ADB Lends $150 Million for Small Enterprises in Bangladesh

ADB Lends $150 Million for Small Enterprises in Bangladesh

MANILA, PHILIPPINES (18 November 2021) — The Asian Development Bank (ADB) has approved a $150 million loan to Bangladesh to provide financing for cottage, micro, and small-sized enterprises (CMSEs) operated by youth, returning migrant workers, and rural entrepreneurs, particularly women, who have been hit hard by the coronavirus disease (COVID-19) pandemic.

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 aims to facilitate employment creation and help these vulnerable groups recover from the adverse impact of the COVID-19 pandemic.

Youth unemployment remains at a high level in the country, and they are more severely affected as they concentrate in sectors such as retail trade, accommodation, and food services, which were worst hit by the pandemic. About 400,000 overseas migrant workers have returned since the start of the pandemic, and many remain unemployed. Rural incomes have stayed depressed and nonfarm employment opportunities remain limited. Rural enterprises were severely affected, putting further pressure on rural employment.

“ADB supports the Bangladesh government’s long-term strategy to tackle the country’s employment challenges, which has been exacerbated by the pandemic,” said ADB Principal Financial Sector Specialist for South Asia Dongdong Zhang,. “Promoting access to finance will help address a critical challenge of helping vulnerable groups in the immediate term and developing CMSEs in the long term.”

Given the limited access of women to finance and their high concentration in retail, travel, and hospitality sectors, they have borne brunt of the impact of the pandemic. The project has targeted to disburse 20% of the funds to microbusiness led by women to support their recovery.  

ADB will provide an additional $900,000 technical assistance grant from its Technical Assistance Special Fund for Bangladesh Bank and PFIs 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 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.