Md. Joynal Abdin
The Independent on March 03, 2017
Bangladesh is a developing country. With so many development requirements it is fighting to reduce unemployment and provide employment opportunity to all of its workable population. There are about 160.41 million people in Bangladesh. The median age of Bangladeshi population is 26. That means it is dominating by the young for14ce. It is high time to take the population dividend for Bangladesh. But the matter of fact is that, there are about 3 million workable people unemployed, they are neither in education nor in job. Additional 2.2 million educated young forces are entering into job market every year. Another 10.6 million people are day labourers doing odd jobs without any job security for tomorrow’s tasks. Therefore till now 24.8% of the total population is living under the poverty line and extreme poor people are about 6.5% of its total population.
Huge workable population, growing number of higher educated population; population dividend etc. are not matching with its 25% poverty affected people. It is because we have workable hands but government is failing to provide jobs to them. It is impossible for any government of the world to provide jobs to all of its population. But government has a great responsibility to create such a congenial environment in which a person will go for self-employment through entrepreneurship development and employ another five persons in it. Government could inspire private sector for more investment and expansions which will lead to more employment generation, faster GDP growth, increased value addition and export earnings.
A decently employed person can free a family from poverty. On the other hand, an unemployed young man may be a liability for a family and the society. Many skilled but low paid workers want to be entrepreneurs but cannot do so for lack of capital.
Banks can help him with loans on easy terms and conditions. In many cases banks’ authorities do not come forward due to the security of depositor’s money. In such a condition it is only the government that can come forward. Refinancing, pre-financing, credit guarantee, seed financing etc. can be the weapons for the government to fight this tough condition. Government has limitations in terms of its treasury balance. But recent reports are not supporting its treasury balance argument. Because we have gone through the report that, Bangladesh has about USD 35 billion foreign aid in hand but failed to utilize it. We had to deposit back the foreign aids due to our inability to utilize the funds. On the other hand, according to a Bangladesh Bank report idle funds with banks and non-banking financial institutions stood at Tk 1263.24 billion on January 31, 2017.
From the above two statements it is clear that, government can source the fund if a positive thinking is there. So it is the peak time for the government to take necessary initiatives for creating an entrepreneurial friendly environment in Bangladesh for promoting self-entrepreneurship and expansion of existing ventures to increase the movement of employment generation. Along with the entrepreneurship development trained manpower export / formal migration of skilled workers can be another very fruitful tool for the government to fight unemployment and poverty. Following recommendations can be considered by the government and the central bank of Bangladesh:
- Easy Formal Channel to Receive Remittance: Bangladesh received USD 15.27 billion as remittance in 2015. In the years 2016 it reduced into USD 13.60 billion. Does it mean the remittance earning is really reducing? No. It is only because sending remittance through formal banking channel is complicated, time consuming and complex to the illiterate or little literate expatriate workers. Whereas using informal channels like Hundi is much easier, quicker and safe. In such way government is losing revenue. Therefore, the government and the central bank have to think over the issue of introducing an easy, quick and hassle free way of sending remittance through formal channel by our illiterate labourers from abroad.
- Easy Formal Credit for Expatriate Labourers and Professionals: There is a bank to provide bank loan against a labour visa to help expatriate manpower of Bangladesh. But, what is their capacity? How many branches do they have? How much money is being offered by them? How many expatriate labourers are migrating from Bangladesh per year? In the year 2016 about 7, 57,731 labourers and professionals migrated from Bangladesh. If 5% of them want to get bank loan for three to five lac per person then 38,000 probable clients are there to receive more than thousand crore taka. How much money do they receive from that single bank? Therefore, it is time to think with the issue of offering bank loan to the second largest contributory sector of the country with hassle free bank loans by the commercial banks and Bangladesh Bank has to come up with a new loan product for them.
