$55 Million Loan to Help Bangladesh Meet Rising Water Challenges | Asian Development Bank

$55 Million Loan to Help Bangladesh Meet Rising Water Challenges

News Release | 7 September 2009

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is extending a $55 million loan to support small scale water services in Bangladesh that will help cut rural poverty, improve community involvement, and address the threat posed by severe floods and other climate change-related events.

The loan from ADB's concessional Asian Development Fund will be used to finance 230 subprojects in the areas of flood management, drainage, water conservation, and irrigation. Funds will also go to strengthen the capabilities of central and local government agencies overseeing the sector, and to develop water management cooperative associations - grassroots organizations responsible for the day-to-day operations of small scale water services.

"Effective water management and equitable access to water are critical for the livelihoods of the rural poor and the project will help boost income opportunities for food crop production, strengthen household food security, improve access to water for the poor, and reduce the risk of flooding," said Yasmin Siddiqi, Water Resource Management Specialist, in ADB's South Asia department.

About 1.7 million people are expected to directly benefit from the project, and special attention will be given to the needs of vulnerable groups, including women, with 30% of all management committee posts in the water management cooperative associations to be reserved for females. The project will build on the lessons learned from two other successful ADB investments in the country's small scale (less than 1,000 hectares) water resources sector.

Around 80% of Bangladeshis live in rural areas, where poverty levels reach as high as 53% and where over two-thirds of the population is landless. With its flat topography and location at the confluence of three major rivers, the country is highly prone to severe flooding during heavy monsoon rains, cyclones and tidal surges. These physical pressures on the country's limited land base have been aggravated by weak management of water facilities, poor maintenance, limited community participation and weak service delivery.

Predicted impacts of climate change, such as rising temperatures and sea levels now pose a major development threat to Bangladesh, with projections that up to 35 million people may have to relocate from coastal areas by 2050. Strengthening flood management, water conservation, irrigation systems, and other water services will help Bangladesh adapt to these challenges and ensure the sustainability of the agricultural sector which employs over 60% of the population.

ADB's 32-year loan - with an 8-year grace period carrying a 1% interest charge and 1.5% for the balance of the term - makes up 51.3% of the total project cost of $107.3 million. The International Fund for Agricultural Development will extend a $22 million loan, administered by ADB, while the Government of Bangladesh and project beneficiaries will make contributions equivalent to $30.3 million. The Ministry of Local Government, Rural Development and Cooperatives will be executing agency for the project which is due for completion in December 2017.