are several factors that might effect poverty. Therfore, poverty sitution of a country needs to be evaluted based on the various factors rather than a single factor. There are several demoprhpic and economic factors that might be considered as indicators of poverty. The important indicators are identified as : 1. Percentage of population earn less than 1USD/Day 2. Per capita GDP 3. Life expectancy 4. Literacy rate of the population of a country 5. Mother an infant motality rate
9

6. Access to Health care facility ( such as nuber of doctors, nurse, hospitals per person ) 8. Prevalence of malnutrition (%) 9. Access to infastructural facilities of a country (such as roads, number of vehicles) 10. Acess to safe drinking water and sanitation (%) 11. Percentage of consumption of engery (such as electricity and gas) 12. Per capita consumption of ceral food Table 1 shows that demographic and economic indicators of selected asian countries of ASIA. As can be seen from the Table 1 Srilanka is in better postion as compared to other countries like Bangladesh and India considering indicators of income, healhcare and education.
Table 1 : Demeographic and economic indicators of South Asian Countries, 2005 Indicators Population income below 1 $ GNP per capita ($) GDP Growth in % Life expectancy Literacy: Primary Com. Literacy: Gender Parity Mat.Mortality100,000 LB % of birth by skilled Bangladesh 41.3 480 4.9 63(M), 65(F) 76 103 380 13 Pakistan 17.0 770 4.1 64(M),65(F 63 75 500 31 India 34.3 820 7.7 63(M),64(F) 90 89 540 43 Myanmar 30 3.9 58(M),64 (F) 48 56 78 Sri Lanka 5.6 1,300 6.6 72(M), 77(F) 97 102 92 96 6,860 10,226

attendant Export: Million $ 12,050 16,917 120,168 Import: Million $ 16,100 29,825 174,376 Sources: World Development Report-2008, World Bank, BDHS-2007

10

Poverty Situation in Bangladesh

Bangladesh is a developing country having low per capita income and inadequate resources. Accoding to Bangladesh Bureau of Statistics, 2008; per capita income for Bangladeshi citizens was USD 520 in 2006/07. Due to low per capita income, people cannot adequately satisfy their basic needs like food, clothing, medical and education facilities. In fact, most of the people are living in poverty. In the context of Bangladesh poverty was measued based on two method which were (i) Direct Calorie Intake (DCI) menthod and (ii) Cost of Basic Needs (CBN) methods. DCI method is used to calculate the insidence of absolute poverty where population or households fall below threshold calorie intake of 2121 kilocalories per person per day; similarly a person having daily calorie intake of less than 1805 kilocalories is considered to be in hard-core poverty. In Household Expenditure Survey (HIS) Conducted in 1995/96, The BBS for the first time adopted the CBN menthod for constructing poverty line; similarly HIS of 2000 and 2005 CBN method was used. With this method, an absolute poverty line is defined as the value of consupmtion needed to satisfy minimum subsistence needs (Bangladesh Economic Review, 2008).

According to the Bangladesh Economic Review, 2008; at the national level, the rate of poverty in 2005 were 40 percent based on Cost of Basic Needs (CBN) and 56 percent based on Direct Calorie Intake (DCI) mentod repectively. In Bangladesh, rural people are more in poverty as compared to urban poverty. Latest Household Expenditure Survey (HES) of 2005 showed that the rate of rural and urban poverty in Bangladesh were 43.8 percent and 28.4 percent respectively based on CBN method. Among the six
11

divisions , insidence of poverty was highest in Barisal division and it was lowest for Dhaka division (Bangladesh Economic Review, 2008). Table 2 shows the Division-wise insidence of poverty in Bangladesh.

Table 2: Division-wise Insidence of Poverty in 2005 by CBN Method (%)

Division / National National Barisal Chittagong Dhaka Khulna Rajshahi Shylhet Using Lower Poverty Line National Rural 25.1 35.6 16.1 19.9 31.6 34.5 20.8 28.6 37.2 18.7 26.1 32.7 35.6 22.3 Urban 14.6 26.4 8.1 9.6 27.8 28.4 11.0 Using Upper Poverty Line National Rural 40.0 52.0 34.0 32.0 45.7 51.2 33.8 43.8 54.1 36.0 39.0 46.5 52.3 36.1 Urban 28.4 40.4 27.8 20.2 43.2 45.2 18.6

Source: Bangladesh Economic Review, 2008

Land is scarce in Bangladesh. Due to small size of land, people cannot utilize their land resources for productive purposes properly such as crop cultivation. Poverty incidence and ownership of land holdings are inversely related. Poverty incidence is lower for the households having large land holdings as compared to the households having small land size. Because, land is a valuable resource for the poor. It increases their investment and risk bearing ability and it also can be used as collateral to fulfill their capital needs for starting the income generating activities. Poverty situation based on land category is shown in Table 3. As can be seen from Table 3 that the rate of poverty reduces with the increase of land size. For instance, rate of poverty for the people having land between 0.01 to 0.04 acre was 25.1 percent while the poverty rate was 1.7 percent for the people having land 7.5 acre or more ( Bangladesh economic review, 2008). Table 3 : Incidence of poverty in 2005 based on land size (%)

12

Land size (acre) Less than 0.05 0.05-0.49 0.50-1.49 1.50-2.49 2.50-7.49 7.5 or more

National (lower) 39.2 28.2 20.8 11.2 7.0 1.7

National (upper) 56.4 44.9 34.3 22.9 15.4 3.1

Source: Bangladesh Economic Review, 2008

National Strategy for Poverty Reduction

1. Acceleration of pro-poor growth: A target of raising economic growth from 5.0 percent to 6-7 percent so that the proportion of poor people can be reduced by half by 2015. The other segments of the strategy include:

(i) A stable macroeconomic framework; (ii) Development of private sector; (iii) Sound and effective financial system; (iv) Strengthening institutional financial capability; (v) Rural development; (vi) Expansion of productive sector; and 2. Promotion of good governance: The government had planned to bring judicial reforms to infuse dynamism in judicial process, to bring basic reforms in police administration, and to ensure transparency and accountability in the use of public resources.

