$108M Rural Infrastructure Project to Spur Growth and Reduce Poverty in Bangladesh

MANILA, PHILIPPINES - Bangladesh, with support from the Asian Development Bank (ADB), is stepping up efforts to upgrade rural roads and market facilities to improve growth and livelihood opportunities, and to cut poverty in underdeveloped areas.

The ADB Board of Directors approved a loan of $60 million equivalent for the Sustainable Rural Infrastructure Improvement Project, which will be carried out in 21 districts in the northwest and southwest of the country. The project is expected to be cofinanced by a grant for €13 million equivalent from KfW, the German government-owned development bank.

"The project will enhance rural people's access to social services, such as health and education, and to economic opportunities," said Rezaul Khan, Natural Resources Economist in ADB's South Asia Department.

Several studies have confirmed that rural road investments in Bangladesh led to substantial gains including higher agricultural wages and crop prices, savings in household transport costs, and a drop in poverty. Bangladesh has strengthened its rural infrastructure but much of the countryside still remains underdeveloped with just 37% of the population having access to all-weather roads, compared with 60% in India and 61% in Pakistan.

The project will upgrade 800 kilometers of roads to all-weather standard, incorporating climate-proofing features which include the building of cross-drainage structures, and roadside tree, horticulture, and pasture development. Support will also be given for mapping climate vulnerability in rural areas and the preparation of a climate change resilient infrastructure management plan.

"Bangladesh is expected to be one of the most affected countries worldwide from climate change and these measures will help ensure that the upgraded roads are less vulnerable to floods, storm surges, landslides and the impacts of other extreme weather events," Mr. Khan said.

The roads will have links to rural market centers that will be improved with better water, drainage and sanitation facilities, and paved trading areas. Sections for women will be established in 50 markets to increase their access to economic opportunities. The project design will ensure the infrastructure is sustainable and can be adequately maintained.

Three of the markets will also be chosen to carry out pilot water supply and another three markets for renewable energy activities, to pave the way for the introduction of piped water supplies and solar-powered lights in selected areas. The project will target strong female participation in the planning of new infrastructure, including a pilot performance-based program under which local governments who meet agreed standards on women's participation will be able to access a special $1 million fund for infrastructure development. Training and other capacity-building assistance will be given to the Local Government Engineering Department, and other local government institutions, to manage the new infrastructure effectively.

The loan from ADB's concessional Asian Development Fund makes up over 55% of the total project investment cost of $108.4 million. It has a 32-year term with a grace period of 8 years, carrying an annual interest charge of 1%, which rises to 1.5% for the balance of the term. Along with the cofinance from KfW, the Government of Bangladesh will provide additional support of $32.5 million equivalent.

The Local Government Engineering Department is the executing agency for the project, which is due for completion by June 2016.