Bangladesh and ADB

ADB's Work in Bangladesh

Bangladesh has more than halved its incidence of poverty over the past 25 years. The country gained lower middle-income status in 2015 and met the criteria to graduate from least-developed country status in March 2018. Bangladesh’s economic expansion has been robust over the past decade and in fiscal year (FY) 2019 the economy grew by 8.2%, the highest in the Asia and Pacific region.

The business district at Motijheel in Dhaka, Bangladesh.

ADB has been a development partner of Bangladesh since 1973 and established its first field office in Dhaka in 1982. ADB is currently supporting Bangladesh under the country partnership strategy, 2016–2020, which aligns with the Government of Bangladesh’s Seventh Five Year Plan (FY 2016–FY 2020).

Since 1973, ADB has committed loans, grants, and technical assistance worth $24.24 billion for Bangladesh. The country is a major recipient of ADB concessional resources.

Under the final tranche of the Skills for Employment Investment Program, ADB committed $150 million to support market-responsive skills training through partnerships with public institutes, industry associations, and other organizations. The program will train about 320,000 people (30% women), covering skills requirements across 10 industry groupings.

ADB is partnering with factories in Bangladesh’s booming garments industry to provide young women with the skills they need to succeed in employment.

ADB committed $300 million for the Dhaka and Western Zone Transmission Grid Expansion Project, which will expand transmission lines and build substations, establish an enterprise resource planning system, construct a drone inspection center to improve operational efficiencies, and introduce advanced conductors to transfer more power at lower energy losses.

To promote rural development, ADB committed $200 million for the Rural Connectivity Improvement Project covering 34 districts. This investment will upgrade about 1,700 kilometers of rural roads to all-weather standards, improve transport efficiency, generate 3.13 million person-days of employment, introduce high-level technology to enhance transport planning, and increase road safety awareness for over 51.5 million people.

New asphalt installation at an embankment, part of the improvement of the Abduler More R and H to Majhirgati GC via Kola Bazar Road.

The Second City Region Development Project, for which ADB committed $150 million, will deliver crucial infrastructure such as roads and drains in Dhaka and Khulna city regions. The financing will help enhance living standards by improving travel and transport, flood resilience, and solid waste management. The bank also committed $33.26 million for preparing the Dhaka Mass Rapid Transit Development Project, which will ease traffic congestion and reduce air pollution in the city. The assistance will support detailed feasibility studies, engineering design, and procurement documentation for the 17.4-kilometer line to be constructed between Gabtoli and Dasherkandi.

ADB committed $50 million for the Microenterprise Development Project to assist at least 40,000 emerging enterprises (70% led by women) with advice on business expansion and training in quality control, branding, packaging, and marketing.

The bank is also helping Bangladesh provide basic infrastructure and services for over 1 million people sheltered in camps in Cox’s Bazar. An emergency grant of $100 million, which ADB approved quickly in 2018, is focusing on water supply and sanitation, access to power, and improved roads needed after more than 700,000 people migrated across the border to Bangladesh in 2017.

The distribution grids at Sirajganj Power Plant in northern Bangladesh

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments from ADB’s own funds (in equity and direct loans) in 2019 amounted to $3.00 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2019, ADB mobilized $3.28 billion of long-term cofinancing and $3.69 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.

Financing Partnerships

Financing partnerships enable ADB’s development partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade Finance Program and Supply Chain Finance Program.

ADB began cofinancing operations in Bangladesh in 1974. Since then, sovereign cofinancing commitments for Bangladesh have amounted to $9.99 billion for 68 investment projects and $91.65 million for 106 technical assistance projects. Nonsovereign cofinancing for Bangladesh has amounted to $3.29 billion for five investment projects and $0.22 million for one technical assistance projects.

In 2019, Bangladesh received $200 million in loan cofinancing from the Asian Infrastructure Investment Bank and $0.75 million in grant cofinancing from the People’s Republic of China Poverty Reduction and Regional Cooperation Fund for the Dhaka and Western Zone Transmission Grid Expansion Project.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

Even though Bangladesh’s economy has enjoyed substantial growth over the past decade, the country faces huge infrastructure and skills deficits. Lengthy internal business processes often delay project approvals, while the limited capacity of the country’s few executing and implementing agencies often leads to delays in project implementation.

In 2019, ADB continued special initiatives to help strengthen the implementation capacity of the government, finance project preparatory works to improve project readiness, and enhance technical design covering environment, land acquisition, and involuntary resettlement. ADB’s new procurement policy and regulations, rolled out and operationalized in 2017, are helping ensure faster procurement and consultant recruitment as well as simpler and more effective fiduciary systems throughout the project cycle.

Future Directions

ADB will continue to support Bangladesh’s efforts to generate inclusive and sustainable growth and achieve the Sustainable Development Goals.

During 2020–2022, ADB has a pipeline of 32 firm projects worth $4.9 billion and 23 standby projects worth $4.8 billion. The technical assistance program for 2020–2022 includes 26 projects worth about $24.3 million (including cofinancing). Standby projects are included to build a strong pipeline of bankable projects in response to Bangladesh’s needs, growing absorptive capacity, and project readiness. Gender equality, good governance, institutional strengthening, and climate change mitigation and adaptation will remain major pillars for ADB operations in the country.