MICROCAPITAL STORY: UN Chief Says Bangladesh on Its Way to Becoming a Middle Income Country

UN Secretary-General Ban Ki-moon of South Korea, predicted that Bangladesh will become a middle-income country in the next 10 years on a recent visit to Bangladesh.  Addressing the media at a press conference, he reflected on a visit to Bangladesh 33 years ago and lauded the changes and achievements in economic growth, poverty reduction, family planning, educating girls, and reducing the mortality rate.  

Ban’s prediction was echoed in a 2007 Wold Bank report, Bangladesh: Strategy for Sustained Growth. In the report, the author, economist Sandeep Mahajan, argued that Bangladesh is well positioned to become a middle-income country due to a combination of sound economic policies, tremendous grassroots energy, and gross domestic product (GDP) growth that has averaged 5% annually.  Since the early 1990’s, Bangladesh’s poverty rate has fallen by 20 percent.  Despite its vulnerability to natural catastrophes, the author found that Bangladesh’s per-capita income has not fallen in a single year since 1990, even in years where there were severe floods.

In 1972, Bangladesh’s per-capita net income was USD 50 to USD 70.  Life expectancy was well under 50 years, the literacy rate was less than 20 percent, the unemployment rate was 25 to 30 percent, and the population was growing at 3 percent annually due to an average fertility rate of 7 children.  Fast forward 35 years, and GDP is up 90 percent on a constant purchasing power parity basis.  Life expectancy has increased to 64 years, the literacy rate has more than doubled, unemployment is down to 4 percent, and population growth has been cut in half to 1.5 percent as the average fertility rate is down to 3 children.  

Bangladesh’s Microfinance Industry is among the most developed in the world as evidenced by Forbes’ 2007 list of the Top 50 Microfinance Institutions (MFIs).  Seven of the 50 were Bangladeshi MFIs.  India was the only other country to make as many appearances on the list.  Grameen Bank, Bangladesh Rural Advancement Committee (BRAC), and ASA, are Bangladesh’s largest MFIs by total loans outstanding and the number of borrowers.  In 2007 alone, Grameen Bank and BRAC disbursed a combined  USD 1.65 billion in loans, representing 0.79% of the country’s total GDP.  At the end of 2007, ASA had USD 361.7 million in loans outstanding, however, the total amount that ASA disbursed during 2007 is unknown.  

During his 2-day visit to Bangladesh, Ban Ki-moon met with Bangladeshi President Iajuddin Ahmed, Bangladeshi caretaker government Chief Adviser Fakhruddin Ahmed, Bangladeshi Foreign Adviser Iftekhar Ahmed Chowdhury, Army Chief General Moeen Ahmed and leaders from the major parties.  

By Iyanna Holmes, Research Assistant

Additional Resources:  

BRAC.net:  2007 Annual Report

China View:  UN Chief: Bangladesh to Become Middle Income Country in 10 Years’ Time 

Forbes.com:  Top 50 Microfinance Institutions 

Grameen Bank:  A Short History of Grameen Bank

MIX Market:  ASA; BRAC; Grameen Bank

World Bank: Making Bangladesh a Middle Income Country

 

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