Following independence in 1971, Bangladesh faced formidable development challenges. In 1975, it had one of the world’s lowest per capita incomes with the world’s highest population density. The country was also highly vulnerable to natural disasters and climate change. Yet despite initial conditions, it grew rapidly and achieved lower-middle-income status in 2016, less than 50 years since independence.

Bangladesh now faces the challenge of maintaining that momentum to transition to full middle-income status. A new report from the Independent Evaluation Group, The World Bank Group in Bangladesh, Fiscal Years 2011-20, assesses the effectiveness and relevance of the Bank Group’s engagement with Bangladesh during a decade and identifies lessons to inform future support and help the country answer key questions.

Bangladesh’s success was underpinned throughout much of the past five decades by strong macroeconomic fundamentals and good progress in reducing poverty and increasing access to education and health.  Growth was driven by the ready-made garment sector and by remittances from migrant workers. Yet despite these achievements, governance challenges have persisted, creating what has been called Bangladesh’s ‘development paradox’. A key question now is if Bangladesh can rely on its past successes, or does it need to pivot its development strategy to sustain progress toward middle-income status.

Supporting Bangladesh’s socio-economic improvements over the past decade

The World Bank Group contributed to increasing equity in access to primary education and secondary education (especially for girls and other vulnerable populations), and to reducing child and maternal mortality. These achievements were made through the World Bank’s longstanding engagement in the sector-wide approach (SWAP) with development partners in education and health. During the review period, the World Bank’s fund for the world’s poorest countries, IDA, was the largest source of education financing among development partners. Gross primary enrolment for girls increased from 109.3% in 2010 to 125% in 2020, while gross secondary female enrolment increased from 56.2% in 2011 to 81.5% in 2020. Rates of maternal mortality were reduced from 240 per 1,000 live births in 2011 to 173 in 2017.

Additionally, the Bank Group contributed to improving power generation capacity, access to clean energy, access of rural populations to all-season roads, and financial inclusion. The Bank Group was catalytic in helping the government establish and sustain an appropriate policy framework to guide the rural electrification program and set standards and promoted knowledge transfer on renewable energy. The effectiveness of Bank Group support for clean energy has been significant with the rapid rollout of nearly 4 million solar home systems by 2016 and providing clean energy to some 12% of the population.

The Bank Group also contributed to enhancing Bangladesh’s preparedness and resilience to natural disasters caused by climate change. It provided the largest and most comprehensive response to the 2007 cyclone Sidr which caused the loss of more than 3,000 lives, 55,000 injuries, and damages estimated at $1.7 billion. Through the Emergency 2007 Cyclone Recovery and Restoration Project, the Bank helped build new multipurpose disaster shelters, rehabilitate coastal embankments and existing disaster shelters, and restore the livelihoods of affected communities; the project’s multi-purpose shelters have successfully reduced the country’s vulnerability to weather-related disasters.

Responding quickly and flexibly to changing country conditions  

The World Bank Group was able to adapt to meet new challenges, as demonstrated on two notable occasions. During the early part of the evaluation period, the Bank Group canceled the centerpiece of its engagement with Bangladesh, the Padma Bridge, over governance concerns. In the face of the resulting tension with the government, the Bank Group successfully pivoted away from large infrastructure projects, to focus on sectors such as education and health in which it had more traction and long-standing history of effective engagement.

In 2018, as the government faced a massive influx of Rohingya refugees, the Bank Group pivoted once again to provide effective support. It leveraged the IDA refugee sub-window to provide financial and technical assistance to the displaced Rohingya population and its host communities using existing country systems and in close coordination with UN agencies and other development partners.

Yet, there were missed opportunities in several areas

In education, the World Bank Group did not invest sufficiently in data and measurement, particularly to track progress in improving the quality of education. This was unfortunate given that inadequate monitoring and measurement of learning outcomes had been identified as a shortcoming in IEG’s 2009 Country Assistance Evaluation for Bangladesh. Addressing this shortcoming should be considered a priority going forward.

Support to enhancing regional connectivity was negatively impacted by the Bank Group’s decision to step back from large infrastructure projects in the wake of the Padma Bridge cancellation. In addition, the rapid scale-up of lending during the second half of the evaluation period in complex and diverse sectors where both the World Bank and the government had limited expertise and experience, for example, in regional waterway transport, resulted in inadequate project design, lack of readiness for implementation and implementation delays, including those related to staffing and procurement.  

The Bank Group had a tendency to understate the magnitude of rising fiscal and financial vulnerabilities after the end of the IMF program in 2016. As a result, it downplayed fiscal risks and emerging risks of debt stress. A more cautious public assessment of the strength of the macroeconomic framework would have been warranted given rising contingent liabilities (both explicit and implicit) mounting pension liabilities, the understatement of non-performing loans in the banking sector and concerns with the quality of official GDP statistics. In other areas, domestic vested interests prevailed resulting in little progress in improving the business environment, natural resource management, banking sector reform, and tariff reform.

The report found that going forward, the Bank Group could help the country prioritize and undertake key reforms that will become increasingly important for a country transitioning to middle-income country status. Many of these reforms will be in the realm of institution building and governance, coming face to face with the ‘development paradox’. Where reform is deemed critical to sustaining development progress, but government commitment is weak or absent, the World Bank can play an important role by building constituencies for reform by using its analytical work to highlight the costs and risks associated with inaction. This can help prepare the ground for future action when a window of opportunity presents itself. In turn, active engagement of Bank Group management with high-level decision-makers on critical reforms should continue to help foster ownership and sustainability of reforms.

Photo: Dhaka flyover bridge. Credit: K M Asas / World Bank