The year 2016 will be remembered as a tumultuous year for Bangladesh, rocked by major security incidents involving deadly terrorist attacks that negatively affected the country’s image, both at home and abroad.
Despite this, Bangladesh still proved its resilience to such shocking events and continued on with its economic growth trajectory, recording an impressive GDP growth rate of 7.1% in 2016.
Bangladesh is currently the second-largest exporter of RMG in the world after China.
Foreign remittances continue to flow into the country in record amounts of roughly $14 billion per year from hard-working Bangladeshis residing in the Middle East and other parts of the world.
Signs of an economic boom are visible in and around the country’s cities, but especially in the capital, Dhaka, where hundreds of luxury cars and expensive new apartments concentrated in the posh residential areas overlook poor neighbourhoods and slums.
A record number of Bangladeshis are now going abroad for vacations and medical treatment, and sending their children to schools overseas for higher education. Many have acquired second and third homes in countries like Malaysia, Australia, Canada, the UK, and the US.
Signs of an economic boom are visible in and around the country’s cities, but especially in the capital, Dhaka, where hundreds of luxury cars and expensive new apartments concentrated in the posh residential areas overlook poor neighbourhoods and slums
In a country of 160 million, about 1% makes up this privileged class, and is comprised of people with the largest concentration of power and wealth.
This “elitist group” almost exclusively enjoys the benefits of economic growth in Bangladesh.
They are mostly business people who run family-owned businesses -- what is referred to as the “group of companies.” These groups of companies control vast amounts of wealth and own most of the banks and other financial institutions.
They also represent the majority of the law-makers in Parliament and hold influential government and private posts.
Their overall power and accumulation of wealth is unprecedented in Bangladesh.
So what about the other 99% of the population? According to the latest estimates from the Asian Development Bank (ADB), around 50 million people in Bangladesh continue to live below the poverty line -- the highest in South Asia.
The earnings gap between workers and owners is higher than ever in Bangladesh’s business sector, and even worse for the female labour force, who account for an estimated 45% of the population.
To make matters worse, because women face greater challenges accessing finance and information, female-headed micro and small businesses rarely get the opportunity to compete in the male-dominated arena of trade and commerce.
The stock market, which normally provides an avenue for common people to invest and participate in the larger economy, has been in shambles since the Bangladesh stock market crash in 2011 that sparked violent protests and left around 3 million small investors penniless.
A government-led investigation identified about 100 individuals -- many of whom represent the “group of companies”-- who were thought to have been involved in the manipulation of the market that led to the devastating crash.
However, no corrective or disciplinary action has been taken against them.
The incident broke the confidence of potential investors, including the Bangladeshi diaspora who continue to send their hard-earned money back home.
Given the lack of investment opportunity, most of the locally-generated savings and foreign remittances are used in buying non-productive assets like agricultural land or government savings bonds.
Bangladesh needs to come out of the mindset of a “trickle-down economy.”
It hasn’t worked. The ongoing capturing of economic opportunities by the elites and lack of investment opportunity for regular citizens have created an unmanageable gap between the “haves” and the “have-nots,” or the super-rich and the rest.
Now there is an urgent need for the government and development practitioners to address the growing income inequality.
Policies and structures need to be put in place that give common people the opportunity to reap the benefits of economic growth.
To do so, the government needs to ensure better transparency and accountability in the capital market, financial institutions, and public procurement.
It needs to provide a safe and supportive environment including infrastructure support (roads, energy, land) and create a level playing field for all, specifically for the small and medium-sized enterprises, to compete and participate in business opportunities.
The government should seek assistance from think tanks and research organisations in identifying prospective sectors that can provide investment and employment opportunities for all citizens of the country.
The inclusive growth strategy should empower people by creating employment opportunities, fostering the scope for greater labour force participation with decent wages, particularly for women, and supporting skill development in response to local and overseas market demands.
Inclusiveness should encompass more than income; it should include opportunity, decent employment, and access to services. These elements will be critical to Bangladesh’s transition from a lower-middle income to a middle-income country.
Hasan Mazumdar is The Asia Foundation’s country representative in Bangladesh. This article was previously published in asiafoundation.org.