Potential scope for digitizing G2P transfer in Bangladesh
There is strong justification for the digitization of G2P payment (social safety net, salaries, pension and gratuities) in Bangladesh [one major recommendation prescribed under NSSS – National Social Security Strategy]. Currently, 145 social security programs are administered by 23 Ministries/Divisions in Bangladesh.
| Name of SSP (Social Security Payment) | Payment method | % allocation of SS (Social Security) Budget | Lifecycle staging | Potential scope for digitizing G2P transfer | Comment |
| VGF (Vulnerable Group Feeding) | 10 Kilogram rice per month | 5.2% |
Food Transfer (Working Age) |
✖ | The first SSP (Social Security Payment) program initiated in Bangladesh. |
| IGVGD (Income Generating Vulnerable Group Development) | 30 Kilogram of wheat/rice or 25 Kilogram of fortified atta per month |
3.7% |
✓ |
Financial inclusion through formal banking channel should reduce leakage. |
|
| FSVGD (Food Security Vulnerable Group Development) | Monthly cash support of Taka 100 and 15 Kilogram flour | ||||
| RERMP (Rural Employment and Road Maintenance Program) | Daily cash support of Taka 90 ( 6- working day per week) | 1.1% | ✓ | Currently beneficiary group’s forced savings are saved through bank account | |
| REOPA (Rural Employment Opportunities for Public Asset) | Daily cash support of Taka 100 | Data not available | ✓ | Beneficiary’s own bank accounts are used in this G2P transfer. | |
| TR (Test Relief ) | 3.5 Kilogram of food grain per day at maximum | 5.5% | ✖ | ||
| GR (Gratuitous Relief) | Can be both cash transfer or food transfer | 1.1% | ✖ | Fulfills emergency relief need of disaster victims | |
| FFW (Food For Work) | Data not available | 6.5% | ✖ | Food transfer | |
| PES (Primary Education Stipend) | Monthly cash transfer of Taka 100 | 4% |
School Age |
Already digitized | Guardians’ bank accounts are used in this G2P transfer. |
| Stipend and access increase for Secondary and Higher Secondary level students | Monthly cash transfer of Taka 125 – Taka 175 | 2.8% | Already digitized | Beneficiary’s bank accounts are used in this G2P transfer. | |
| Allowance for the widowed, deserted, destitute women | Monthly cash transfer of Taka 300 | 1.4% |
Socially Excluded |
✓ |
Financial inclusion through formal banking channel should reduce leakage. |
| Old age allowance | Monthly cash transfer of Taka 300 | 3.9% |
✓ |
Financial inclusion through formal banking channel should reduce leakage. | |
| Pension for retired government employees | Based on government’s pension scheme | 24% | Old Age | Already digitized | Beneficiary’s bank accounts are used in this G2P transfer. |
| Allowance for financially insolvent disabled | Monthly cash transfer of Taka 300 | .4% | Disability |
✓ |
Financial inclusion through formal banking channel should reduce leakage. |
| Allowance for beneficiaries in CHT (Chittagong Hill Tracts) | Taka 1644 per household | 1% | Socially Excluded |
✓ |
Financial inclusion through formal banking channel should reduce leakage. |
| OMS (Open Market Service) | OMS’s targeting and coverage depends on inflationary challenges | 7.6% | Food Transfer | ✖ | Food transfer at a cheaper price |
| Allowance for Dalit | Dalit household colony were built | Data not available |
Socially Excluded |
✖ | Transfer in-kind |
| Allowance for People living with HIV/AIDS | Data not available | Data not available | ✖ | Data not available |
Estimated leakage is around $100 million for top 14 social safety net programs (most of these programs use cash-based payments).Leakages and inefficiency in cash-based systems could be minimized if the payments are digitized. Moreover, digitization of G2P payment disbursement would save an estimated $146 million annually across six major social safety net programs that can be translated to 44% of the total operating cost.
Date – 24 July, 2017
Blog Writer: Hussain Ahmed Enamul Huda
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