ADB provides $150M for small enterprises to create jobs in Bangladesh

The Asian Development Bank (ADB) and the Government of Bangladesh today signed agreements for $150 million in loan to provide financing for the cottage, micro, and small-sized enterprises (CMSEs) to create jobs for promoting socio-economic recovery after the coronavirus (Covid-19) pandemic.

The assistance under the Supporting Post-Covid-19 Small-Scale Employment Creation Project will rejuvenate CMSEs operated by youth, rural entrepreneurs, returning migrant workers, particularly women, who have been hit hard by the pandemic.

Fatima Yasmin, secretary, Economic Relations Division (ERD), and Edimon Ginting, country director, ADB, signed the agreements on behalf of Bangladesh and ADB, respectively at a ceremony at ERD in Dhaka, according to a press release.

“The assistance will support Government’s efforts to accelerate socioeconomic recovery from the Covid-19 pandemic,” said Fatima Yasmin.

“This project will reinforce ADB’s long-standing support to Bangladesh in financial inclusion and address key barriers for financing CMSEs by developing a comprehensive action plan that will tackle sector-wide challenges, promote best practices at the banks, and expand training and business development support to the borrowers,” said Edimon Ginting.

“The project will also balance the affordability and availability of loans in addition to adopting innovative approaches so that lower loan interest rates do not disincentivize banks’ lending to CMSEs,” Ginting added.

The loan to Bangladesh Bank, the nation’s central bank, will be on-lent to participating financial institutions (PFIs), which in turn will help 30,000 CMSEs operated by the beneficiaries. 

The project will create at least 45,000 employment opportunities by December 2025 and it has targeted to disburse 20% of the funds to microbusinesses led by women to support their recovery as they have limited access to finance and have severely been affected by the pandemic due to their high concentration in retail, travel, and hospitality sectors.

ADB will provide an additional $900,000 technical assistance grant from its Technical Assistance Special Fund for Bangladesh Bank and participating financial institutions to help them strengthen their risk management capacities, business process, and information systems. 

The assistance will also boost their support of CMSEs by incorporating mobile finance, value chain financing, and sustainable financing tackling climate change.

This project builds on the $250 million policy-based Strengthening Social Resilience Program, approved by ADB in June 2021, to strengthen Bangladesh’s social protection programs and resilience of vulnerable groups. 

It also complements the $50 million additional financing to the ongoing Microenterprise Development Project, approved in December 2020, to help restore the economic activities of microenterprises affected by Covid-19 in the country.   

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 68 members—49 from the region.

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