Special editorial feature

Download PDF:Investing in South Asia

October 2020

Hartwig Schafer,
Vice President, South Asia Region, World Bank

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During the time I spent in South Asia, I have met and heard inspirational stories of people throughout the region who were able to improve their lives for the better - send their children to school, feed their families, make a good living - often with just a little help from well-targeted programs.

Stories like that of Kausar, from Hyderabad, India, who dropped out of school and got married at age 17. But she received skills training and found a job at a government hospital, providing bed-side care. Samina, a woman from Karachi, Pakistan, who built a micro-enterprise and employed 9 other women. Qamara, from Afghanistan’s Nangarhar province, who received a cow and a calf from an emergency support program, and can now sell milk to dairy shops and neighbors, keeping a lifeline throughout the COVID-19 pandemic.

I remembered these stories when I read the numbers included in the just-released 2020 edition of the World Bank’s Human Capital Index. The report presents the most comprehensive picture of human capital we have to date, reflecting close consultations with experts and methodological improvements since the first release of the Index in 2018.

The numbers in the report represent dramatic improvements in lives and opportunities for millions of people in South Asia. Between 2010 and 2020, India reduced the share of children under the age of 5 who are stunted by 13 percentage points, from 48 to 35 percent. In Bangladesh, a child can now expect to spend 10.2 years in school, which is 2 years more than in 2010. In Pakistan, 7 in every 100 children do not live past the age of 5, compared to 9 in every 100 in 2010.

Covid-19 and World Bank
Assistance to South Asia

Amid the global economic fallout triggered by the COVID-19 pandemic, South Asia will likely experience its worst economic performance in the last 40 years, with temporary contractions in all eight countries. As COVID-19 spreads across the region, South Asia’s economic outlook is dire. The region will likely experience its worst economic performance in the last 40 years, with temporary contractions in all eight countries. According to the latest Global Economic Prospects, GDP in the region is projected to contract by 2.7 percent in 2020 as pandemic mitigation measures hinder consumption and services activity and uncertainty about the course of the pandemic chills private investment.

In India, growth is estimated to have slowed to 4.2 percent in FY 2019/20, which ended in March 2020. Output is projected to contract by 3.2 percent in FY 2020/21, when the impact of the pandemic will largely hit. Pakistan (-2.6 percent in FY 2019/20) and Afghanistan (-5.5 percent) are both projected to experience contractions, as mitigation measures are anticipated to weigh heavily on activity. Growth in Bangladesh (1.6 percent in FY 2019/20) and Nepal (1.8 percent in FY 2019/20) is expected to decelerate markedly due to pandemic-related disruptions including mitigation measures and sharp falls in exports and remittance inflows.

Due to the COVID-19 pandemic, economic circumstances within countries and regions are fluid and change on a day-by-day basis. The analysis in the latest Global Economic Prospects report is based on the latest country-level data available as of June 2020.


Notes: The 2020 and 2021 numbers represent the lower and upper bound of the forecast range. For India, 2020 refers to FY19/20. e: Estimate f: Forecast.

But the report also reminds me that there is still so much work ahead to strengthen human development outcomes. Even before the pandemic, 1 out of 3 children in South Asia was still stunted, and 4 out of every 100 children did not live beyond the age of 5. While more children attend school than ever before, students in South Asia still do not learn more than in the average Sub-Saharan country. The report also shows what we don’t know, pointing to the need to strengthen the consistency and quality of data collection on human development, particularly in our region.

We know that the pandemic will worsen these outcomes and reverse some of the gains, even if the full impact is not yet measurable. Several countries in the region continue reporting high number of cases each day, and even countries that have fared relatively well like Bhutan and Sri Lanka will need to remain vigilant. And, while attention has focused on direct impacts such as hospitalizations and deaths, the indirect impacts are slowly becoming visible. These indirect impacts include unavailability of some key health services, income loss and hunger – all of which will have long term impacts. Students across South Asia have been deprived of 4 months of learning opportunities, which could lead to long-term economic losses of up to $801 billion.

Hartwig Schafer,
Vice President, South Asia Region, World Bank

One important lesson is that we need to keep a strong focus on inequality, which is perhaps the key driver of poor human capital. Low learning levels, stunting, child mortality, and vulnerability to shocks are all concentrated among the poor. Reducing inequality means strengthening the quality of service delivery, closely tracking program impacts on the poor, and making sure that services work for people like Kausar, Samina and Qamara. Bangladesh increased its level of schooling by helping the poorest stay in school longer. Yet many are not able to access digital learning opportunities. During this day and age, reducing inequality includes addressing the digital divide.

Over the last few months, the World Bank has rapidly mobilized support, providing more than $1.6 billion in emergency health operations and $4 billion in relief, recovery, and resilience operations across the region.

To better protect people from shocks, we also need a whole of government approach that addresses the many risks faced by South Asia’s population – including from environmental factors. 134 million people in South Asia do not have access to improved drinking water and the majority of sources are contaminated. Environmental pollution - particularly air pollution - is a leading risk factor for premature deaths: 1 out of every 10 deaths in all countries but Sri Lanka and Maldives is due to environmental risks. South Asia is also very vulnerable to climate change: 800 million people are at risk of lower incomes and 40 million at risk of becoming climate refugees. Improving human lives will require us to think beyond sectoral silos.

World Bank Strategy

The Bank’s strategy in South Asia emphasizes The Bank’s strategy in South Asia emphasizes promoting sustainable and inclusive growth, investing in people, and strengthening resilience. It focuses on supporting policy reforms for private sector–led job creation; addressing stunting with multi-sectoral solutions; increasing female labor force participation; supporting refugees, returnees, and internally displaced persons; and addressing climate risks, including through disaster preparedness and management. In fiscal year 2019, the World Bank approved $8.9 billion in lending to the region for 54 operations in fiscal 2019, including $4.0 billion in IBRD loans and $4.9 billion in IDA commitments. The Bank also delivered 178 advisory services and analytical products to eight countries, totaling $79 million, providing technical advice on issues such as energy sector reform, female labor force participation, and climate change.

Over the last few months, the World Bank has rapidly mobilized support, providing more than $1.6 billion in emergency health operations and $4 billion in relief, recovery, and resilience operations across the region. Well over 800 million new beneficiaries are expected to be covered by social protection programs. We have also mobilized our technical expertise, closely tracking the impact of COVID-19 on health, social transfers, and learning losses. We are also building new coalitions to reach more people, for instance to deliver emergency remote learning in Nepal, and helping design and implement awareness raising campaigns on good hygiene and social distancing, for example in Afghanistan and Pakistan.

The numbers released today show that it is possible to improve the lives of millions of people, but we must do a lot more now to protect and invest in people’s lives and livelihoods.