Page 77 - IBT August 2021 Issue

Economic Insight THE DEBT
TRAP

Fatema Begum is not sure how old she is, but Bangladesh in April this year found that 93 percent of micro,
estimates it to be a little over 20. small and medium enterprises (MSMEs) faced financial crunch,
She was brought to Dhaka at age four by her and 75 percent of them had to borrow.
grandmother and sent to work in a household. The ebb-and-flowing nature of the country’s COVID-19
After years of mistreatment and abuse, she restrictions has had an impact on these businesses as well, as
started working at a garments factory, but many took loans in the later part of last year when the
that also stopped when she got married. economy somewhat reopened – in hopes of making back the According to a study
In April 2020, just after the country went into losses and getting their businesses back on track. by BRAC, New York
a “general holiday shutdown”, Fatema found Md Babul, who sells plastic goods in two small shops in
out she was pregnant. She also found out her Dhaka’s Adabar and Darussalam, told The Daily Star in July University and UN
husband, a rickshaw-puller, has married over that he incurred a debt of Tk 5 lakh in the last year and a half. Women Bangladesh,
a dozen other women in secret, and her Of it, Tk 3 lakh was from a bank and the rest Tk 2 lakh from a
pregnancy prompted her husband to abandon private moneylender, at a staggering interest rate of 30 77 percent of informal
her as she could not earn anymore. percent. workers’ families lost
Unable to find any other work amid the He said he made the loans expecting his business to bounce income, 62 percent
pandemic, she started pulling a rickshaw to back as businesses opened in June last year, but with the
make ends meet, but the heavy labour while in country in lockdown again, the doors to his shops remain shut saw their average
delicate health caused her son’s prenatal and the interest keeps piling up. savings dip, and 31
death. She fell sick and was hospitalized for a The government did allocate funds to help such groups to cope
month, for which she had to take loans of over with the pandemic’s fallouts, but many have been left out of percent saw their
Tk 1 lakh. After recovering, she went back to outstanding debt rise
the road, this time driving an auto-rickshaw in the first seven
in the capital, to pay back her loan.
Until July, Fatema was able to pay off Tk months of the
60,000 of the loan, and was counting days pandemic
when her debt would be repaid and she could
go back to her village home. (April-October 2020).
Despite all the economic progress Bangladesh
have made, including the growth, millions of
informal workers and micro businesses
remained on the brink of uncertainty at the
onset of even a small fallout or accident, and does not have a choice. She walks for over six and their last visit to a healthcare facility cost them Tk 1,655 –
the pandemic pushed many of them off the hours just to commute to and from her meaning that every time a domestic worker visited a
edge. workplace, and even then, considers herself healthcare facility, they had to spend over a week’s earnings.
"People employed in the urban service sectors, fortunate that she has a job, because the Tk Unsurprisingly, two-thirds of workers who visited a medical
in particular, were badly hit. A majority of the that on grounds of technicalities in the criteria. 5,000 she makes a month is vital to the facility had to take out a loan for their healthcare needs or a
jobs in the urban service sector are informal In January, Tk 1,500 crore was earmarked under a stimulus treatment of her cancer-afflicted son. family member’s, and the report says such loans, often taken
and there is little job security in these package for small traders, entrepreneurs and farmers, and While this may seem like an extreme case, at high interest rates, can put the recipient in a debt trap.
engagements," said economist Dr Selim engaged eight government and semi-government institutions thousands of informal workers who live hand Around 85 percent of respondents said they delayed health
Raihan, executive director of think-tank South to disburse those. However, informally-run micro-businesses to mouth have been faced with monumental care at some point, largely due to a lack of money. While the
Asian Network on Economic Modelling and hawkers were left out of it, as the eligibility criteria said challenges with dipping incomes and rising government in 2020 decided to send cash aid of Tk 2,500 to
(SANEM) in a February 2021 report in The the beneficiaries must have trade licenses and permanent uncertainties, and no social protection about 50 lakh low income people including domestic workers
Daily Star that found poverty rate in the establishments. mechanism to save them. by end of July that year, until mid-September the National
country has doubled since 2018. It may be worth mentioning here that a whopping 85 percent The country has over 4.3 crore women Domestic Women Workers union reported that none of its
With lost jobs and crashing businesses due to of the country’s employed labour force is in the informal workers, and a vast majority -- 90 percent -- of members received the support.
lockdown and economic fallouts, informal sector, according to the latest (2017) Labour Force Survey them are in the informal sector according to With a sharp rise in cases, the government imposed a “strict”
workers like Fatima and small business conducted by the Bangladesh Bureau of Statistics. recent estimates. Domestic workers like Asiya lockdown in the country at the beginning of July, and after a
owners were forced to borrow money, with no However, when talking about big numbers, it is easy to lose are not included within the scope of the labour one-week relaxation of restrictions ahead of Eid, re-imposed it
foreseeable light at the end of the proverbial sight of the true personal strife that is reduced to just law, and are only technically recognized as till the first week of August at the time of writing this report.
tunnel. According to a study by BRAC, New statistics. workers through the Domestic Workers While the government maintains that this is the best way to
York University and UN Women Bangladesh, Take the case of 65-year-old Asiya Begum. She was Protection and Welfare policy 2015. contain the spread of the coronavirus, various quarters have
77 percent of informal workers’ families lost photographed in July on the outskirts of Dhaka, wading According to a 2020 study by Women in termed it inhuman and ineffective to restrict earning sources
income, 62 percent saw their average savings through ankle-deep water in the rain walking from her Informal Employment: Globalizing and for low-income and daily wage earners without providing them
dip, and 31 percent saw their outstanding debt workplace in the capital’s Lalmatia to her house in Organizing, the COVID-19 pandemic has with food assistance at least. Only time can tell when the
rise in the first seven months of the pandemic Hemayetpur of Savar, a distance of about 15 kilometres. With brought unseen sufferings for these domestic pandemic will be contained fully and life as we knew it
(April-October 2020). a lockdown in place, there was no transportation available, but workers. The average survey respondent pre-2020 can resume, but until then, the many Fatemas and
Another study by Citizen’s Platform for SDGs Asiya, a daily domestic help in the sunset years of her life,
reported a typical weekly income of Tk 1,250, Babuls and Asiya’s will have little hope to hold on to.

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