Bangladesh: Small and Medium-Sized Enterprise Development Project
The Small and Medium-Sized Enterprise Development Project is aimed at accelerating the development of small and medium-sized enterprises (SMEs), especially SMEs in rural and nonurban areas, by improving their access to medium- and long-term credit.
Saha, Bidyut Kumar
South Asia Department
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|Project Name||Small and Medium-Sized Enterprise Development Project|
|Project Type / Modality of Assistance||Loan
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Gender Equity and Mainstreaming
Private sector development
|Sector / Subsector||
Finance / Small and medium enterprise finance and leasing
|Gender Equity and Mainstreaming||Gender equity|
|Description||The Small and Medium-Sized Enterprise Development Project is aimed at accelerating the development of small and medium-sized enterprises (SMEs), especially SMEs in rural and nonurban areas, by improving their access to medium- and long-term credit.|
|Project Rationale and Linkage to Country/Regional Strategy||
The major development challenge in Bangladesh is a sharp east-west regional divide in terms of employment and economic growth. The contrast in the incidence of poverty between the eastern and western parts of the country is significant-with a headcount ratio of 32%-34% in the eastern part (comprising Dhaka, Chittagong, and Sylhet divisions) versus 47%-52% in the western part (comprising Barisal, Khulna, and Rajshahi divisions). This disparity has emerged as a key public policy concern. Unemployment and underemployment in the western part are also much higher than in the eastern part. The Government's policy priority is to foster economic development in nonmetropolitan and/or rural and nonurban areas (i.e., outside the metropolitan areas of Dhaka and Chittagong) to address regional inequalities.
The Government's development agenda for nonmetropolitan and/or rural and nonurban areas recognizes the private sector as the engine for growth and employment. Nonmetropolitan SMEs comprise 60%-65% of the country's 1.5 million SMEs and account for most of the private sector in rural and nonurban areas. Nonmetropolitan SMEs are a key driver to reduce poverty in the country since these SMEs are responsible for generating rural nonfarm activities-the source of more than 50% of employment and income for the rural population.
An investment climate assessment conducted by the World Bank in October 2008 indicates that access to credit (particularly medium- to long-term credit) remains a key constraint for SMEs. Lack of credit access is more marked in nonmetropolitan areas. As a result, nonmetropolitan SMEs are unable to realize their full potential to grow and generate employment.There are indications that the global financial crisis is beginning to impact the economy. The recession in developed markets and the economic slowdown in the Middle East are beginning to threaten Bangladeshi exports and remittances which can have a significant impact on unemployment in the economy. In the context of the projected economic slowdown from the global financial crisis, the Government has sought Asian Development Bank (ADB) support for a key stimulus measure-enhanced access to finance to enable SMEs to operate at full potential.
|Impact||Contributing to continuing economic growth and poverty reduction through development and growth of the SME sector|
|Description of Outcome||Enhanced growth in the number and size of commercially viable SMEs (with emphasis on women owned SMEs) and increased employment in the SME sector|
|Progress Toward Outcome||Establishment of SMEs 1,521,084 SMEs (308,726 in 2010; 319,341 in 2011, and 359,110 in 2012, and 533,907 in 2013), and employment generation in SMEs (1,639 in 2011; and 4,201 in 2012, and 1,186 in 2013) are in increasing trend. Women entrepreneurs are gradually comming up in establishing SMEs. Country wide, under different program, a total of 1,521,084 enterprises developed during 2010-13 meaning increase by 183% comparing to 2009 baseline. A total of 11,804 enterprises funded under the Project which is 1.4% comparing to baseline of 2009. Total 7,026 employments created during 2010-2013 by the SMEs assisted by the Project. The Project was extended up to 31 December 2013. Under the Project, approximately 10% - 11% represent women enterprises of total SME established. Implelmentation of the Project has been physically completed and the accounts will be closed by 31 March 2014.|
|Description of Project Outputs||
1. Expansion of medium- to long-term credit by PFIs to SMEs located outside the metropolitan areas of Dhaka and Chittagong, with emphasis on women-led SMEs
2. Enhanced capacity of women entrepreneurs and associations to fully access the financial resources earmarked for women-led SMEs under the Project
|Status of Implementation Progress (Outputs, Activities, and Issues)||
Ongoing. According to BB, SME credit ratio was 21.07 in 2010 which is 23.82 on 30 July 2012. This means that the growth has been overachieved by now.
Ongoing. Involvement of women in SME sector is gradually increasing that reached to around 10% by now.
