Assessment gap leads to more Covid stimulus for organised businesses  

A lack of sector-wise need assessment let organised business groups including apparel-makers secure more Covid stimulus compared to the country's hard-hit informal sectors and small ventures, said economists.

At a virtual discussion Saturday, they said the business groups were organised enough in reaching the policymakers, while the government could not reach out to the informal sector thanks to its weaker institutional capacity and a lack of data.

"We need to switch to evidence-based capability from policies on guesswork. Weaknesses in institutional capacity can undermine transparency and accountability," Research and Policy Integration for Development (RAPID) Chairman MA Razzaque told the programme jointly organised by Asia Foundation, Economic Research Forum (ERF) and RAPID.

Agreeing over a lack in institutional capacity, Planning Minister MA Mannan told the discussion that the government emphasised prompt disbursement of stimulus instead of need assessment.   

"There were some inclusion and exclusion errors at the beginning, but those had been corrected later," said the minister. "When a fire breaks out, you need to pour water hurriedly without wasting time in thinking too much. The government did the same thing."

In the keynote paper, MA Razzaque said the government did not even conduct any impact assessment after beginning the stimulus disbursement in 2020.

He said the first package of the stimulus was for staff salaries in export-oriented sectors, while packages for the small and medium enterprises were announced later. However, contractual workers and apprentices in the export-oriented sectors were excluded from the staff salary package.

"The garment sector bounced back quickly with stimulus support. But many in the informal sector remained out of support, while there had been no unemployment protection," he said.

MA Razzaque said, "We have a long-standing weakness in identifying the beneficiaries of social safety programmes. The vulnerability was further compounded when the government announced cash support to 5o lakh families. Some 15 lakh families did not get the support due to a lack of a proper database."

He said showing Tk9,500 crore agri-subsidy in social safety programmes in the national budget was not right. The economist, however, commented that the government's food assistance met with success.   

UNDP Country Economist Nazneen Ahmed underscored area-based need assessment in distributing the stimulus, and she said it would also play a crucial role in achieving the sustainable development goals.

Khairuzzaman Mozumder, additional secretary at the Finance Division, told the programme that there are no issues in social safety allocation, rather the targeting is not accurate.     

He said there are plans to further expand the social safety net, introducing pensions for all and insurance for workplace accidents.

According to the public official, 60% of the stimulus has been disbursed so far, benefiting 6.79 crore people.

Khorshed Alam, deputy managing director of Eastern Bank, said, "We first gave the loan for a period of one year. Now it has to be extended for another 1-2 years under the direction of the Bangladesh Bank. The impact on the banking sector will be reflected in the balance sheet in the next one to one-and-a-half years."

Monowar Hossain, chief financial officer of Agrani Bank, said banks are meeting their stimulus disbursement targets. But they cannot assess whether the right people are getting the loans since risk assessment dictates the lending.

The discussion was chaired by ERF President Sharmin Rinvi and moderated by General Secretary SM Rashidul Islam.