AfDB grants $ 150 million loan to small businesses affected by Covid in Bangladesh

Photo: Moksumal Haque / CGAP


Photo: Moksumal Haque / CGAP

Asian Development Bank (AfDB) approved $ 150 million loan for Bangladesh – to provide finance to small enterprises, micro and small enterprises (CMSEs) run by youth, returning migrant workers and rural entrepreneurs , especially women, hard hit by Covid19.

The loan to Bangladesh Bank will be on-lent to Participating Financial Institutions (PFIs), which in turn will assist 30,000 CMSEs operated by beneficiaries.

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The project aims to facilitate job creation and help these vulnerable groups recover from the adverse effects of the pandemic, a press release said.

Youth unemployment remains at a high level in the country, and they are hit hardest as they are concentrated in sectors such as retail, accommodation and food services, which have been hit the hardest by the downturn. pandemic.

About 400,000 overseas migrant workers have returned since the start of the pandemic, and many remain unemployed. Rural incomes have remained low and off-farm employment opportunities remain limited. Rural businesses have been severely affected, putting additional pressure on rural employment.

“The AfDB supports the long-term strategy of the government of Bangladesh to address the employment challenges in the country, which have been exacerbated by the pandemic,” said Dongdong Zhang, AfDB’s senior financial sector specialist for the South Asia.

“Promoting access to finance will help address a critical challenge of helping vulnerable groups immediately and developing CMSEs in the long term. “

The project aimed to disburse 20% of funds to women-led microenterprises to support their recovery.

The AfDB will provide an additional technical assistance grant of $ 900,000 from its Special Technical Assistance Fund to the Bangladesh Bank and PFIs to help them strengthen their risk management capacities, business processes and management systems. information.

The assistance will also strengthen their support to CMSEs by incorporating mobile finance, value chain finance and sustainable finance for the fight against climate change.

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

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

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