The Islamic Development Bank (IDB) is set to finance a $1.0 million project in Bangladesh under its newly innovated 'reverse linkage' modality.
The Jeddah-based lender will sign a memorandum of understanding with the government during its president Bandar Al Hajjar's upcoming Dhaka visit this weekend.
"The project is aimed at enhancing the country's capacity to develop high-yielding cotton varieties," said economic relations division (ERD) additional secretary Mohammad Shamsul Alam.
"Islamic Development Bank, Bangladesh government and Nazalli Cotton Institute of Turkey are the three parties involved in the scheme," he told the FE.
Under the modality, the IDB will bear 27 per cent and Nazalli 53 per cent of the total project cost.
The remaining money will come from the state coffers to fund the scheme, ERD officials informed.
The entire amount would come as grant and no borrowing will be involved, they added.
This is the first time that that IDB is going to finance any project in Bangladesh under its 'reverse linkage' modality.
Reverse linkage is a South-South Cooperation mechanism aimed at knowledge sharing, technology transfer and cross-border investment among its member countries.
The IDB usually provides a certain amount of grant along with the borrowing and receiving entity while acting as the coordinating entity of the entire scheme.
The IDB is the only multilateral agency whose membership is drawn entirely from developing countries.
"It's a way of fostering South-South Cooperation among these developing nations," said an ERD official involved with the initiative.
Bangladesh is currently heavily reliant on imported cotton for feeding its readymade garments industry.
Local growers can meet only 2.0 per cent of the local demand for cotton-leading to over $3 billion worth of import annually, according to available statistics.
In this context, there have been growing calls for more investment in cotton-related research to decrease this high import dependency.
It is envisaged that the project will develop high-yielding cotton varieties that are compatible with the soil and climatic conditions of Bangladesh.
In addition, it will provide technical support to set up a biotechnology laboratory at the cotton research center in Gazipur.
Sources said the scheme will also work on integrated crop management technologies while arranging overseas training for cotton researchers and relevant officials.