The Role of MFS: Transparency & Accountability in Government Aid Disbursement

The Role of MFS in the Distribution of Government Allowances

As a developing country, Bangladesh has recently received the recommendation from the United Nations to be promoted as a “Developing country” from “Least Developed Country.” However, like many other developing countries, Bangladesh is also prone to corruption. As a result, the benefits of many initiatives taken at the highest levels of government do not reach the doorsteps of the common people. Many of these initiatives taken for the citizens lacked transparency and accountability. The Government has allocated various funds and financial assistance for the citizens from time to time. However, instances of corruption were noticeable while disbursing those funds. According to an article in Prothom Alo, Bangladesh ranks 12th in the list of corrupt countries. Besides that, the news of corruption of different government organizations’ officials came up at several times. However, in the last few years, the government has distributed these allowances and grants through mobile financial service providers by avoiding bureaucratic complications while ensuring transparency and accountability besides significantly reducing corruption. 

In the last decade, besides the socio-economic development of Bangladesh, progress has been observed in various sectors of the country, including overall infrastructure, energy, and business sectors. One of these successes is to bring a large portion of the country’s population under financial inclusion. In March 2011, the first mobile financial service in the country was launched through Dutch Bangla Mobile Bank. In July of that year, USA-based ‘Money In Motion LLC’ and ‘BRAC Bank’ launched ‘Bkash’ as a joint venture. A few years later, Bangladesh Bank formulated its Mobile Financial Services Policy. And, under the policy, several other banks also introduced MFS services for their customers. According to Bangladesh Bank, 19 banks launched mobile banking services in December 2016, but 18 banks actively provided these services. At that time, more than 4 Crore customers in the country had MFS accounts. Later, the number of banks that had licenses for mobile banking reached 29 at one point. 

On the other hand, according to Bangladesh Bank, 15 banks in the country are currently providing MFS services to the customers, and the number of registered customers is around ten crore.

15 banks are currently providing MFS services

Meanwhile, ‘Nagad’ the MFS of the postal department, which is excluded in the calculation of Bangladesh Bank, has about five and a half crore registered customers, and the average daily transaction is about BDT seven hundred crores. On the other hand, the rest of the MFS providers in the country are transacting more than BDT 2100 crore on an average every day. Although a large portion of the country’s population remained ‘unbanked’ at the beginning of the last decade, this situation has now changed through Bkash, Nagad, and Rocket, and other MFS service providers. However, groundbreaking changes have been seen in the distribution of Government allowance and assistance.

As a disaster-prone country, Bangladesh has been hit by various natural calamities, including floods, droughts, river erosion, cyclones, and tidal surges at different times in the last 50 years. The government of the country has always come forward to help and rehabilitate the victims of these disasters. At various times, the government has provided financial and relief assistance to these needy people. Besides that, on the ongoing corona epidemic, the government has given several incentives in 2019, including an allocation of BDT 5,000 crore for low-income people and farmers.

 Government has given several incentives through Nagad
Government has given several incentives through Nagad

However, in the past, most of these government aids did not reach the affected people. These grants were supposed to reach the needy people from government funds through field level UNOs, chairmen, and members, but in many cases, it did not reach the right people at the right time due to bureaucratic complications. As the bureaucratic process had to go through many stages, the relief would reach a very small number of people due to various complications and corruption of dishonest officials. Newspapers and magazines often published news about dishonest and corrupt government officials and people’s representatives. It is uncertain whether the money has reached the needy people in previous government assistance projects.

However, in the last two years, there have been significant changes in this regard. On Eid-ul-Fitr 2020, the Prime Minister said that Eid gifts would be sent to 50 Lakh families. The Prime Minister’s gift was to send BDT 2,500 to each family. In this context, 50 Lakh families were listed with the help of various governmental and non-governmental organizations and local representatives. Among these families, the MFS of the postal department ‘Nagad’ was responsible for 17 Lakh, bKash was responsible for 15 lakh, Rocket was responsible for 10 lakh, and SureCash, which was discontinued earlier this year, was responsible for 8 lakh families for delivering the PM’s gift.

However, the Prime Minister’s Eid gift was sent to 34 lakh families that year. Eid gifts were again sent to 34 lakh families from the Prime Minister’s fund during this year’s Eid-ul-Fitr in the same system. Of which, about 15 lakh by ‘Nagad’, more than 10 lakh by bKash and Rocket has sent Eid gifts to 8 lakh families. Similarly, during the last Eid-ul-Azha, the Prime Minister has provided assistance to 17 lakh people in various professions, including farmers and workers who lost their jobs due to Covid-19. All of which has gone through mobile financial services, led by Nagad. Besides that, mothers of 1 crore 40 lakh primary school students have received stipends and allowances on their mobile phones for buying educational materials by ‘Nagad.’ Apart from this, under the Prime Minister’s Education Assistance Trust, private MFS provider ‘bKash’ has distributed education stipends among two lakh secondary level students. The MFS of the Government’s postal department ‘Nagad’ distributed among 4 lakh students. In addition, 75 percent of the 76 lakh social security allowances for the backward sections of the society have been sent by Nagad. Besides, BDT 5885 crore has been disbursed in this sector. A few days ago, teachers and students of 300 technical education institutions were provided assistance through ‘Nagad’ in the epidemic situation. Similarly, VDF and other government assistance have also been successfully tested to be disbursed through the mobile financial service operator ‘Nagad’.

As a result, the government has ensured transparency and accountability in distributing various grants and allowances and has also saved the government money. At the same time, these allowances have reduced the corruption and irregularities in the distribution in the past. According to a report by ‘Telecom Reporters Network Bangladesh’, the failure of sending the Prime Minister’s Eid gift to 17 lakh families before Eid-ul-Fitr in 2020 is not a failure, but a milestone. Because in the previous grants and government assistance projects, no money has ever been returned to the government funds. On the other hand, these grants have been sent through Nagad, bKash, and Rocket, which have been properly distributed among 34 lakh families.

Government assistance distributed among 34 lakh families.

Among the 16 lakh families that could not be distributed were fake names. As a result, BDT 365 crore has been saved in government funds. Which is a huge milestone in terms of government allowance and fund distribution.

Meanwhile, a report by Prothom Alo published on July 28 said that there were several fake names in the distribution of social security allowances. However, due to digitization through mobile financial services, 87,000 fake names have been found and removed from the list. Here, about half a crore BDT of the government has been saved from corruption as well.

The TRNB report also said that the government used to spend BDT 22 per thousand on the distribution of allowances and education assistance to primary school students. The government’s expenditure has decreased to BDT 7 per thousand since ‘Nagad’ started doing it. So here, the government is saving a lot of money as well. This costing issue is being followed in the distribution of other allowances, which plays a vital role in saving people’s money.

If MFS providers can be included to ensure transparency and accountability in the distribution of funds for all other government projects, a lot of government’s money would be saved from corruption.

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