Situation and cooperation

View of Dhaka, Bangladesh

In Bangladesh, around 156 million people live on only 148,000 square kilometres of land. With an average of more than 1,200 inhabitants per square kilometre, Bangladesh is one of the most densely populated countries in the world. The population is currently growing at a rate of 1.2 per cent a year – too high for the country’s limited natural resources.


The economy of Bangladesh has been growing since the 1990s. In the past ten years, annual growth has been a fairly steady six per cent. The World Bank expects this rate of growth to continue in 2015. The main drivers of the country's economic growth are its cities.

More than half of its gross domestic product comes from the services sector, with industry generating slightly more than a quarter. Besides a growing textiles industry, Bangladesh also has new export-oriented sectors with further potential for growth, such as shipbuilding, ceramic wares, pharmaceuticals and the IT sector.

The country's most important export markets are the member states of the EU and the US. Bangladesh is also making an effort to expand its export activities into new markets such as Turkey, Brazil, South Africa, Japan, Australia and Russia.

The second most important source of foreign exchange after export earnings are the remittances of Bangladeshis working abroad – in particular in the Gulf states.


A rice farmer in Bangladesh

Although agriculture in Bangladesh contributes only about 16 per cent of the country's value creation, approximately half of the working population is employed in the agricultural sector. Rice is the most important crop. The fertile lowlands regularly flood, enabling them to produce several harvests a year.

So far, food production has kept pace with population growth. However, the unstable climatic conditions in Bangladesh increase the risk of food shortages. The extent of the flooding is growing, and flood damage can be immense. Experts reckon that climate change is likely to exacerbate these problems even further in the future, and that agricultural production will decline as a result. Moreover, the land available for growing crops is dwindling due to increasing settlement and industrialisation.

The textiles industry

A textiles factory in Bangladesh in which special attention is paid to complying with social and environmental standards

The textiles industry is Bangladesh’s most important export branch by a long way, accounting for more than 80 per cent of all exports.

However, because the health and safety standards in the country’s textile factories are very poor, there are frequent accidents. For example in 2012, a fire which broke out in a factory in Ashulia, on the outskirts of Dhaka, claimed more than one hundred lives. In 2013, the Rana Plaza – a nine-storey business and factory building in Savar near Dhaka – collapsed, killing more than 1,100 people and injuring more than 2,000. The Rana Plaza collapse was the worst factory disaster in the country's history.

The BMZ has provided special funding amounting to 2.5 million euros for the medical care and occupational rehabilitation of the victims of the disaster and their dependents.

As a result of international pressure, far-reaching agreements on fire prevention measures and safety standards in buildings have meanwhile been initiated, which should benefit the 4.5 million textile workers in Bangladesh. The initiatives started in Bangladesh may have an impact well beyond the country's borders. However, the implementation of such safety measures is progressing more slowly than had been hoped.

Following the Rana Plaza disaster, it was agreed to set up a fund for compensation payments to the victims and their families. The International Labour Organization (ILO) is coordinating the fund, and various companies have pledged to help finance it.

Germany has been supporting measures to improve social and environmental standards in the industrial sector in Bangladesh since 2005. The BMZ has invested some 16 million euros in pertinent projects. Since 2010, about 100,000 workers have taken part in further training projects, as have managers and factory owners. Labour inspectors have been trained and assisted. The issue of environmental and social standards in global value chains will continue to play an important role in the work of the BMZ at various levels. For future projects in this field, the BMZ has planned further commitments.

For more detailed information on the BMZ’s engagement in the textile sector, click here.


Traffic in Tongi, Bangladesh

A particular problem in Bangladesh is the poor state of its infrastructure. Many roads and railway lines are congested and in need of repair. The transport of goods is also hampered by silted-up rivers and ports. Power-generating facilities which are outdated and unable to cope with demand are holding back the country's economic development.


The proportion of people living below the national poverty line has been reduced from 40 per cent in 2005 to 31.5 per cent in 2010. Despite this achievement, poverty reduction remains one of the government's primary tasks, as Bangladesh is still one of the least developed countries in the world, ranking 136th out of 189 countries on the most recent Human Development Index (HDI).

A major cause of poverty in Bangladesh is underemployment. The government wants to create more jobs by fostering labour-intensive manufacturing industries, and is trying to attract foreign investors by offering them tax incentives and reduced customs tariffs. However, this reasonably favourable formal and legal environment must be set against the country’s inefficient bureaucracy, lack of transparency and corruption. Power shortages and poor transport infrastructure also deter potential investors. The volume of foreign direct investment has been low in recent years as a result.

The government of Bangladesh has formulated an ambitious goal in its long-term strategy "Vision 2021". By the 50th anniversary of its independence in 2021 the country should have reached the status of a "middle-income country". In order to achieve this, many issues and development obstacles still need to be resolved. However, since July 2015, the World Bank has rated Bangladesh as a "lower middle-income country".


The political atmosphere in Bangladesh is largely determined by the confrontational policies of the two major parties, the Awami League (AL) and the Bangladesh Nationalist Party (BNP). In the run-up to the parliamentary elections held in early January 2014, tensions between the two parties increased and violent clashes erupted, bringing public life in various parts of the country to a standstill on numerous occasions.

