The government has signed a $300m financing agreement with the World Bank (WB).
The agreement was signed on Sunday, at the Economic Relations Division, by Mahmuda Begum and Qimiao Fan, on behalf of the government of Bangladesh and the WB, respectively.
The deal aims to improve the transparency and efficiency of Bangladesh’s major cash transfer programs for the poorest and vulnerable— including for the elderly, widows, and people with disabilities.
The cash transfer modernization project will help the Department of Social Services (DSS) modernize Bangladesh's four major social protection programs, using cash transfers, by improving beneficiary targeting, program administration, and benefit payments.
The programs provide allowances for: the elderly, widows, deserted and destitute women, the financially insolvent, and the disabled. It also provides stipends for disabled students.
These programs, collectively, will reach about 6.5 million people.
World Bank Country Director for Bangladesh, Bhutan, and Nepal Qimiao Fan said: "An efficient, automated, and transparent social protection service delivery system is critical to build resilience and create opportunities for the poorest people.”
He said the: "World Bank is helping the government build common digital platforms to better administer safety net programs.
“This will help reduce administrative costs and errors by identifying the most vulnerable people with greater accuracy and transferring cash in a timely manner."
In fiscal year 2018, Bangladesh spent about $5.8bn – or about 2% of its gross domestic product (GDP) – on social protections; improving the efficiency of these programs will help Bangladesh to use public resources more effectively.
The DSS has already started digitizing the records of beneficiaries of its cash transfer programs— and the project will help further strengthen case management and payment processes.
The WB said that to accurately identify the recipients of cash transfers, the project will help integrate DSS's management information system with the Bangladesh Bureau of Statistics' National Household Database.
For more secure and accessible payments to beneficiaries, the system will be linked to the Finance Division's centralized payment platform, and use a network of banking agents.
Additional Secretary of Economic Relations Division Mahmuda Begum said: "The government is committed to developing a digitized, modern, social protection service delivery system.
"This project is a critical step forward towards this vision and aligned with the National Social Security Strategy, 2015."
The credit is provided by the International Development Association, the WB's concessional lending arm, which provides grants and zero-interest loans.
The credit has a 38-year term, including a six-year grace period, and a service charge of 0.75%.
