The Asian Development Bank is working with Bangladesh to increase economic growth and reduce poverty by supporting small businesses. The project is increasing the number and size of commercially viable small businesses in Bangladesh by helping them obtain bank loans and other types of financing.
| Project Name | Second Small and Medium-Sized Enterprise Development Project | ||||||||
| Project Number | 36200-023 | ||||||||
| Country | Bangladesh |
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| Project Status | Active | ||||||||
| Project Type / Modality of Assistance | Loan Technical Assistance |
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| Source of Funding / Amount |
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| Strategic Agendas | Inclusive economic growth |
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| Drivers of Change | Gender Equity and Mainstreaming Partnerships Private sector development |
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| Sector / Subsector | Finance / Small and medium enterprise finance and leasing |
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| Gender Equity and Mainstreaming | Effective gender mainstreaming | ||||||||
| Description | Accelerating growth and reducing poverty, income inequality and regional disparity are the overarching goals of the current development paradigm in Bangladesh. Development of small and medium-sized enterprises (SMEs) is envisaged as a key element in this development strategy as noted in the 6th Five-Year Plan (FY2011 2015) of the Government of Bangladesh (GOB). For achieving double digit economic growth, promoting the development of the SME sector is considered critical. | ||||||||
| Project Rationale and Linkage to Country/Regional Strategy | The SME sector in Bangladesh plays a vital role in the growth of the country. According to the third economic census of the country carried out by the Bangladesh Bureau of Statistics during March 2013- May 2013, it is estimated that the SME sector comprises 7.2 million firms, which account for 90% of all private enterprises in Bangladesh or even 99% of all companies when micro enterprises are included. The SME sector employs also around 70- 80% of the non-agricultural workforce and contributed 25% of Bangladesh''s gross domestic product and 40% of the manufacturing output in 2014. The major development challenge in Bangladesh is a sharp metropolitan-nonmetropolitan divide in terms of employment and economic growth. The contrast in the incidence of poverty between the urbanized (comprising Dhaka, Chittagong, and Sylhet divisions) and the more rural parts of the country (comprising Barisal, Khulna, and Rajshahi divisions) is significant. This disparity has emerged as a key public policy concern. Unemployment and underemployment in the rural part are also much higher than in the metropolitan 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. |
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| Impact | Continued economic growth and poverty reduction through the development of the SME sector outside the metropolitan areas of Dhaka and Chittagong (aligned with the SME Strategy Paper for the government's forthcoming Seventh Five-Year Plan, FY2016-FY2020) | ||||||||
| Project Outcome | |
|---|---|
| Description of Outcome | Increase in the number and size of commercially viable SMEs, as well as employment in the SME sector |
| Progress Toward Outcome | Total $50 million disbursed. ($20 million - 28 Mar 2018, $20 million - 6 Nov 2018, $10 million - 27 Mar 2019) Approximately $28 million contract awarded. ($15 million - 28 Sep 2018, $13 million 19 Dec 2018) |
| Implementation Progress | |
| Description of Project Outputs | 1. Increased medium- and long-term credit, especially to SMEs, SME clusters, and BSCIC estates in rural areas 2. Strengthened capacity of SME entrepreneurs to access bank financing 3. Strengthened managerial and technical capacity of SME support institutions (BB, SMEF, BSCIC) and PFIs for SME cluster financing 4. Enhanced women-led SMEs' access to bank finance and financial services 5. Strengthened project management capacity of the implementing agencies |
| Status of Implementation Progress (Outputs, Activities, and Issues) | Total $50 million disbursed & approximately $28 million contract awarded. So far, 13% of the credit line went to women. BB is working to improve this figure. - - - - - - - - - - |
| Geographical Location | Dhaka |
| Safeguard Categories | |
|---|---|
| Environment | FI |
| Involuntary Resettlement | FI |
| Indigenous Peoples | FI |
| Summary of Environmental and Social Aspects | |
|---|---|
| Environmental Aspects | |
| Involuntary Resettlement | |
| Indigenous Peoples | |
| Stakeholder Communication, Participation, and Consultation | |
