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ADB to provide $50m to develop Bangladeshi microenterprises

  • Published at 04:28 pm February 6th, 2019
web_ADB-ERD Loan
Manmohan Parkash, country director for ADB and Monowar Ahmed, secretary for the Economic Relations Divisions, Bangladesh signed the agreement on behalf of ADB and Bangladesh, respectively, at a ceremony held in Dhaka on Wednesday, February 6, 2019 PID

The agreement was made to reduce poverty and grow an inclusive economy

In a bid to alleviate poverty, the Asian Development Bank (ADB) will provide Bangladesh a sum of $50 million to develop microenterprises.

ADB signed an agreement with Bangladesh for the loan on Wednesday. The loan is intended to grow an inclusive economy and reduce poverty.

Monowar Ahmed, secretary for the Economic Relations Divisions (ERD); and Manmohan Parkash, country director for ADB, signed the agreement on behalf of Bangladesh and ADB, respectively, at a ceremony held in Dhaka.

ADB's loan should assist microenterprises in accessing financing through the Palli Karma Sahayak Foundation (PKSF)—an apex development finance and capacity-building organization—and its partner organizations.

"The greatest constraint in developing microenterprises in Bangladesh is the limited access to finance," Manmohan Parkash said at the ceremony. "This project will provide financing to ease this constraint."

The project also introduces an innovative mobile-based microenterprise financing application, on a pilot basis, and boosts forward linkages to agriculture; promoting rural growth plus income and job opportunities, Manmohan furthered. 

In line with the agreement, the loan will be provided to PKSF to lend to partner organizations; and sub-lend to about 40,000 microenterprises, 70% of which are managed by women.

To address mid-term challenges, the project will help PKSF develop a financing strategy and strengthen institutions.

Meanwhile, in the longer term, the project will develop microenterprise finance operational guidelines, for microfinance institutions. It will also assist in clustering microenterprises to expand business and improve—with quality control—branding, packaging, and marketing.

Additionally, the project will make financing institutions more oriented, as well as assist micro-entrepreneurs in getting enterprise loans and monitor environmental and social safety issues.

The project is accompanied by an ADB technical assistance grant of $500,000 to enhance the capacity of PKSF and its partner organizations in microenterprise lending and promoting sustainable operations. The grant is from ADB’s Financial Sector Development Partnership Special Fund, financed in partnership with the Government of Luxembourg.

The total cost of the project, which is due for completion at the end of 2020, is $62.5 million—of which the microenterprises will contribute $12.5 million. 

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members—48 from the Asian region.