Diverse income streams needed for poverty alleviation

Households with diverse income streams, both farm and non-farm, are more resilient and can escape poverty faster, said experts yesterday.
Research over the last 20 years on the impact of microcredit indicates, both nationally and internationally, that pure microfinance will not have a sustainable impact on poverty alleviation, said MA Baqui Khalil, professor and dean for the School of Business at the University of Asia Pacific.
This is because poor people need insurance, savings, health expenses and other non-financial services beyond credit, he said at a roundtable styled “Pathways to prosperity for extremely poor people (PPEPP)”.
Palli Karma-Sahayak Foundation (PKSF), the European Union and The Daily Star jointly organised the event to mark the International Day for the Eradication of Poverty at The Daily Star Centre in Dhaka.
“People with multiple income opportunities are less vulnerable to poverty and can graduate out of it at a faster rate,” Khalil said.
If a household has both farm and non-farm activities, it can absorb shocks, and income from multiple sources contributes to savings.
The creation of wage employment is important as an alternative to farm employment to reduce extreme poverty.
“These issues were reflected in the PPEPP project of the PKSF,” he added.
In 2019, with lessons learned from various extreme-poverty projects, PKSF undertook a multi-dimensional initiative titled PPEPP with funding from the UK’s Foreign, Commonwealth and Development Office (FCDO) and the EU.
The project aims to eradicate extreme poverty for approximately 250,000 households (about 1 million people) in selected poverty-prone districts across the northwestern char areas, the southwestern coastal belt and the Haor region.
The project also includes ethnic minority pockets in Dinajpur and Thakurgaon districts.
Since 2022, the PPEPP project has been funded by the EU and renamed PPEPP-EU, targeting 215,000 households.
It provides a carefully sequenced package of livelihoods, nutrition and primary healthcare, inclusive finance and community mobilisation interventions as the core components.
To address the multidimensional nature of poverty, the project also integrates climate resilience-building, disability inclusion and women empowerment with the core components.
“If we want to bring the issue of sustainable poverty reduction to the forefront, there needs to be a linkage between this project and a market-based linkage,” said Mustafa K Mujeri, executive director at the Institute for Inclusive Finance and Development.
“If we can provide them with loans and create such enterprises, then it is possible to move them toward a sustainable livelihood. So, it is necessary to think about how we can link them with cottage, micro and small enterprises,” he added.
Poverty and inequality are two different things and should not be conflated together, said Zakir Ahmed Khan, chairman of PKSF.
“What we are doing now is dealing with poverty, not inequality. Poverty is not only a lack of money — it means many more things.”
The PPEPP should be taken as a programme and not as a project, he said.
There must be a connection between sustainability and the market, said Mohammad Muslim Chowdhury, chairman of Sonali Bank.
“Otherwise, we may go from one project to another. If we don’t link it with the market and create self-employment opportunities, it won’t succeed.”
Different projects and programmes should be linked to central policies and aligned with the national strategy.
The programme needs to be implemented comprehensively, he said, adding that the local government should also be linked.
The primary goal of PKSF is to eradicate inequality along with poverty, aiming for zero poverty and the creation of an inclusive and equitable society, said Md Fazlul Kader, acting managing director of PKSF.
Bangladesh has witnessed remarkable growth and development, but unfortunately, extreme poverty still exists, said Michal Krejza, head of cooperation at the delegation of the EU to Bangladesh.
For example, in the southern coastal belt, the incidence of extreme poverty is quite high and is increasing in some areas due to the impacts of climate change.
To make these people less vulnerable, better access is needed to basic public services such as education, health care, safe drinking water and sanitation, and safe and nutritional food, he said.
“They need skills development and jobs. Those for whom the need is the highest often have the poorest access.”
Since its inception of the project in 2019, 72 percent of the extremely poor households covered by the project have risen above the international poverty line, he added.
Macroeconomic policies do have a significant impact on poverty reduction at the national level, said Zaidi Sattar, chairman of the Policy Research Institute of Bangladesh.
“The impact on poverty comes from the kind of macroeconomic policies we have. Macroeconomic stability is essential and macroeconomic policies for economic growth are also essential,” he added.
Bangladesh has done very well on many things including poverty, said Mahfuz Anam, editor and publisher of The Daily Star.
“But what remains is also a massive task. Let us not get into some sort of a comfort zone that we have done well.”
As the most densely populated country, whatever the country achieved really stands threatened because of climate change and Bangladesh needs global support, he added.