| During Project Design | The Project was comprehensively consulted with the Government, Bangladesh Bank, SME Foundation, and other relevant stakeholders. The stakeholders showed high level of commitment for the proposed facility which would develop the small and medium enterprises further, particularly outside major metropolitan cities. However, the key implementing agency, communicated certain changes to the design of the loan and the TA after the loan negotiation which could not be accommodated and project was approved. This resulted in delay of signing of loan agreements by a year. Finally, majority of issues have been resolved to the satisfaction of the Government and implementing agencies and loan agreements were signed on 18 Jan 2017, exactly one year after the approval date. The loan became effective on 27 November 2017 and the TPP was approved on 04 March 2018. |
| During Project Implementation | |
| Business Opportunities | |
|---|---|
| Consulting Services | NA |
| Procurement | The capacity of procurement and anticorruption policies of BB and SMEF, as well as the PFIs, and to monitor the subprojects would have to be reviewed to determine any potential governance risks for the project. |
| Responsible ADB Officer | Zhang, Dongdong |
| Responsible ADB Department | South Asia Department |
| Responsible ADB Division | Bangladesh Resident Mission |
| Executing Agencies |
Bank and Financial Institutions Division-MOF [email protected] Bangladesh Secretariat Dhaka-1000 Bangladesh |
| Timetable | |
|---|---|
| Concept Clearance | 29 Jul 2015 |
| Fact Finding | 02 Aug 2015 to 06 Aug 2015 |
| MRM | 15 Sep 2015 |
| Approval | 19 Jan 2016 |
| Last Review Mission | - |
| Last PDS Update | 01 Apr 2019 |
Loan 3367-BAN
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 19 Jan 2016 | 18 Jan 2017 | 27 Nov 2017 | 30 Jun 2021 | - | - |
| Financing Plan | Loan Utilization | ||||
|---|---|---|---|---|---|
| Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
| Project Cost | 266.70 | Cumulative Contract Awards | |||
| ADB | 200.00 | 19 Jan 2016 | 50.00 | 0.00 | 25% |
| Counterpart | 66.70 | Cumulative Disbursements | |||
| Cofinancing | 0.00 | 19 Jan 2016 | 50.00 | 0.00 | 25% |
| Status of Covenants | ||||||
|---|---|---|---|---|---|---|
| Category | Sector | Safeguards | Social | Financial | Economic | Others |
| Rating | - | Satisfactory | - | - | - | - |
TA 9068-BAN
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 19 Jan 2016 | 23 Jan 2017 | 23 Jan 2017 | 31 Mar 2019 | - | - |
| Financing Plan/TA Utilization | Cumulative Disbursements | |||||||
|---|---|---|---|---|---|---|---|---|
| ADB | Cofinancing | Counterpart | Total | Date | Amount | |||
| Gov | Beneficiaries | Project Sponsor | Others | |||||
| 0.00 | 2,000,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 2,000,000.00 | 19 Jan 2016 | 115,330.90 |
| Status of Covenants | ||||||
|---|---|---|---|---|---|---|
| Category | Sector | Safeguards | Social | Financial | Economic | Others |
| Rating | - | Satisfactory | - | - | - | - |
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.
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| Title | Document Type | Document Date |
|---|---|---|
| Project Agreement for Loan 3367-BAN: Second Small and Medium-Sized Enterprise Development Project | Project/Program Agreements | Jan 2017 |
| Loan Agreement (Ordinary Operations) for Loan 3367-BAN: Second Small and Medium-Sized Enterprise Development Project | Loan Agreement (Ordinary Resources) | Jan 2017 |
| Second Small and Medium-Sized Enterprise Development Project: Report and Recommendation of the President | Reports and Recommendations of the President | Dec 2015 |
| Second Small and Medium-Sized Enterprise Development Project: Gender Action Plan | Gender Action Plans | Dec 2015 |
| Second Small and Medium-Sized Enterprise Development Project: Project Administration Manual | Project/Program Administration Manual | Nov 2015 |
| Second Small and Medium Enterprise Development Project: Initial Poverty and Social Analysis | Initial Poverty and Social Analysis | Aug 2015 |
| বাংলাদশে: দ্বিতীয় ক্ষুদ্র ও মাঝারি উদ্যোগ (এসএমই) উন্নয়ন প্রকল্প : প্রকল্প তথ্যপত্র | Translated PDS | Jul 2015 |
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
None currently available.
Related Publications
None currently available.
The Access to Information Policy 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.
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ADB to Provide Loans to SMEs, Women Entrepreneurs in Rural Bangladesh
ADB will provide $200 million in loans to small and medium-sized enterprises (SMEs) in rural Bangladesh to help them gain access to medium- to long-term credit.
Tenders
| Tender Title | Type | Status | Posting Date | Deadline |
|---|---|---|---|---|
| Strengthening Capacities of Small and Medium-Sized Enterprise Stakeholders to Access Bank Financing and Services | Firm - Consulting | Closed | 11 Mar 2019 | 07 Apr 2019 |
Contracts Awarded
No contracts awarded for this project were found
Procurement Plan
None currently available.