Poverty and Inequality in Bangladesh


Income inequality is a key contributor to both the economic as well as social inequalities witnessed in both developed and emerging countries. One of the key effects is unequal access to opportunity, especially in significant areas such as quality education, health care as well as respectable work. In the case of Bangladesh, the country’s poverty incidence ranks among the highest in the world, with millions of its population suffering from the associated hardships. One of the key drivers is inequality, which, to a great extent, has afflicted the persistence of poverty. This paper will look at the current state of poverty and inequality in Bangladesh, examining the nature, cause, and consequences of the problem that affects millions of lives. Moreover, it will explore the potential role of businesses in contributing to the reduction of the crisis.

The Current Poverty and Inequality Situation in Bangladesh

Ferdous (2023) highlighted that the trajectory of Bangladesh’s battle against poverty has been marked by remarkable strides fueled by sustained economic growth. This promising future will see the nation’s imminent graduation from the United Nations’ list of least developed countries (LDCs) in 2024. Based on the ‘Household Income and Expenditure Survey (HIES) 2022 report, the country’s poverty rate is currently at the 18.7 percent mark, with the extreme condition poverty rate condition being 5.6 percent (see Figure 1) (Bangladesh Economic Review 2023). This is a remarkable improvement from the numbers reported in 2016 at 24.3 and 12.9 percent, respectively, according to the Household Income and Expenditure Survey (HIES) 2016.

In addition, Bangladesh’s per capita Gross Domestic Product (GDP) reached $2,068 in 2020, up from $700 in 2010, putting the country in the middle-income bracket of South Asian countries (Hongmei and Yuchun, 2022). This has propelled the projection of the country’s potential to join the upper-middle-income frame by 2041 if its present development trajectory continues (Hongmei and Yuchun, 2022). Thus, the country’s poverty and inequality index has shown substantive growth in recent years.

The Causes of Poverty and Inequality in Bangladesh

The paradox of poverty persists in Bangladesh, even though the country has reduced poverty. The problem has several interrelated sources and is complicated, as is typical in many emerging nations. Many people are worried that the current economic crisis will widen the wealth gap in this country, which has one of the highest population densities in the world (1,115 people/km2) and a poverty rate of 21.8%. (Al-Zaman 2020). There is less of an impact on poverty alleviation, and growth is hindered by an uneven growth pattern. Determining how to alleviate poverty without also tackling inequality is, hence, a challenging task.

Corruption within government institutions and public services has also contributed to the ineffective implementation of poverty alleviation programs and the equitable distribution of resources (Rahman 2019). Nearly every point of service delivery is prone to extortion, and the government’s lack of responsibility and supervision only worsened the problem (Mansur 2020). The yearly development program (ADP) of the nation suffers from poor quality and return on investment due to overly optimistic budgets and poor craftsmanship and machinery (Mansur 2020). Value for money and service delivery in public sector initiatives will continue to elude unless there is a firm mandate from top political leaders to curb wasteful spending and corruption. Moreover, More than 655,000 Rohingya have fled Burmese military operations, which has increased the prevalence of some governance concerns, including human trafficking, as well as caused basic commodity prices to rise and daily salaries to drop (Rahman 2019). This has further exacerbated the poverty situation.

Poverty and Inequality Consequences in Bangladesh

One of the consequences can be witnessed in the healthcare sector; Bangladesh’s healthcare system has often failed to meet the public’s needs for appropriate treatment due to its unreliability, lack of responsiveness, and lack of empathy (Al-Zaman 2020). Urban regions have more medical facilities, which creates a healthcare divide and leaves rural areas without enough options (Al-Zaman 2020). In this context, the COVID-19 pandemic exposed several dangers, with the less fortunate affected most. With the second lowest testing rate in South Asia, limited testing laboratories, and uneven distribution of resources, the healthcare system struggled to identify and contain cases promptly (Al-Zaman 2020). Financial barriers, such as expensive tests in private facilities, disproportionately affected the impoverished, leading to underreporting. A scarcity of medical workers, an unregulated testing system favoring elites, corruption, and the imposition of testing fees further compromised the pandemic response (Al-Zaman 2020). The result was distorted official COVID-19 statistics, exemplified by the undiagnosed deaths of 1,010 individuals with coronavirus symptoms (Al-Zaman 2020), highlighting the profound impact of poverty and inequality on the effectiveness of healthcare preparation and capacity in Bangladesh.

