The World Bank has approved a total US$476m loan to finance the implementation of two projects in Bangladesh.
The lending agency’s board of directors on June 5 approved the loan in Washington DC for the projects to help develop a strong financial sector and to improve agricultural productivity for one million poor farmers, according to a statement received here yesterday.
The projects approved by the Bank’s Board of Executive Directors are $300m for the financial sector support project and $176.06m for the Second National Agricultural Technology Program.
The credits are from the International Development Association (IDA), the World Bank’s concessional lending arm. They have 38 years to maturity with a 6-year grace period and carry a service charge of 0.75%.
“These two projects will support Bangladesh to reach middle-income status by strengthening the financial sector and ensuring greater food security. These, in turn will create more and better jobs,” said WB country director Johannes Zutt.
He appreciated Bangladesh’s remarkable progress in reducing poverty in the past decades.
The Financial Sector Support Project (FSSP) aims to improve financial market infrastructure, the regulatory and oversight capacity of the Bangladesh Bank, the country’s central bank, and the access to long-term financing for private firms in Bangladesh.
The 2013 Doing Business report identified access to affordable finance among the top four obstacles for doing business in Bangladesh. The project will enable the participating financial institutions to provide long-term financing to manufacturing and export intensive firms, said the statement.
The availability of long-term financing of up to five years to the private sector, and in particular to the readymade garments, footwear and light engineering sectors will spur competitiveness, investment, and growth. The financing institutions will lend at commercially determined rates and also offer Shariah-compliant financial products, added the World Bank statement.
“By providing access to long-term finance, the project will help to build a market for long-term lending in Bangladesh. The project will also provide technical assistance for capacity building of the financial institutions and industry associations,” said Shah NurQuayyum, task team leader, Financial Sector Support Project of the World Bank.
The Second National Agricultural Technology Program (NATP II) aims to support some one million poor, small and marginal farmers in 57 districts. These small-scale farmers will benefit from stronger linkages with research, on-farm demonstrations of improved technologies, training and skills development, agricultural extension services, and co-funding productive assets.
The project aims to increase and diversify agricultural production, and ensure the poor farmers’ access to markets. The project seeks to increase agricultural productivity of crops, livestock and fisheries. The project will continue the formation of farmers’ groups, 35% of which would consist of women.
“The project builds on the lessons learnt and the success of the first NATP project. The World Bank, along with other development partners, has long promoted agricultural technology and its adaptation to farmers in Bangladesh,” said Patrick Verissimo, Task Team Leader, NATP II, World Bank.
“The project would promote an integrated approach to help to achieve food security, adapt to climate change and enhance nutrition through safer and more diversified food.”