- Easy Formal Channel to Receive Freelancer’s Earning: According to a recent report published by oDesk there was about USD 3.2 billion freelancing market in 2014. USA, India, Ukraine, Australia, Canada even Pakistan is earning a significant part of that amount. Bangladesh has every possibility to be a significant partner in the global freelancing market. But due to complexities in banking channel to receive freelancing earnings many qualified professionals and unemployed young men are getting frustrated. Digital Bangladesh will be meaningfully digital when common people of the country will easily receive their free-lancing earnings through their ordinary bank account. It is the Bangladesh Bank that has the responsibility to mobilize this process and offer a great service to the local freelancers.
- Startup Financing/Seed Financing for Entrepreneurs: There are about 2 million educated people unemployed in Bangladesh. Another 2.2 million graduates are entering into the job market every year. It is impossible for the government to ensure employment to this huge number of population without promoting entrepreneurship and industrial development. Entrepreneurship is the only solution to this unemployment problem of Bangladesh. But till now there are no startup financing / seed financing mechanism for promoting entrepreneurship in Bangladesh. So government can rethink the issue and come up with a mechanism to provide startup financing for the new / would be entrepreneurs.
- Promotional Package for Venture Capital Sector: Venture capitalism is a proven tool for supplying interest free loan facility to the entrepreneurs. It is widely received by the entrepreneurs and potential entrepreneurs of Bangladesh as well. But due to the shortage of adequate fund this sector is not booming up as expected. Therefore it is the peak time for the government to inspire venture capital sector for the sustainable industrialization in Bangladesh.
- Export Guarantee Scheme: There are about 7.8 million industrial entities in Bangladesh. Most of these are cottage and small in categories. Few of these enterprises are producing excellent quality products having export potentials. But due to lack of knowledge and shortage of finance to operate international trade they are not going to export. To inspire such enterprises Bangladesh Bank/ government can introduce export guarantee scheme and boost up export earnings of the country.
- Credit for Export Diversification and Market Expansion: Bangladesh earned USD 34.24 billion in last fiscal year (2015-16FY). It is almost 10% more than that of the previous year. But we have capacity to earn even more than that. We have to diversify our export basket and explore new export destinations to do so. Government can offer credit facilities for export oriented product diversification (procurement of machineries) to the existing exporters. Thus Bangladesh’s export basket could be enlarged and increase amount of export earnings.
- Credit Guarantee Scheme: Commercial banks are offering loan by investing depositor’s money. All types of bank loan have risk of return. As a result commercial banks have hesitation to provide bank loan. In such a situation Bangladesh Bank can offer credit guarantee scheme for providing guarantee of loans so that commercial banks’ hesitations go down. Thus government can promote the industrialization movement of the country.
- Security Issues in Online & ATM Banking: Recent ATM Scamming and Bangladesh Bank’s reserve issues created panic among the mass people. As a result people are feeling insecure even to draw money from ATM Booth and deposit money to a bank. Therefore, it is time for Bangladesh Bank to take necessary measures to stop ATM scamming and ensure security of depositor’s money. Online banking system should be 100% secured and people’s awareness could be developed to relief the panic.
- Entrepreneurship Loan for Technical Graduates: There are about 2 million unemployed graduates in the country. Additional 2.2 million graduates are entering into the job market each year. Both the government and private sector does not have ability to offer such a huge number of jobs per year. Therefore government / Bangladesh Bank can offer entrepreneurship loan for the technical graduates and developing them as entrepreneurs in respective fields.
- Professional Management of Idle Reserve / Bank Deposit: A recent report showed that the idle reserve / bank deposit is mounting up in the banking sector (BDT 1140 billion) especially there are BDT 1420 billion statutory deposits to the Bangladesh bank. No return is coming out from this huge amount of idle money in comparison with its opportunity cost. Therefore, it is time for thinking to invest at least a portion of this money through professional money managers. Thus a reasonable return could be ensured out of this idle money.
Finally we would like to hope that, the government and the central bank along with other responsible agencies will consider the above recommendations and create a pro-entrepreneurship regime in Bangladesh for fighting unemployment effectively and create a poverty free middle income country before the end of SDG deadline.