36200-023: Second Small and Medium-Sized Enterprise Development Project | Asian Development Bank

Bangladesh: Second Small and Medium-Sized Enterprise Development Project

Sovereign (Public) Project | 36200-023 Status: Active

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 Details

Project Officer
Zhang, Dongdong South Asia Department Request for information
Country
  • Bangladesh
Modality
  • Loan
  • Technical Assistance
Sector
  • Finance
 
Project Name Second Small and Medium-Sized Enterprise Development Project
Project Number 36200-023
Country Bangladesh
Project Status Active
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 3367-BAN: Second Small and Medium -Sized Enterprise Development Project
Ordinary capital resources US$ 200.00 million
TA 9068-BAN: Strengthening Capacities of Small and Medium-Sized Enterprise Stakeholders to Access Bank Financing and Services
Japan Fund for Poverty Reduction US$ 2.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Partnerships
Private sector development
Sector / Subsector

Finance / Small and medium enterprise finance and leasing

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.

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.

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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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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.


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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.