The Asian Development Bank (ADB) has approved a $150 million loan for Bangladesh to provide financing for cottage, micro, and small enterprises (CMSEs) operated by youths, returning migrant workers and rural entrepreneurs, particularly women, who have been hit hard by Covid-19.
The loan to Bangladesh 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 impacts of the pandemic, a press release said.
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 non-farm employment opportunities remain limited.
Rural enterprises were severely affected, putting further pressure on rural employment.
“The ADB supports the Bangladesh government’s long-term strategy to tackle the country’s employment challenges, which has been exacerbated by the pandemic,” said Dongdong Zhang, the ADB’s principal financial sector specialist for South Asia.
“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,” he added. The project aims to disburse 20 per cent of the funds to microbusiness led by women to support their recovery.
The ADB will provide an additional $900,000 as a 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 the ADB in June 2021, to strengthen Bangladesh’s social protection programmes 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 local microenterprises affected by Covid-19.
