Bangladesh: Agribusiness Development

Sovereign Project | 33224-013

Summary

The Project is aimed at reducing poverty in Bangladesh through agribusiness growth that generates income and employment in rural areas. The outcome of the Project will be expanded activities of rural enterprises engaged in commercial agriculture production, input supply, marketing, processing, and transportation. These will generate employment in rural and peri-urban areas, increase the value added of nontraditional crops and commodities, and increase rural incomes.

Specifically, the Project will target small-scale agribusinesses that do not have the wherewithal to mobilize the financing they require to expand, or the capacity to open up new downstream markets. This will be undertaken with the assistance of NGOs experienced in providing credit and support to rural enterprises at the grassroots level. The rural poor will be the ultimate beneficiaries of all of these actions through enhanced employment opportunities, income generation, and agricultural production.

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Project Name Agribusiness Development
Project Number 33224-013
Country Bangladesh
Project Status Closed
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 2190-BAN: Agribusiness Development
Asian Development Fund US$ 42.50 million
TA 4674-BAN: Strengthening Project Management on Agribusiness Development (piggy-backed to Loan 33224-01)
Technical Assistance Special Fund US$ 600,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector

Agriculture, natural resources and rural development - Agro-industry, marketing, and trade

Gender Equity and Mainstreaming
Description

The Project is aimed at reducing poverty in Bangladesh through agribusiness growth that generates income and employment in rural areas. The outcome of the Project will be expanded activities of rural enterprises engaged in commercial agriculture production, input supply, marketing, processing, and transportation. These will generate employment in rural and peri-urban areas, increase the value added of nontraditional crops and commodities, and increase rural incomes.

Specifically, the Project will target small-scale agribusinesses that do not have the wherewithal to mobilize the financing they require to expand, or the capacity to open up new downstream markets. This will be undertaken with the assistance of NGOs experienced in providing credit and support to rural enterprises at the grassroots level. The rural poor will be the ultimate beneficiaries of all of these actions through enhanced employment opportunities, income generation, and agricultural production.

The Project outputs include (i) establishment, expansion, and successful operation of agribusinesses by small-scale entrepreneurs; (ii) strengthened capacity of participating NGOs and wholesale banks in agribusiness lending; (iii) strengthened capacity of agribusiness associations in policy dialogue and agribusiness information and technology dissemination; and (iv) improved policy environment enabling private sector participation.

Project Rationale and Linkage to Country/Regional Strategy

Despite several limitations (vulnerability to natural disasters, limited infrastructures, low average income), Bangladesh has lot of potentials and opportunities. Among others, productive agricultural land and a hardworking rural population are among the country' s few resources and assets. Thus, future economic growth will require stimulating commercial activities within, and based on, the agriculture sector. Since almost all cultivable land is in use, increased growth in the agriculture sector must be derived from (i) diversification of agriculture production to higher value crops; (ii) intensification of production around homestead areas; (iii) provision of services to the agriculture sector (upstream links); and (iv) value addition through further processing, storage, and transport of agricultural commodities (downstream links). In other words, future economic growth will require an expansion of agriculture-based enterprises or agribusiness.

The Project is consistent with the poverty reduction strategies of the Government and ADB, which recognize that viable agribusiness are the key for faster growth and poverty reduction in rural areas of Bangladesh. As per National Strategy for Economic Growth, Poverty Reduction and Social Development, the rapid growth of agriculture would require agroprocessing, agribusiness development and value addition to facilitate access of farmers to modern inputs and production technologies to cater increased demand for agriculture products. The ADB 2006-2010 Country Strategy and Program for Bangladesh stressed the need to transform agriculture from a subsistence to a commercial orientation and promote agribusiness development as a means to improve the livelihood of 76% of the country's population (and 85% of the poor). To foster a vibrant and diversified rural economy, ADB assistance through this project will contribute to (i) intensification, diversification, and value addition of the crops to boost agricultural productivity, improve food security, and foster rural enterprise development; (ii) strengthened farm-to-market links; and (iii) sustained growth of agriculture and agribusiness, which generate productive on-farm and off-farm employment to raise rural incomes.

Impact To reduce poverty in Bangladesh through agribusiness growth that generates income and employment in rural areas.
Project Outcome
Description of Outcome Expanded activities of rural enterprises engaged in commercial agriculture production, input supply, marketing, processing, and transportation [Taken from the Design & Monitoring Framework.]
Progress Toward Outcome

Tk2,729.89 million credit disbursed to 33,432 small scale agribusiness entreprenuers, of which 36% are women.

On an average, employment of about 5.51 persons per entreprise generated.

Implementation Progress
Description of Project Outputs

1. Agribusinesses by small-scale entrepreneurs established, expanded, and successfully operated.

2. Capacity of participating NGOs and banks in agribusiness lending strengthened.

3. Capacity of agribusiness associations in policy dialogue and agribusiness information and technology dissemination strengthened.

4. Improved policy environment enabling private sector participation.

Status of Implementation Progress (Outputs, Activities, and Issues)

Small scale entreprenuers under the Project established their enterprises (more than targetted) with project support and services, which are in operation during project's physical completion.

Employment of about 5.51 person per enterprose generated.

Complied with.

36% are women

Ongoing

One survey conducted.

Completed.

Total 8 associations supported. 18 Value chain links established, and are in operation.

Not yet due.

Subborrowers are earning good profit, as reported and observed during ADB project review missions

Around $32.0 million disbursed

A revolving credit fund has been established. The wholesale banks and NGOs will continue disbursing credit after physical completion of the Project. The project physically completed on 31 December 2011.

Ongoing

Planned trainings under the project for NGOs and wholesale banks completed and other capacity devlopement initiatives/ training by the partner NGOs themselves are ongoing. The capacities of partner NGOs and wholesale banks are being strengthened on a continuous basis.

