CORRUPTION WIDENS INCOME DISPARITY

Rajika Jayatilake reports on the youth revolt against corruption – and the call for fairness and accountability

The recent bloody uprising in Bangladesh, which resulted in over 300 deaths and the sudden ouster of former prime minister Sheikh Hasina Wazed, came as a shock to the international community. However, not so much to most Bangladeshis…

The reason for this is that even though the country appeared to be “racing on the highway of development” – in the words of Senior Lecturer at Dhaka’s North South University Sharmee Hossain – over the past 15 years, regular Bangladeshis were suffering relentless price hikes.

She says: “There was a huge disconnect. The dissatisfaction of the people grew, and the gulf between the government and the general people of Bangladesh started to widen.”

Oblivious to this, the world saw Bangladesh as “an incredible story of success and struggle,” according to Senior Professorial Lecturer at the American University in Washington D.C. Tazreena Sajjad.

Reflecting on the birth of Bangladesh in 1971, Qimiao Fan – who is the Director of Strategy and Operations in the Office of the Managing Director for Development Policy and Partnerships at the World Bank – remembers former US secretary of state Dr. Henry Kissinger’s words as he described the South Asian nation as “a basket case.”

Bangladesh was the world’s second poorest country at the time after it emerged from the 1971 War of Independence.

Despite a disastrous famine in 1974 and several devastating cyclones, the country picked up and moved on valiantly with textile and garment exports growing exponentially.

Since 2000, the economy recorded six percent growth every year, and experts from other countries sought to emulate Bangladesh for its miraculous economic success. New York based research firm Wealth-X identified the country as the global leader in wealth growth between 2010 and 2019.

But as economist Prof. M. M. Akash at the University of Dhaka explains, the bitter truth is Bangladesh’s rich people were getting wealthier while the poor struggled to survive – because most of the rich didn’t reinvest their wealth, hiding it in offshore accounts to evade tax instead.

A study by the country’s Ministry of Finance showed that a shocking 45-65 percent of national income is untaxed. Consequently, a substantial portion of government revenue comes from indirect taxes such as VAT, which burden the poor disproportionately.

So even as the country of some 180 million was seen to progress and prosper, generated wealth was confined to its elite, resulting in an ever widening divide between the rich and poor.

According to official statistics, the richest 10 percent of the population controls 41 percent of national income while the bottom 10 percent receives only 1.3 percent.

Moreover, out of some 2.6 million unemployed, almost 83 percent are aged between 15 and 29. Therefore, job quotas led to resentment about the unequal distribution of wealth.

It was Sheikh Mujibur Rahman – the father of Hasina as well as modern Bangladesh – who introduced the work quota system in 1972, by allocating 30 percent of government jobs for ‘freedom fighters,’ 10 percent for women, 10 percent for districts based on population, five percent for ethnic minorities and five percent for people with disabilities.

Building on the legacy of her father, Hasina was once the guiding light of Bangladeshi democracy and empowering women. In recent years however, she was accused of favouring her henchmen and suppressing dissent.

In 1997 and 2010, the quota system was extended to include the children and grandchildren of veterans, which led people to feel that the elite class was benefitting at the expense of the poor.

In 2018, a student revolt on the streets demanded reform and the government scrapped quotas. In June 2024 however, the high court deemed the removal of quotas illegal, leading to a new wave of protests and Hasina’s ouster.

Policy and Advocacy Manager at the Balsillie School of International Affairs in Ontario Saad Hammadi noted that “this is a protest for fairness, transparency and accountability.”

Subsequently, the student protestors supported the interim government headed by Nobel Laureate Dr. Muhammad Yunus, who created a microcredit system that empowered millions of poor people – especially women and girls.

Bangladesh’s wealth disparity is aggravated by widespread corruption. According to Transparency International’s (TI) 2023 Corruption Perceptions Index (CPI), Bangladesh was ranked 149th among the 180 countries in the CPI.

Moreover, Executive Director of Transparency International Bangladesh Dr. Iftekharuzzaman points out that the cost of grand corruption in Bangladesh is high. Grand corruption is the collective abuse of political, governmental and business power for private gain.

Bangladeshi finance minister in 2015 Abul Maal Abdul Muhith notes that at the time, between two and three percent of the country’s GDP was lost to corruption annually. Credible data from Global Financial Integrity (GFI) on illicit outbound financial transfers shows that Bangladesh lost US$ 8.275 billion annually between 2008 and 2015 only on trade related misinvoicing.

As Danish politician Ulla Tørnæs aptly said, “corruption in the form of bribery and misuse of public funds is a major obstacle to democracy and economic development in many of the world’s poor countries.”

Corruption in the form of bribery and misuse of public funds is a major obstacle to democracy and economic development

Ulla Tørnæs

Danish politician