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Bangladesh Country Brief

September 2004

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Over the past decade Bangladesh has reduced its infant mortality rate faster than any other country. However, malnutrition rates among women and children are among the highest in the world.

 

 

 JOINING HANDS, FIGHTING HIV/AIDS

Vigorous and immediate action is required for Bangladesh to avoid the devastating social and economic effects of a full-blown epidemic.

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While the number of HIV/AIDS cases in Bangladesh is still relatively low—around 13,000 people— the country has seen a growth in high-risk behavior including the sharing of infected needles by injecting drug users, low condom use within the country's large commercial sex industry, and blood transfusions from an unscreened blood supply. In December 2000, the World Bank approved a $40 million credit to help the country's fight against HIV/AIDS.

 

 

 

 

 

Improving Rural Access and Women's Lives

Eighty percent of Bangladesh’s 135 million people live in rural areas, often accessible only by unpaved, poorly maintained roads. As a result, sending produce to markets, seeds and fertilizer to farms, children to school, and family members to health clinics is time consuming, expensive, and—during the floods of the monsoon season—often impossible.

In addition to components in other rural development projects, the World Bank has committed nearly $200 million in financing and technical assistance for two Rural Roads and Markets Improvement Projects.

The projects have improved over 1,000 km of small or “feeder” roads and nearly 40,000 meters of structures, such as culverts and small bridges; helped build 35 river landings ghats; and improved maintenance systems in the project areas.

The projects improved public facilities—such as internal roads, paved areas, raised and covered selling areas, drainage, potable water supply, and latrines—at over 200 rural markets—the nerve centers of Bangladesh’s rural economic activity. They also added shops reserved for women—traditionally absent at markets in Bangladesh.

According to a study of the most recent project by the Bangladesh Institute of Development Studies, the labor force increased by over 4 percent more in project areas than in non-project, control areas.

About 5,700 maintenance crew members are engaged in year-round work in the project area. Of these, 4,200 are destitute women who had few or no alternatives to earn a livelihood. In addition, as a result of the project’s initiative, 13,000 destitute women are also now employed year-round outside the project area.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The IFC and MIGA

The World Bank Group's International Finance Corporation (IFC) has a local representative in the Bank's Dhaka Office. The IFC focuses on supporting private investments in infrastructure, agribusiness, and manufacturing and on developing financial markets. The IFC's portfolio in Bangladesh at the end of July 2004 stood at $166.6 million, comprising $115.9 million in loans, $12.4 million in equity, $5 million in guarantees, and $33.3 million in B-loans.

The IFC also manages the multi-donor funded South Asia Enterprise Development Facility (SEDF), which is helping to increase the competitiveness, performance, and growth of small and medium enterprises. In Bangladesh, the SEDF is assisting nine financial institutions who have, over the last year, provided $52 million in financing to small and medium enterprises. The facility has also worked with the Bangladesh Bank to train about 450 bankers in core risk areas.

The Multilateral Investment Guarantee Agency (MIGA), also part of the World Bank Group, is helping to encourage foreign investment in Bangladesh by providing guarantees in the manufacturing, financial, and infrastructure.

 

 

 

 

Bangladesh has made great strides in improving the lives of its people since gaining independence in 1971, yet it remains one of the poorest countries in the world. Its progress over the past two decades is evidence of a great potential that is still far from being realized.

Health and education levels have improved remarkably, and poverty has been declining. Reducing population growth and attaining gender parity in school enrollment rates are recent notable achievements. In the past decade, Bangladesh has reduced infant mortality by half—a faster rate than any other country—and has increased adult literacy rates by eight percent for women and six percent for men. The country has also achieved near self sufficiency in food production and made progress in improving its capacity to manage natural disasters and provide social safety nets which provide assistance to the country's poorest people.

Bangladesh's nongovernmental organizations (NGOs) are among the most active in the world, and successive governments have developed effective partnerships with them to improve services—such as providing small loans known as "micro-credit" for start-up businesses, non-formal education, and social mobilization to help strengthen poor communities and amplify their voice.

Economic performance has been relatively strong in the past decade, with annual GDP growth averaging five percent. The country has seen an emergence of progressive entrepreneurs, and good macroeconomic management has kept inflation in the single digits. Recent reform actions in fiscal management, governance, state-owned enterprises, banking, telecommunications, and energy have also shown encouraging results. Foreign direct investment flows have supported infrastructure, energy, and export-oriented manufacturing.

CURRENT CHALLENGES

Although data show that even among the very poor there has been significant income growth and improved nutrition, Bangladesh's poverty rate remains high. With nearly half of its 135 million people living below the poverty line, Bangladesh still has the highest incidence of poverty in South Asia and the third highest number of poor people living in a single country after India and China. The challenges are magnified by a population density of roughly 800 people per square kilometer—one of the highest in the world.

