Mobile Banking Improving Rural Economy

mobile banking

The economy of Bangladesh has grown at a rapid rate over the past years, driven by the remarkable growth of the ready-made garment (RMG) sector. Mobile banking puts an immense impact on the economy of rural households through its fast and affordable cost of money transferring options. But to keep pace with the growing economy, vocational training programmes in such growing sectors can reduce skill gaps and improve income and employment potentials, experts said at a conference.

Mobile banking improved the economy of rural households and they reduced borrowing, increased savings and saw gains in health, education and agricultural productivity, said Prof Jonathan Morduch of New York University at the conference titled “Seeds of Change in the Garment Industry”. The conference was jointly organized by International Growth Center (IGC), Innovations for Poverty Action and the BRAC Institute of Governance and Development (BIGD), BRAC University on 16 July 2017 at a city hotel.

“They also saved more and were less likely to be poor. Overall, the results suggest that mobile banking has an insurance function. It increases the welfare of rural households but has mixed effects on the welfare of migrant workers,” said Prof Morduch while presenting his paper titled “Poverty and Migration in the Digital Age: Experimental Evidence on Mobile Banking in Bangladesh”.

According to another recent study titled “Overcoming barriers to female managers in the RMG sector”, more than three-quarters of sewing operators are women but at the same time, number of female sewing supervisors is only fiver percent. The study prepared and presented by Prof Christopher Woodruff of the University of Oxford, also revealed that, in last 25 years economy of Bangladesh grown high with the remarkable growth of RMG sector.

Three other papers titled ‘On-The-Job Training Increases Employment for Rural Poor in the Manufacturing Sector: Experimental Evidence from Bangladesh’ by Prof Abu Shonchoy of the New York University, Monitoring and Improvement in Physical Working Conditions: Evidence from The Accord Initiative in Bangladesh by Dr. Atonu Rabbani of the University of Dhaka and ‘Consequences of Imperfect Information about building safety and garment workers and factories’ by Laura Boudreau of the University of California Berkeley were also presented at the conference.

“The progress was generally slower for the types of problems that require larger fixed costs,” said Dr. Rabbani in his presentation. Prof Abu Shonchoy’s study shows that vocational training programmes in growing sectors can reduce skill gaps and improve income and employment potentials.

President of the Bangladesh Employers’ Foundation (BEF) Mr. Salahuddin Kasem Khan was the chief guest and Chief Executive Officer of the Bangladesh Foreign Trade Institute (BFTI) Mr. Ali Ahmed was the special guest in the programme.

In his speech, Mr. Khan said that RMG sector is playing a key role in the economic growth of Bangladesh and research in this area is very important. “I think such researches would also help add value to this important sector,” he added.