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Bhutan: Diagnostic Study and Strategy Development for Rural Finance Sector Development

Sovereign (Public) Project | 53307-002 Status: Active
 
Project Name Diagnostic Study and Strategy Development for Rural Finance Sector Development
Project Number 53307-002
Country Bhutan
Project Status Active
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 9805-BHU: Diagnostic Study and Strategy Development for Rural Finance Sector Development
Technical Assistance Special Fund US$ 225,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Finance / Finance sector development - Inclusive finance - Small and medium enterprise finance and leasing

Gender Equity and Mainstreaming Effective gender mainstreaming
Description The TA will conduct a research for potential transaction on rural finance sector development in Bhutan.
Project Rationale and Linkage to Country/Regional Strategy

Despite the recent private sector-driven economic growth, the Bhutanese economy is still largely rural and agriculture-based. Out of its total population, 62.2% live in rural areas with agriculture as its primary source of livelihood for most rural population. The agriculture sector contributes about 16.52% of the total gross domestic product; but employs over 56% of the total population in 2017. Although Bhutan's poverty ratio decreased from 23.2% in 2007 to 8.2% in 2017, a sizable number of the rural population remains in poverty. The estimated 11.9% of the rural population is below the national poverty line as compared to 0.8% in urban areas.

Most Bhutanese farmers are subsistence small farmers with limited landholdings and income. In rural areas, opportunities to generate cash incomes outside of agriculture or off-farm employment are extremely limited making farmers exclusively dependent on farming. The Government of Bhutan recognizes the cottage and small enterprises (CSEs) as the economy's driver and can positively impact employment, income generation and poverty reduction, and implements various policy measures to promote CSEs. CSEs constitute more than 90% of the total enterprises and employ about 99,288 people. However, despite the government support, the CSEs face various constraints including access to finance, access to infrastructure and market, taxation, and labor regulation. Among these, access to finance is by far the largest constraint due to (i) weak financial and operational performances of the key rural finance institutions; (ii) lack of adequate products and limited social mobilization to reach rural CSEs; and (iii) rural financial institutions' limited source of funding.

Impact Appropriate financial products and services provided by formal financial services providers to meet the needs of the unserved and underserved segments of Bhutan's population
Project Outcome
Description of Outcome Government's knowledge and policy implementation capacity for rural finance sector development enhanced
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

BDBL and REDCL diagnostic review conducted

BDBL and REDCL institutional strengthening plans developed

BDBL and REDCL gender and social inclusive rural enterprise financing strategies developed

Pilot microinsurance scheme plan developed

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services ADB will recruit using individual consultant selection for both international and national consultants. ADB will procure consulting services following the ADB Procurement Policy (2017, as amended from time to time) and Staff Instructions for ADB-Administrated Consulting Services. The required consultants inputs are, for international consultants: (i) banks and financial institutions specialist (2 person-months (pm); (ii) rural finance specialist (2 pm); (iii) financial management assessment and financial due diligence specialist (2 pm); (iv) microinsurance specialist (2 pm): and, for national consultant: (v) financial sector specialist (2 pm).
Procurement Not applicable
Responsible ADB Officer Ozaki, Mayumi
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 24 Sep 2019
Last Review Mission -
Last PDS Update 14 Dec 2020

TA 9805-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
24 Sep 2019 - 24 Sep 2019 30 Apr 2020 30 Nov 2020 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
225,000.00 0.00 0.00 0.00 0.00 0.00 225,000.00 24 Sep 2019 190,557.97

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Safeguard Documents See also: Safeguards

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None currently available.

Evaluation Documents See also: Independent Evaluation

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Related Publications

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Tenders

Tender Title Type Status Posting Date Deadline
Microinsurance Specialist Individual - Consulting Closed 07 Nov 2019 20 Nov 2019
Diagnostic Study and Strategy Development for Rural Finance Sector Development Individual - Consulting Closed 02 Oct 2019 08 Oct 2019
Diagnostic Study and Strategy Development for Rural Finance Sector Development Individual - Consulting Closed 27 Sep 2019 03 Oct 2019
Diagnostic Study and Strategy Development for Rural Finance Sector Development Individual - Consulting Closed 27 Sep 2019 03 Oct 2019
Rural Finance Specialist Individual - Consulting Closed 27 Sep 2019 10 Oct 2019

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.