Bangladesh: Second Small and Medium-Sized Enterprise Development Project

Sovereign Project | 36200-023

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
    Al Hasan, Mohammad Rashed
    South Asia Department
    Request for information
  • Country/Economy
    Bangladesh
  • Modality
    • Loan
    • Technical Assistance
  • Sector
    • Finance
Project Name Second Small and Medium-Sized Enterprise Development Project
Project Number 36200-023
Country / Economy 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 Prosperous and Resilient Asia and the Pacific 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 3,000 SMEs have received loans from 33 Participating Financial institutions (PFIs), of which 21 are Banks and 12 are NBFIs.
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)

1a. Total $130 million loan disbursed to SMEs and SME clusters (as of 22 September 2021).

1b. As of June 2021, 13% credit line went to women entrepreneurs.

2a. Guidelines for establishing incubation centers prepared.

2b. Women entrepreneurs' needs incorporated into the design and development of incubation centers.

3a. Total 14 training workshops on how to form alliances in clustering and networking to help small firms to compete, grow, and cooperate with larger firms held in 12 clusters. Number of participants: 421. Total 5 workshops held, with PFI staffs Number of PFI staffs attended: 113

3b. Gender-related elements and/or elements addressing needs of women entrepreneurs have been incorporated in the needs assessment and training programs on SME, BSCIC, and SME cluster financing.

4a. Total 9 Trainers' training program for staff of Bangladesh Bank's WEDUs on access to financial services conducted. Number of BB staffs attended: 50

4b. Total 9 training on gender-sensitive approaches to assisting women entrepreneurs organized for 138 staffs of the PFIs.

4c. Organized 14 trainings on women entrepreneurs in accessing financial services and total 417 women entrepreneurs trained.

5a. Developed Financial management framework for SME Foundation (SMEF) and it was adopted by SMEF.

5b. Project management software implemented at Bangladesh Bank.

5c. Total 64 PFI staffs trained in comprehensive monitoring and reporting framework and project management software.

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 Al Hasan, Mohammad Rashed
Responsible ADB Department South Asia Department
Responsible ADB Division Bangladesh Resident Mission
Executing Agencies
Bangladesh Bank
Mr. Harunur Rashid Bhuiyan
[email protected]
Motijheel Commercial Area
P. O. Box 325, Dhaka 2
Bangladesh
Financial Institutions Division-MOF
Mr. Arijit Chowdhury
[email protected]
Bangladesh Secretariat, Abdul Gani Rd
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 28 Sep 2021

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 30 Jun 2022 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 266.70 Cumulative Contract Awards
ADB 200.00 04 Feb 2022 160.00 0.00 80%
Counterpart 66.70 Cumulative Disbursements
Cofinancing 0.00 04 Feb 2022 160.00 0.00 80%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory - Satisfactory 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 18 Jan 2021 08 Apr 2021
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 04 Feb 2022 1,825,839.14
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory - Satisfactory 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.

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.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

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
Second Small and Medium-Sized Enterprise Development Project: Audited Project Financial Statements (July 2020-June 2021) Audited Project Financial Statements Dec 2021
Second Small and Medium-Sized Enterprise Development Project: Project Administration Manual Project/Program Administration Manual Feb 2021
Second Small and Medium-Sized Enterprise Development Project: Audited Project Financial Statements (July 2019-June 2020) Audited Project Financial Statements Dec 2020
Amendment to the Loan Agreement for Loan 3367-BAN: Second Small and Medium-Sized Enterprise Development Project Loan Agreement (Ordinary Resources) Oct 2020
Amendment to the Project Agreement for Loan 3367-BAN: Second Small and Medium-Sized Enterprise Development Project Project/Program Agreements Oct 2020
Second Small and Medium-Sized Enterprise Development Project: Audited Project Financial Statements (July 2018-June 2019) Audited Project Financial Statements Dec 2019
Second Small and Medium-Sized Enterprise Development Project: Audited Project Financial Statements (1 July 2017 - 30 June 2018) Audited Project Financial Statements Dec 2018
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: Gender Action Plan Gender Action Plans Dec 2015
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: 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 (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.

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

Contract Title Approval Number Contract Date Contractor | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
Capacity Development Technical Assistance 9068 13 Aug 2019 Eurosupport - Fineurop Support (ITALY) in association with ASSOCIATES FOR DEVELOPMENT SERVICES LIMITED (BANGLADESH) | Via Santa Margherita 6 Milan 20121 Italy Bank and Financial Institutions Division-MOF 1,527,696.00

Procurement Plan

None currently available.