Being complied.

Policy environment started to improve towards more private sector participation in agribusiness promotion, value addition and commercial agriculture, and hopefully will continue to further improve in future.

Actions initiated to establish revolving funds with NGOs and PFIs that will be monitored by Bangladesh Bank

MOU signed with 8 associations and under process with another 7 associations

Recently 8 associations formed. First body formed by selection procedure.

Total 20 workshops held

Total 4 fairs held

MOU signed with 3 service provider associations and training provided to 60 paraprofessionals in three batches.

Being complied.

One survey completed.

Not yet due

Not yet due

Women participates in the workshops.

Ministry of Agriculture and Department of Agricultural Marketing are familiar by this time.

Geographical Location Country-wide
Safeguard Categories
Environment FI
Involuntary Resettlement
Indigenous Peoples
Summary of Environmental and Social Aspects
Environmental Aspects

The Project involved many small-scale investments ($500-$5,000 equivalent) around

the country. As such, any single activity under the Project is unlikely to have anything other than

a minor localized environmental impact. Environmental and social impacts were considered through incorporating into work

planning and monitoring of the Project. Through training, NGO staff were awared about potential

negative impacts. and the means to avoid or mitigate such impacts.

Involuntary Resettlement

The Project involved 34,432 small-scale entreprenuers with arround $34 million equivalent credit across the country. No involuntary isplacement of local populations required. Public sector entities was not involed in acquiring any land under the Project.

Nevertheless, the project design has incorporated safeguards to minimize potential negative effects.

Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Extensive consultations and dialogues with stakeholders were conducted by the PPTA Consultant during the course of PPTA implementation. Workshops, participatory meetings, focus group discussions, as well as donor coordination meetings were held between March to August 2004. (Please see Group Consulted for details.)
During Project Implementation

The Project support was demand-driven with all the agribusiness investment decisions made by small-scale agribusiness entrepreneurs. The enterprises sponsored by the Project, as private sector ventures, will continue to operate on a self-sustaining and self-financing basis as long as they are profitable and value adding. The Project discouraged special subsidies or preferential treatment. The Project implementation unit closely monitored the performance of the agribusiness enterprises. The measures taken so that at least 90% of agribusiness ventures supported by the Project will be in operation during the project completion review. It is expected that by 2020 the number of new agribusinesses ventures will be double.

The Project used well-established, financially sound and well-governed banks to channel funds through reputable and experienced NGOs to small-scale agribusiness entrepreneurs, who are presently unable to access finance for their ventures. The successful growth of agribusiness lending through experienced NGOs demonstrated to policymakers that the key to expanding rural financial services is engaging capable institutions with the financial and managerial strengths to respond to the growing demands of the market.

Business Opportunities
Consulting Services The project required support from 652 person-months of consulting services including 93 person-months of international consulting services, and 559 person-months of domestic consulting services. Consulting services were to include expertise in agribusiness promotion, agribusiness finance, agribusiness policy, marketing management, training, project management information systems, project accounting, environmental impact screening and mitigation, social impact screening and mitigation, legal, and the support of women entrepreneurs. Recruitment of consultantswill was commenced following ADB's Guidelines on the Use of Consultants and other arrangements for recruitment of domestic consultants acceptable to ADB. The EA finally failed to recuruit a consuling firm and then requested to recruit required key consultants. The consultants recruited under the piggy-backed TA (4674-BAN: Strengthening Project Management on Agribusiness Development) assisted PIU in project implementatation. Besides, ADB recruited 6 key domestic consultants under the loan project for smooth project implementation.
Procurement Goods and related services being procured following ADB's Guidelines for Procurement (the Guidelines). The procurement of equipment and machinery by small-scale entrepreneurs are being followed in accordance with para. 3.08 of the Guidelines (Purchase of Equipment for the Use of Small Private Subborrowers). A few vehicles and a small amount of office equipment for PIU were procured, though no large purchases are required. PIU purchased these items using methods specified in Public Procurement Regulation 2003 that are acceptable to ADB.
Responsible ADB Officer Md. Shahidul Alam
Responsible ADB Department South Asia Department
Responsible ADB Division Bangladesh Resident Mission
Executing Agencies
Ministry of AgricultureMd. Mahmud Hossainmhossain_dae@hotmail.comShech Bhaban, Manik Mia Avenue, Sher-e-Bangla Nagar, Dhaka
Timetable
Concept Clearance 04 Apr 2005
Fact Finding 05 Apr 2005 to 30 Apr 2005
MRM 19 Aug 2005
Approval 27 Oct 2005
Last Review Mission -
PDS Creation Date 24 Feb 2006
Last PDS Update 25 Mar 2013

Loan 2190-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Oct 2005 22 Jun 2006 17 Nov 2006 30 Jun 2011 30 Jun 2012 28 Nov 2012
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 59.80 Cumulative Contract Awards
ADB 42.50 27 Oct 2005 39.06 0.00 100%
Counterpart 17.30 Cumulative Disbursements
Cofinancing 0.00 27 Oct 2005 39.06 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - - - -

TA 4674-BAN

Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
600,000.00 0.00 0.00 0.00 0.00 0.00 600,000.00 - 0.00
Title Document Type Document Date
Agribusiness Development: Project Completion Report Project/Program Completion Reports Sep 2014
Agribusiness Development Project Project/Program Administration Manual Dec 2006
Project Agreement for Agribusiness Development Project between ADB Project/Program Agreement Oct 2005
Loan Agreement for Agribusiness Development Project between People's Republic of Bangladesh and ADB Loan Agreement (Special Operations) Oct 2005
Agribusiness Development Project Reports and Recommendations of the President Oct 2005

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation

No documents found.


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