Ongoing. Bangladesh Women Chamber of Commerce and Industries (BWCCI) has been appointed as consultant to train women in SME establishment, training in necessary business, project feasibility, and access to financial institutions. This increased establishment of women enterprises in SME sector. As a result, 100% applications by women entrepreneurs became successful. The successful application is more than 10% nationwide.
|Summary of Environmental and Social Aspects|
|Environmental Aspects||No subproject (SMEs) will be financed that may have a significant adverse environmental impact.|
|Involuntary Resettlement||No involuntary resettlement impact is envisaged from the Project.|
|Indigenous Peoples||The Project will not have any impact on indigenous peoples and ethnic minority in Bangladesh.|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design||The Project was prepared in consultation with a broad range of stakeholders, including Bangladesh Bank, the Board of Investment, the National Board of Revenue, Ministry of Commerce, Ministry of Finance, Ministry of Industry, the Bangladesh Small and Cottage Industries Corporation (BSCIC), the SME Foundation, city corporations and municipalities, various private sector agencies (including chambers of commerce and business associations), and development partners. In addition, indepth consultations were carried out with the Bangladesh Women Chamber of Commerce and Industry (BWCCI), the Women Entrepreneurs Association, and Micro Enterprise Development Assistance and Services (MIDAS).|
|During Project Implementation|
|Consulting Services||A contract with Bangladeh Women's Chamber of Commerce and Industries (BWCCI) has been signed in September 2010 for implementing the activities under the Technical Assistance subproject in accordance with ADB's Guidelines on the use of Consultants (2007, as ammended from time to time).|
|Procurement||Procurement under ADB-financed subloans will be in accordance with ADB's Procurement Guidelines (2007, as amended from time to time), as these relate to financial intermediary loans. Eligible subborrowers will be required to undertake procurement in accordance with established private sector or commercial practices that are acceptable to ADB.|
|Responsible ADB Officer||Saha, Bidyut Kumar|
|Responsible ADB Department||South Asia Department|
|Responsible ADB Division||Bangladesh Resident Mission|
Finance Division, MOF (EA)
Mr. Amalendu Mukherjee
Ministry of Finance, Dhaka-1000, Bangladesh
|Concept Clearance||28 Apr 2009|
|Fact Finding||03 May 2009 to 13 May 2009|
|MRM||16 Jul 2009|
|Approval||17 Sep 2009|
|Last Review Mission||-|
|PDS Creation Date||16 Oct 2009|
|Last PDS Update||31 Mar 2014|
|Approval||Signing Date||Effectivity Date||Closing|
|17 Sep 2009||12 Oct 2009||03 May 2010||30 Mar 2013||31 Dec 2013||22 Jul 2014|
|Financing Plan||Loan Utilization|
|Total (Amount in US$ million)||Date||ADB||Others||Net Percentage|
|Project Cost||126.67||Cumulative Contract Awards|
|ADB||76.00||07 Sep 2021||74.97||0.00||100%|
|Cofinancing||0.00||07 Sep 2021||74.97||0.00||100%|
|Status of Covenants|
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.
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In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
|Title||Document Type||Document Date|
|Small and Medium-Sized Enterprise Development Project: Project Completion Report||Project/Program Completion Reports||Aug 2015|
|Small and Medium-Sized Enterprise Development Project||Project/Program Administration Manual||Nov 2009|
|Project Agreement for Small and Medium-Sized Enterprise Development Project between Asian Development Bank and Bangladesh Bank dated 12 October 2009||Project/Program Agreements||Sep 2009|
|Loan Agreement for Small and Medium-Sized Enterprise Development Project between People's Republic of Bangladesh and Asian Development Bank dated 12 October 2009||Loan Agreement (Special Operations)||Sep 2009|
|Small and Medium-Sized Enterprise Development Project||Reports and Recommendations of the President||Aug 2009|
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
|Title||Document Type||Document Date|
|Bangladesh: Small and Medium-Sized Enterprise Development Project||Validations of Project Completion Reports||Jul 2016|
|Title||Document Type||Document Date|
|Gender Equality Results Case Study: Bangladesh - Small and Medium-Sized Enterprise Development Project||Reports||Jun 2015|
The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.
Requests for information may also be directed to the InfoUnit.
Bangladesh: Throwing a Lifeline to Small BusinessesA partnership between Bangladesh and ADB provided loans to rural and women-owned businesses that struggled to access the credit needed to expand their operations.
Bangladesh: A Witness to DevelopmentCapturing the progress of the poor in Bangladesh through the images of documentary photographer Mohammad Rakibul Hasan.
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