13

3. Investment in human development: The government had given special attention in enhancing the capacity of the poor by way of strengthening the health, education and nutritional programs. For this, the government had diverted and allocated more resources to these sectors.

4.Women development: Empowering women is important for the overall socioeconomic development of the country. The government had adopted several strategies to improve the women status which were:

(i) Policies and institutional actions to close the gender gap; (ii) Reduce violence against women; (iii) Remove hindrances to womens employment and economic opportunity; (iv) Reduce high maternal mortality; (v) Implement policies to ensure formal equality; and (vi) Create women friendly institutional environment.

5. Ensuring social security: The first set of policy focused on the safety net for the poor through food for work and income transfer programs such as old age pension schemes in rural areas. The second set of policy addressed the vulnerabilities of new poor like retrenched workers. The third set of policy put emphasis on the social solidarity as an important route of social interventions. Newly set up umbrella support organization such as Social Development Foundation (SDF) is to play an important role in fostering social

14

capital formation. The fourth set policy was related to risk insurance covering four categories such as (i) providing access to credit to the poor in times of emergency to ease the burden of shocks, (ii) ensuring good public health service to reduce health hazard related income and consumption shocks, and (iii) strengthening disaster preventing and mitigating mechanisms to enhance the coping capability of the poor in times of natural disaster and introducing effective measures to minimize suffering from violence and personal insecurity.

Organizations in Bangladesh Working for Poverty Alleviation

Poverty ia a curse for developing country like Bangladesh. The prime task of government is to alleviate poverty and to improve the quality of living-standard.several Government Organizations, NGOs and Foregin Agencies are working for poverty Alleviation. Major Organization are:

1. PKSF (Government Organization) 2. BRDB (Government Organization) 3. BARD (Government Organization) 3. Grameen Bank (Specialized Bank) 4. ASA (Local NGO) 5. Proshikha (NGO) 6. BRAC (Local NGO) 7. BARD (Government Organization) 8. IFAD (Donor Agency)
15

9. CIDA (Donor Agency) 10. FAO (Donor Agency) 11. UNDP ( Donor Agency)

REFERENCES: Aliber, M. (2003). Chronic Poverty in South Africa: Incidence, Causes and Policies. World Development, 31(3), 473490. Bangladesh Economic Review (2008) Finance Division, Ministry of Finance. Government of the Peoples Republic of Bangladesh.

Bebbington, A. (1999). Capitals and Capabilities: A Framework for Analyzing Peasant Viability, Rural Livelihoods and Poverty. World Development, 27(12), 20212044.

Chowdhury, A. M. R., and Bhuiya, A. (2004). The Wider Impacts of BRAC Poverty Alleviation Programme in Bangladesh. Journal of International Development 16(3), 369-386. Hulme, D., and Shepherd, A. (2003). Conceptualizing Chronic Poverty. World Development, 31(3), 403423.

Khan, M. H. (2000). Rural Poverty in Developing Countries: Issues and Policies (IMF Working Paper No- WP/00/78): International Monetary Fund.

16

Krishna, A., (2004). Escaping Poverty and Becoming Poor: Who Gains, Who Loses, and Why? World Development, 32(1), 121136.

Matin, I., and Hulme, D. (2003). Programs for the Poorest: Learning From the IGVGD Program in Bangladesh. World Development, 31(3), 647665.

Mckay, A., and Lawson, D. (2003). Assessing the Extent and Nature of Chronic Poverty in Low Income Countries: Issues and Evidence . World Development, 31(3), 425439.

Mitlin, D. (2003). Addressing Urban Poverty Through Strengthening Assets . Habitat International, 27, 393406.

17

Sen, B. (2003). Drivers of Escape and Descent: Changing Household Fortunes in Rural Bangladesh. World Development, 31(3), 513534.

Sharma, M., and Zeller, M. (1997). Repayment Performance in Group-Based Credit Programs in Bangladesh: An Empirical Analysis. World Development, 25 (10),1731-1742.

Shrestha, S. G. and Shivakoti, G. P. (2003). Prominent Livelihood Asset Pentagon Within the Analytical Framework of Irrigation System Performance Assessment. Asia-Pacific Journal of Rural Development, 13(1), 60-88.

Srinivasan, T. N.(2000). Poverty and Undernutrition in South Asia. Food Policy, 25, 269282.

Uzma, A., Underwood, A., Atkinson, D., and Thackrah, R.(1999). Postpartum Health in a Dhaka Slum. Social Science and Medicine, 48, 313-320.

World Bank. (2005b).World Development Indicators. Washington, D.C.: World Bank.

18

Zeller, M., and Sharma, M. (2000). Many Borrow, More Save, and All Insure: Implications for Food and Micro-finance Policy. Food Policy, 25, 143-167

19