Moreover, Bangladesh has become more resilient to natural disasters such as cyclones and floods, and the state’s capacity to manage crises also has improved.

Bangladesh’s virtuous cycle of technology-aided development stems from decades of sustained state-NGO collaboration, combined with an emphasis on bottom-up initiatives to empower female entrepreneurs. This model has also given the country an unexpected advantage in managing the economic impact of the COVID-19 pandemic.

Although many developing countries rapidly implemented new cash-transfer programs in response to the pandemic, not all of these schemes have been equally effective in reaching the poor. Pakistan and India both relied on the traditional banking system to disburse cash benefits, while China opted to digitize transfer services. But both methods have excluded significant segments of the population.

Bangladesh therefore chose a different path by using mobile money to bridge the double divide in access to digital technology and formal banks. The government recently ended the age-old practice of transferring money under safety-net programs to beneficiaries’ bank accounts. Instead, mobile financial services providers today cover 98 percent of the country’s mobile-phone subscribers. Nearly 80 percent of users live within one kilometer (0.6 miles) of an MFS agent, stationed in local grocery stores and mobile recharge points. The agent manages e-money and cash withdrawals from mobile money accounts, as well as assisting with account registration. The MFS regulation also allows money transfers to cellphone owners who do not have a mobile-money account, thus ensuring that even those without internet access can benefit.

MFS could potentially revolutionize social-service delivery in South Asia, where as many as 625 million adults have no bank account. Bangladesh, with high teledensity and (by regional standards) a relatively small gender gap in mobile-phone ownership, stands to benefit. But other countries’ use of mobile-phone payment technology to disburse COVID-19 funds has been limited by lower coverage and a lack of mobile-money agents.

Pakistan, for example, lags behind Bangladesh in terms of the number of mobile cellular subscriptions per hundred inhabitants. According to the World Bank, only 50 percent of Pakistani women own a mobile phone, compared to 61 percent in Bangladesh. Furthermore, just 7 percent of the population has a mobile-money account, whereas 21 percent of Bangladeshis do.

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