Social safety net programs (SSNPs) serve as a critical support mechanism for the less fortunate people of Bangladesh. The government has more than 16 SSNPs. pi STRATEGY in partnership with a2i and CGAP, has conducted a study on the potential benefits of digitizing these SSNPs.
The study took a deeper look into 6 social safety net programs from a list of 16 and tried to analyze the benefits of digital payments from both the demand and supply side. This study estimates that digitizing the payments can help the government save up to BDT6.22 billion annually, along with other benefits. Digitization will not only benefit the government, but also help the beneficiaries. Total digitization of these programs can impact the lives of 15 million citizens of the country, saving them 116.3 million hours of time, 26.8 million visits to the facilities and a cost of BDT1.08 billion annually.
The leakage in both efficiency and in finances can also be reduced by introducing digital payments. One form of leakage is the presence of ‘ghost’ workers, while the other is unofficial fees in different stages. The government loses an estimated BDT7.73 billion annually in SSNPs (Figure 1). Digital payments can help the government save an estimated total of BDT6.15 billion annually.
One of the major programs among the studies is Old Age Allowance Program (OAAP). The objective of this program is to ensure the social safety of old people of lower socio-economic class. Traditionally, this includes cash transfers through various government bodies, which is inefficient at various points. The beneficiaries have to go through tiring processes to receive the allowance. Payment through hand-to-hand cash transactions with manual processing and record keeping has left the transactions exposed to misappropriation, payment mismanagement, and abuse in individual payment cases. The study estimates that digitizing the payments for only this program may save a total of BDT188 million annually for the government. The TCV analysis shows the beneficiaries will be able to save BDT529 million, 8.1 million visits and 57.2 million hours if the payments are digitized (Figure 2).
Even small improvements can generate meaningful value propositions for all parties considering the budget and number of beneficiaries of G2P programs in Bangladesh (Figure 3). It transcends into far more important areas of accountability, transparency and people’s confidence in the government.