ADB $125 Million Loan to Help Turn Pourashavas into ‘Model Towns’

DHAKA, BANGLADESH (18 July 2014) – The Asian Development Bank (ADB) has approved a $125 million loan to improve services and governance in pourashavas—or municipalities— across Bangladesh, making them more livable and attractive, and helping to ease population pressures in major cities.

“The two largest cities of Dhaka and Chittagong now account for nearly half of Bangladesh’s urban population and to ease the effects of overcrowding, it is essential to develop livable district towns with quality infrastructure and that are well managed,” said Norio Saito, Principal Urban Development Specialist with ADB’s South Asia Department. “This assistance will support that goal and help Bangladesh create model towns for possible future replication.”

Many pourashavas suffer from weak oversight and are struggling to provide citizens with key services including drinking water, sanitation, solid waste management and drainage systems. In response, ADB has already been providing support for improved services under an urban governance action program.

The new project, which is part of the program, will provide assistance to 30 pourahsavas with a total population of 2.2 million, including 20 district headquarters towns. These administrative, trade and economic centers, and transportation and distribution hubs, are crucial for more balanced development in Bangladesh.

The loan funds will be used to upgrade infrastructure and services, including roads, drainage and sanitation systems, piped water supplies, and solid waste collection and disposal. They will also be used to strengthen the ability of municipalities to carry out urban planning, financial management, and service delivery.

Some of the expected benefits will include reduced travel time and cost savings from better roads, health improvements from piped water and solid waste collection, and more citizen participation—including by women and poor and marginalized groups—in governance and provision of basic services.

Reflecting lessons from previous ADB project assistance, the target pourashavas will be eligible for additional phased funding support as they meet performance-based targets linked to governance reforms.

Along with ADB’s loan, OPEC Fund for International Development will provide cofinancing of $40 million alongside government and pourashava counterpart support of $71 million, for a total project cost of $236 million. The projects are expected to be completed at the end of June 2020.