The Bangladesh government specifies in its sixth five-year plan that there is a need to improve governance and, more particularly, fight corruption. In the Corruption Perception Index compiled by the non-governmental organisation Transparency International, Bangladesh ranked 145th out of the 175 countries evaluated in 2013.

This lack of political stability could have a negative impact on the country's economic development in the long term.


Boat on Banani Lake, Bangladesh

The environment in Bangladesh is being progressively degraded, mostly as a result of natural disasters, overpopulation and poverty. Soil erosion and deforestation are destroying forests, wetlands and farmland. In addition, a proportion of the country’s drinking water is contaminated by natural deposits of arsenic. Drinking the contaminated water over long periods of time can cause serious illnesses.

Bangladesh is particularly severely affected by the impacts of climate change. Experts predict that the frequency and intensity of natural disasters will continue to increase. The rise in industrial production is placing a further strain on the environment. The country's rivers are being polluted by industrial and domestic effluents in particular.

Priority areas of German development cooperation

Germany has pledged Bangladesh a total of 234.1 million euros for the years 2014 and 2015. Cooperation between the two states currently focuses on the following three priority areas:

  • Renewable energy and energy efficiency
  • Good governance, the rule of law and human rights
  • Adapting to climate change in urban areas

Germany's involvement in the priority area of health is coming to an end.

In order to guarantee an efficient and coordinated division of labour, the Government of Bangladesh and 18 development partners including Germany signed a Common Implementation Strategy in June 2010 covering the period from 2010 to 2015. This strategy, together with an annually updated action plan, is the basis on which international development action is implemented in Bangladesh.

Renewable energies and energy efficiency

Increasing industrial production in Bangladesh is exacerbating the already serious energy crisis facing the country. Shortages result in frequent power cuts. The over-stretched and obsolescent infrastructure in the energy sector is holding back the country's economic development. The World Bank has estimated that Bangladesh's economy could grow by up to an additional two per cent a year if the country had an adequate power supply.

Germany is actively supporting Bangladesh in efforts to reform the country’s energy sector. One particular concern is to improve the energy supply in rural areas that are not yet connected up to the national electricity grid. Renewable energy sources such as solar energy and biogas play an important role here. But measures to improve energy efficiency, for example through the use of energy-efficient stoves, are also receiving support.

Another development focus is investment in improving the electricity network and avoiding transmission losses.

Measures also include advising enterprises on ways of saving energy. Germany’s development cooperation in the energy sector is helping bring about a change in awareness throughout society.

Good governance, human rights and the rule of law

Children in Korail slum, Dhaka

The human rights situation in Bangladesh gives cause for concern. Human rights violations are not prosecuted systematically or effectively enough. Furthermore, Bangladeshi citizens are not yet sufficiently aware of their rights.

The general framework, though, has improved: Bangladesh has now ratified all international human rights conventions. In 2010, it was the first South East Asian state to ratify the Rome Statute of the International Criminal Court. Watchdog bodies, including a national human rights commission and an Anti-Corruption Commission (ACC), have been put in place.

However, there are still many weaknesses in the justice sector. For example, the courts are overstretched, the prisons overcrowded and conditions in prison often inhumane. Some 70 per cent of all prisoners have not yet been properly sentenced; some of them have been in detention awaiting trial for years. These figures must be viewed in the light of the fact that only 25 per cent of all criminal proceedings actually lead to a conviction.

Germany is supporting Bangladesh in its efforts to fully reform its prisons. The plan is to carry out capacity building measures in the context of prison administration and to improve the penal system. Germany is working with the Bangladesh Ministry of Labour and Employment and the Ministry of Environment and Forests, as well as with factory managers, to support a project intended to promote social and environmental standards in the industrial sector of Bangladesh. This project is to help improve working conditions and enhance the safety of the workforce, as well as strengthening their organisations and protecting their rights. Together with the International Labour Organization, ILO, Germany is helping, amongst other things, to provide training for more than 200 state-approved health and safety inspectors, whose job it will be to inspect factories on behalf of the Bangladesh Ministry of Labour and Employment.

Furthermore, Germany is supporting national and international initiatives to improve working conditions as well as fire and general safety in commercial buildings in Bangladesh.

Adapting to climate change in urban areas

High-rise buildings tower overlooking the makeshift houses in a slum near the Buriganga River, Dhaka, Bangladesh

Since the activities of many donors in the field of adaptation to climate change concentrate on coastal and rural areas, Germany has decided to promote adjustment measures in towns and cities.

Climate change presents huge challenges for the towns and cities in Bangladesh, where natural events like flooding tend to affect a huge number of people living within a confined space. At the same time, climate change is likely to further increase the number of people migrating to towns and cities.

This influx of people brings with it major problems for the country's towns and cities. The way resouces are used will have to change in order to ensure adequate housing, water, energy and food. Models of public participation will also need to be adapted to new realities in order to nip any increase in social tensions in the bud.

But towns and cities also offer opportunities to adapt to climate change. Urbanisation brings with it a structural change in the country’s economy, away from agriculture towards the less vulnerable industrial and services sectors.

That is why the aim of German development activities is not only to make resource policy more efficient, but also to strengthen the resilience of the urban population in particularly vulnerable high-risk areas.

Initially climate change adaptation strategies are to be drawn up with those affected, in particular poorer population groups. In a second stage, Germany will then help them to implement these strategies – for example measures to scale up early warning systems and flood-proof infrastructure.

More information

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