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Funding Trends for the Development of Bangladesh

Md. Humayun Kabir

Foreign partners have contributed an average of 32.5% to Bangladesh’s Annual Development Programme over the past decade, although there has been a decline in grant and concessional resources in recent years. The country has seen a decrease in reliance on foreign aid for development projects, with only 32% of the ADP budget being funded by foreign aid in the fiscal year 2019-20 compared to 48% in 2001-02. The government has been successful in mobilizing domestic resources, ranking 7th on the Global Climate Risk Index and 163rd out of 181 countries on the ND-GAIN index due to the impact of climate change.

Bangladesh has been a major recipient of foreign aid for climate change mitigation interventions following COP-15 in Copenhagen, receiving a cumulative USD 1 billion over the past twelve years. However, the country has experienced approximately USD 3.72 billion in economic losses due to climate change, highlighting the need for increased funding in this area.

The agriculture sector plays a crucial role in ensuring self-sufficiency in essential commodities, contributing 14% to GDP and employing 40% of the working population. Sustainable and climate-smart agricultural practices are essential to mitigate the impact of climate change and increase production growth and prosperity for farmers.

The youth population in Bangladesh presents an opportunity for economic growth, but lack of marketable skills among young people has led to higher unemployment rates. Skill development and vocational training programs are essential to address this issue, with a focus on enterprise development initiatives and impact-driven projects funded by donors. The private sector is also prioritizing skills training for business growth.

COVID-19 has increased awareness of hygiene practices, but many ultra-poor populations still lack access to improved sanitation facilities. Investments in water, sanitation, and hygiene are crucial for economic growth and public health.

As Bangladesh transitions towards economic growth, there are concerns about potential shifts in donor funding as the country graduates from LDC status. Private sector development and ‘Aid to Trade’ initiatives are expected to play a larger role in development funding. Foundations and private corporations will be crucial in filling gaps left by receding donor funding, with the government encouraging private sector investments through policy incentives.

NGOs in Bangladesh focus on a variety of areas, including empowerment, social mobilization, and building social capital. They primarily target marginalized groups such as those in hard-to-reach areas, underprivileged communities, and people with disabilities. The development sector in Bangladesh faces a turbulent future as the country evolves economically and adapts to changing development needs.

The donor funding landscape in Bangladesh is changing, with a focus on new funding sources and purposes. As Bangladesh nears graduation from LDC status, funding for critical areas such as Climate Change, Sustainable Agriculture, and the Rohingya Crisis becomes increasingly important. Despite economic and human development progress, challenges arise from geopolitical shifts, rising GHG emissions, and the need to harness demographic potential. Therefore, the development sector is emphasizing new thematic areas to address these challenges.

Development funding trends in Bangladesh are influenced by economic growth, changing priorities, and the global development agenda. Key trends in development funding as:

  • Climate Change and Environmental Sustainability: Significant funding is directed towards climate resilience projects, environmental conservation, and sustainable resource management.
  • Digital Transformation Initiatives: Efforts are made to enhance digital infrastructure, expand internet access, develop digital skills, and support smart city projects.
  • Healthcare and Pandemic Response: There is an increased focus on improving healthcare infrastructure, pandemic preparedness, and ensuring access to healthcare services.
  • Education and Skill Development: Donors prioritize projects aimed at improving education quality, reducing dropout rates, and providing vocational training.
  • Gender Equality and Women’s Empowerment: Programs focus on women’s economic empowerment, gender-based violence prevention, and promoting women’s rights.
  • Agriculture and Food Security: Funding is directed towards sustainable farming practices, improving agricultural productivity, and ensuring food security.
  • Water, Sanitation, and Hygiene (WASH): Efforts continue to improve access to clean water, sanitation facilities, and hygiene practices, particularly in rural areas.
  • Infrastructure Development: Investments are made in transport, connectivity, urban infrastructure, and accommodating rapid urbanization.
  • Social Protection and Inclusion: Programs target vulnerable populations and provide social safety nets for those in extreme poverty.
  • Private Sector Engagement and Public-Private Partnerships: Public-private partnerships are increasingly used to leverage private sector expertise and funding for development projects.
  • Innovation and Technology: Support for tech startups, digital inclusion, and bridging the digital divide to ensure equitable access to technology.
  • Governance and Institutional Capacity Building: Initiatives focus on good governance, transparency, accountability, and strengthening the capacity of government institutions.

Key donor organizations such as the World Bank, ADB, USAID, UNDP, European Union, DFID, JICA, and SIDA contribute to various sectors including infrastructure, education, health, climate change, governance, and more. These trends highlight a diverse and evolving development funding landscape in Bangladesh driven by local needs and global priorities.

The article was written by Md. Humayun Kabir, an Independent Consultant, and Director, Creative Services Limited. Email: humayun@cslbd71.com

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