ADB Funds to Improve Health and Environment Services in Bangladesh

MANILA, PHILIPPINES - Two Asian Development Bank (ADB) loans and one technical assistance will improve the living standards of Bangladesh's city dwellers, especially the urban poor.

ADB's Board of Directors approved the Bangladesh Urban Public and Environmental Health Sector Development Program that composes two loans (a program loan of $70 million and one project loan of $60 million) and a technical assistance grant of $500,000 that will support better public and environment health services in Bangladesh's large cities.

Except for a few city-states, Bangladesh is the most densely-populated country in the world (more than 1,000 people per square kilometer), with an urban population expected to rise to 89.5 million by 2030, from only 39.5 million in 2005. As a result of the rapid pace of urbanization, many people live in poor hygienic conditions and are more vulnerable to health hazards.

"Weak public and environmental health services, poor sanitation, overcrowding, unhygienic living conditions, and poverty, among others, impact on the health of the urban poor," said Sekhar Bonu, Principal Urban Development Specialist at ADB's South Asia Department. "A burgeoning urban population is only going to make the situation more challenging."

Local urban agencies that are mandated to provide these services have limited institutional and financial capacities.

The Sector Development Program will help reduce child mortality and morbidity by decreasing the prevalence of waterborne and food-related diseases in six cities covering 34% of all urban areas in Bangladesh - Barisal, Chittagong, Dhaka, Khulna, Rajshahi, and Sylhet - and other towns.

ADB's $70 million program loan is aimed at addressing a wide range of complex but interlinked urban public and environmental health challenges. The program loan will help strengthen institutions and agencies managing public and environmental health; and improve their financial sustainability, service delivery, governance, and management.

The $60 million loan will provide funds to accelerate improvement in the delivery of solid and medical waste management and food safety, as well as supporting program management, institutional support, and capacity development. The sector development program will help mitigate climate change by reducing carbon emissions through hygienic disposal of municipal waste consisting largely of organic materials.

The loans are sourced from ADB's concessional Asian Development Fund. The program loan will have a 24-year repayment period, and will be released in three tranches ($30 million, $20 million and $20 million) upon compliance with agreed tranche conditions. The project loan will have a 32-year repayment period. The Bangladesh government will provide counterpart fund of $20 million for the project loan.

The loans have an eight-year grace period, and an interest charge of 1% every year during the grace period and 1.5% every year thereafter.

A $500,000 technical assistance grant will be used for consultancy support to jump start the sector development program's implementation and overcome start up delays.