As in other countries with similar income levels, Bangladesh still faces deficiencies in the quality of social services. Nutrition levels for women and children have improved substantially. Nonetheless, the incidence of malnutrition in Bangladesh remains the highest in the world. Relatively new challenges include unsafe levels of naturally-occurring arsenic in the country's groundwater, and HIV/AIDS (see text box). Although the country has achieved nearly 100 percent primary school enrollment rates, the dropout rate is 40 percent. Literacy rates for both adult men and women have improved, but are still below the regional average for South Asia.

Like other countries in South Asia, Bangladesh is experiencing ecological degradation from urban and industrial pollution. However, several bold steps have been taken recently to improve the urban environment, including banning old buses and two-stroke three wheelers from Dhaka city.

Bangladesh is also vulnerable to natural disasters such as flooding, cyclones, and rising sea levels associated with global climate change. In July, 2004, the country again experienced severe floods. The death toll has reached more than 700 people, and at its peak, 1.7 million people were living in shelters. Overall, 25 percent of the population (almost 34 million people) was affected. About 860,000 houses were destroyed and over 3 million damaged; more than 20,000 livestock perished; and 1.5 million acres of crops were lost. Among Bangladesh's most significant obstacles to growth are poor governance and weak public institutions. Strengthening law and order and addressing issues of personal and economic security are also high on the country's agenda.

Development success in Bangladesh will be critical for meeting the global Millennium Development Goals (MDGs), which include halving the proportion of people in the world living on less than one dollar a day and achieving universal primary education by 2015. According to data on current trends, Bangladesh is expected to meet most of the MDG targets. Halving poverty will in turn depend on efforts to widen economic opportunities and stimulate growth through openness, liberalization, and an improved investment climate.

THE WORLD BANK IN BANGLADESH

The National Strategy for Economic Growth, Poverty Reduction and Social Development, which is Bangladesh's Interim Poverty Reduction Strategy Paper, aims to substantially reduce chronic poverty and invigorate social development. It focuses on five key areas: (i) pro-poor

economic growth for increasing income and employment of the poor; (ii) human development of the poor through education, health, nutrition, and social interventions; (iii) women's advancement and closing of gender gaps in development; (iv) social safety nets for the poor; and (v) participatory governance for enhancing the voice of the poor and improving well being in areas such as security and social inclusion and removing institutional hurdles to social mobility.

The strategy also sets a medium-term macroeconomic framework and addresses the issues of trade reforms, governance, and sector-specific reforms.

Encouraged by recent progress in Bangladesh's reform efforts, the World Bank in June 2003 approved $300 million to support initial actions that will enable the successful implementation of the Poverty Reduction Strategy Paper (PRSP). The support was in the form of a Development Support Credit (DSC)—a low-cost credit from the Bank's International Development Association (IDA). In July 2004, the Bank approved a second DSC for $200 million, supporting further reforms in critical areas.

The World Bank's Country Assistance Strategy (CAS) for Bangladesh focuses on three powerful lines of action against poverty: further advances in health and education, an integrated approach to rural development, and promotion of private sector-led growth. A new CAS will be prepared in tandem with the completion of Bangladesh's full PRSP, expected in early 2005.

Cross-cutting themes in all areas of the Bank's work are institutional capacity building, governance, macroeconomic stability, social concerns (such as gender equity), and environmental protection. The strategy places particular emphasis on institution building, a fundamental requirement for improving underlying systemic weakness in the country.

Health and Education

The World Bank has taken a leading role in helping Bangladesh implement an integrated Health and Population Sector Program. In its project work, the Bank is focusing on nutrition; HIV/AIDS; maternal and infant health; and primary, continuing, and non-formal education. A World Bank-funded Female Secondary School Assistance Project more than doubled girls' enrollments in the project area from 462,000 in 1994 to just over 1 million in 2001. A follow-on project approved in March 2002 is expected to benefit as many as 1.45 million more girls.

Rural Development

The Bank is providing policy advice and investments in rural infrastructure (roads, bridges, power), water resource management as well as microcredit programs for the poor. It is also supporting the government's disaster mitigation efforts, emphasizing greater empowerment and participation of affected communities. World Bank funding for riverbank protection has helped prevent land loss and the

destruction of settlements, and prevented increases in regional flood levels. The Bank is also a key development partner in helping the government design and implement a national program for the mitigation of arsenic in the country's drinking water.

Private Sector-led Development

The World Bank is working with the International Monetary Fund and Asian Development Bank to provide advice on financial sector reform, particularly in banking. In energy and infrastructure, it is helping to promote improved regulation, private provision of services, privatization of poorly managed state assets, and policy reform.

CURRENT LENDING

Bangladesh joined the World Bank in 1972, soon after independence. Since then, the International Development Association (IDA), the World Bank's concessional lending window, has financed 203 operations with credits totaling US $11.2 billion equivalent of assistance. In fiscal year 2004, the World Bank approved around $407.1 million in low-interest credits and $119.4 million in grants for six operations.

All dollar figures are in US dollar equivalents.



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