Bangladesh

Bangladesh has experienced turbulent political conditions since its independence, but also strong economic growth and progress in many areas.

Facts about Bangladesh

Population
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Millions
Life expectancy
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Years
GNI pr capita
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USD
Percentage poor people (below 1.25$)
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%
HDI
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Ranking
Source:

Bilateral assistance million kroner

Bilateral assistance million kroner

Bilateral assistance million kroner

Bangladesh gained its independence in 1971, having been a part of Pakistan since 1947. Bengal was a historic region, and had also been a province under British colonial rule in India. When the British left India, the province of Bengal was divided along religious lines. With some exceptions, those regions of Bengal that had a Muslim majority were given to Pakistan and became the province of East Pakistan.
During the 1960s, political conflicts grew between East Pakistan and the rest of Pakistan.

During the election in 1970, the Awami League party gained a majority and demanded increased self-governance for East Pakistan. The failure to respect the result of the election caused an outbreak of unrest and civil war in March 1971, when the Pakistani army intervened to prevent secession. The war brought with it widespread abuse of civilians and large influxes of refugees to the neighbouring country of India.

In December of the same year, India went to war against Pakistan, ending with the capitulation of Pakistan and independence for Bangladesh. Sheikh Mujibur Rahman from the Awami League became the country’s first prime minister.

In addition to the high civilian costs that resulted from the war, in 1970 the country had been struck by a destructive cyclone that took the lives of an estimated 300.000 people. In 1974, Bangladesh was again ravaged by natural forces, this time by floods that destroyed crops and led to food shortages and famine.

Import of artificial fertiliser and commodities

Norwegian development assistance to Bangladesh began in 1973, and at the same time it became a main partner country for Norwegian aid. From the late 1970s until the mid-1990s, Bangladesh was annually among the 3-5 largest recipient countries of development aid disbursed from Norway.

The considerable humanitarian challenges faced by the new nation were a factor that contributed to Bangladesh becoming a partner country for Norway. The argument that aid should be concentrated geographically also played a role. India and Pakistan were already important partner countries.

From 1973 to 1985, commodity assistance constituted two-thirds of Norwegian aid to Bangladesh, equivalent to NOK 1 billion. Commodity assistance meant that Norway paid the costs to Bangladesh of importing foreign goods. Some of the commodity assistance was provided as tied aid, whereby the goods to be imported to Bangladesh needed to come from Norwegian enterprises. Other elements of the commodity assistance were to go towards covering goods that Bangladesh imported from other developing countries.

Norwegian artificial fertiliser produced by Norsk Hydro constituted one-quarter of the total commodity assistance. Commodities such as metals and pulp from the Norwegian processing industry were also exported. The commodity assistance also included the costs to Bangladesh of importing a used oil tanker from Norway, which was sold in 1982 after four years of service and large operational and repair costs.

In addition to commodity assistance, from the late 1970s and during the 1980s Norway also contributed to various development cooperation programmes in Bangladesh, including the enhancement of coastal and river transport, establishment of centres for women’s education in rural districts, and rural development. Norway and other donors were frequently instrumental in formulating these programmes.

Microcredit and development aid investments

Grameen Bank, on the other hand, came about as a purely Bangladeshi initiative. The bank was founded by Muhammad Yunus, an economist at the University of Chittagong. Following the flood disaster in 1974, he wished to assist farmers in rural areas who had no access to banking services.

The bank became a huge success and experienced rapid growth through lending small amounts of money to borrowers who would not normally have been creditworthy in the eyes of an ordinary bank.
Yunus thus became a pioneer for microcredit. From 1986, Norway provided considerable funding for Grameen Bank, and together with Sweden was among the largest international contributors. Total aid from Norway to Grameen Bank amounted to almost NOK 400 million over a period of ten years.

The favourable results in Bangladesh gained worldwide fame. The concept of microcredit spread to many countries, and this form of lending attracted considerable attention as an important measure to help people out of poverty. In 2006, Yunus and Grameen Bank received the Nobel Peace Prize for their efforts to create economic and social development at grassroots level.

Since 2010, critical research on various aspects of microcredit has also made the limitations of this type of lending increasingly clear. Critics pointed to the high interest rates that are frequently demanded, and in their view the lending model was less suitable if the objective was to achieve long-term economic growth.

Economic growth and political unrest

Combined with repeated military coups, the political history of Bangladesh has been marked by the two political parties and main opponents, the Awami League and the Bangladesh National Party (BNP). Since 1990, the key politicians have been the BNP’s Khaleda Zia ur-Rahman (prime minister 1991–1996 and 2001-2006), and Sheikh Hasina Wajed (prime minister 1996–2001 and 2009–) from the Awami League.
 The election in 2014, held after a wave of violence, was boycotted by the BNP in opposition, and voter participation was only 20 per cent.

Despite its politically unstable government, Bangladesh has experienced robust economic development. The value of exports increased more than sixfold from 2001 to 2016, much of it due to strong growth in the clothing industry. In 2017, the UN announced that Bangladesh was about to fulfil the criteria for leaving the group of least developed countries (LDCs).  According to economic measurements, Bangladesh went from being a low-income country to a middle-income country in 2014. In 2016, 24 per cent of the population was below the country’s own poverty line, a fifty per cent reduction since 2000.

Life expectancy had also risen from 58 years in 1990 to 72 years. A child starting school in 2015 could expect to receive 10.2 years of schooling - almost double the outlook for this in 1990.

Strong population growth has been one of the major challenges since independence. However, a conscious effort by the authorities as well as civil society has resulted in a current population growth of only 1.07 per cent. Another challenge is that Bangladesh is considered one of the world’s most vulnerable countries with regard to climate change. The country was affected by extensive flooding in 1988, a destructive cyclone in 1991 and more floods in 1998 and 2004.  Targeted efforts, supported by Norwegian development aid funding, among others, has reduced the extent of damage and number of fatalities resulting from natural disasters.

Business-related assistance and investments

The amount of Norwegian assistance has been gradually reduced since 2008. Until 2003, Norway supported a programme to provide better access to credit for small- and medium-sized businesses, the Small Enterprise Development Project. Altogether 33.000 small businesses received loans, and a large number of new jobs were created as a result of the programme. Between 1997 and 2005, Norway also supported electrification in two districts, Bhola and Gaibandha. In addition, Norway has provided significant support to local women’s and human rights organisations.

In 2010, Norfund – the Norwegian Investment Fund for Developing Countries – committed NOK 122 million in investments in share capital and loans to BRAC Bank, a commercial bank that had more than 100.000 small- and medium-sized businesses as customers in 2015.

Telenor has made extensive investments through its ownership of the mobile phone company Grameenphone, and received support in an early phase from Norwegian development aid. Telenor is currently a majority owner of Grameenphone, Bangladesh’s largest telecommunications company and taxpayer. Since 2015, the Government Pension Fund Global has invested in companies listed on the Bangladeshi stock exchange.

Dyring av ris i Bangladesh, Scubarice
Scubarice in Bangladesh
Scubarice is a strain of rice that grows when submerged in water in flood-prone areas in Bangladesh and India.
Published 29.08.2014
Last updated 28.08.2018