Asian Development Bank (ADB) will provide $200 million in loans to small and medium-size enterprises (SMEs) in rural Bangladesh to help them gain access to medium to long-term credit, said the bank in a statement yesterday.
The credit facility will target particular firms run by women, who are mostly engaged in subsistence trade and retail activities, and are typically less educated and have less access to SME finance than men.
“Rural firms run by women struggle to get loans from banks. That means both they and the Bangladesh economy lose out,” said Peter Marro, Principal Financial Sector Specialist, in ADB’s South Asia Regional Department.
“We want to help flourish cottage industries and SMEs operated by women.”
Loans will be targeted at small firms outside of the metropolitan areas of Dhaka and Chittagong, with at least 15% allocated for women entrepreneurs.
There are about 7.2 million SMEs in Bangladesh. They account for 90% of all companies and employ 70%-80% of the non-agricultural workforce in Bangladesh. In 2014, SMEs contributed 25% of Bangladesh’s gross domestic product and 40% of the manufacturing output.
However, SME growth is constrained by the inadequate access to finance and electricity, poor transportation, increasing labour costs, and lack of skilled manufacturing labor – especially in rural areas.
The project also includes $2 million in technical assistance from the Japan Fund for poverty reduction to help establish incubation facilities at educational institutions to promote entrepreneurship, and support entrepreneurs’ development units at Bangladesh Bank.