Businesses Contribution to the Reduction of Poverty and Inequality in Bangladesh

Like other UN 192 countries, Bangladesh has adopted the sustainable development goals (SDGs) (Nabi et al. 2022). In order for Bangladesh, a lower middle-income country with few resources, to achieve the SDGs, it will be necessary to re-design financial markets so that the poor and other financially excluded groups and businesses can gain access to them, as well as to mobilize resources and take advantage of new sources of financing (Nabis et al. 2022). All available resources must be used to attain SDGs. Given this, Islamic finance, a systemically important component of Bangladesh’s financial system, can help her achieve SDGs by promoting financial inclusion, reducing vulnerability and mitigating risk, addressing environmental and social issues, and facilitating infrastructure. Thus, businesses can actively engage with Islamic banks, sukuk markets, and other Islamic financial instruments to channel funds toward SDG projects (Nabi et al. 2022). Financing shortages for programs addressing climate change, poverty, human resource development, and inclusive growth can be addressed through this collaboration.


Despite the noted economic growth in recent years, Bangladesh, one of the world’s most populated states still struggles with the issue of poverty and inequality. This is reflected in the way the country struggles with bad governance, leading to inequitable distribution of public resources like hospitals, which are more located in urban areas. The issue of refugee influx has also caused the prices of basic products to rise and daily wages to fall. Inequality is also reflected in the healthcare sector, owing to the emergence of the COVID-19 pandemic, further highlighting systematic disparities. As Bangladesh approaches graduation from least developed status, fostering inclusive policies is imperative, with businesses serving as crucial agents in reshaping the nation’s trajectory towards a more equitable and prosperous future by actively contributing to sustainable development goals and leveraging resources through innovative financial models like Islamic finance.


Al-Zaman M S (2020) ‘Healthcare crisis in Bangladesh during the COVID-19 pandemic,’ The American Journal of Tropical Medicine and Hygiene103(4), p.1357. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7543838/

Bangladesh Economic Review (2023) ‘Poverty Alleviation.’https://mof.portal.gov.bd/sites/default/files/files/mof.portal.gov.bd/page/f2d8fabb_29c1_423a_9d37


Ferdous J, (2023) ‘Inequality and prosperity challenges in Bangladesh: experiences from Singapore,’ Southeast Asia: A Multidisciplinary Journal.

Hongmei H and Yuchun S (2022) ‘Current Situation and Trends of Poverty in Bangladesh,’ IPRI Journal22(1). https://journal.ipripak.org/wp-content/uploads/2022/06/Article-6-IPRI-Journal-XXII-I-Dr.-He-Hongmei-Song-Yuchun.pdf

Mansur A H (2020) ‘Bangladesh: Impediments to Enhanced Revenue Mobilization and Equitable and Efficient Spending.’ https://www.cgdev.org/sites/default/files/PP167-Gupta-DRM-Bangladesh.pdf

Nabi M G, Islam M S, Uddin M J and Nabi R (2022) ‘Islamic Finance in Achieving Sustainable Development Goals (SDGs): Bangladesh Perspective.’ https://www.ierb-bd.org/wp-content/uploads/2023/02/Islamic-Finance-in-Achieving-SDG.pdf

Rahman K (2019) ‘Overview of corruption and anti-corruption in Bangladesh,’ Transparency International. https://www.jstor.org/stable/pdf/resrep20491.pdf


Appendix 1

Trends in Bangladesh’s poverty reduction

Figure 1: Trends in Bangladesh’s poverty reduction

Source : (Bangladesh Economic Review, 2023).

Author: Ariane Brunet
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