The Asian Development Bank lends Bangladesh $150 million to breathe new life into cottage, micro, and small enterprises (CMSEs), battered by the Covid-19 pandemic.
Official sources said the board of directors of the Manila-based lender approved the loan Thursday, the ADB headquarters said in a statement.
Some 30,000 CMSEs operated by youth, returning migrant workers, and rural entrepreneurs, particularly women, who have been hit hard by the coronavirus pandemic would get the support from the fund, it said.
Bangladesh Bank would lend the affected CMSEs through commercial banks and financial institutions aiming to facilitate employment creation and help these vulnerable groups recover from the adverse impact of the pandemic.
The Asian bank will sign a loan deal with the Economic Relations Division (ERD) shortly to confirm the loan disbursement.
A senior ERD official said they are completing the procedure of signing the $150 million loan deal with the ADB soon.
"The fund would facilitate business recovery and employment of the youth, women and migrant returnees who have been affected by the Covid pandemic severely," he added.
Youth unemployment remains at a high level in the country, and they are more severely affected as they concentrate in sectors such as retail trade, accommodation, and food services, which were worst hit by the pandemic.
About 400,000 overseas migrant workers have returned since the start of the pandemic, and many remained unemployed.
Rural incomes have stayed depressed and nonfarm employment opportunities remained limited. Rural enterprises were severely affected, putting further pressure on rural employment.
"ADB supports the Bangladesh government's long-term strategy to tackle the country's employment challenges, which has been exacerbated by the pandemic," said ADB Principal Financial Sector Specialist for South Asia Dongdong Zhang.
Promoting access to finance will help address a critical challenge of helping vulnerable groups in the immediate term and developing CMSEs in the long term, he added.
Given the limited access of women to finance and their high concentration in retail, travel, and hospitality sectors, they have borne the brunt of the impact of the pandemic. The project has targeted to disburse 20 per cent of the funds to micro-business led by women to support their recovery.
The ADB will provide an additional $0.90 million technical-assistance grant from its Technical Assistance Special Fund for the central bank and financial institutions to help them strengthen their risk- management capacities, business process, and information systems.
The assistance will also boost their support of CMSEs by incorporating mobile finance, value-chain financing, and sustainable financing tackling climate change.
This project builds on the $250 million policy-based Strengthening Social Resilience Programme, approved by the ADB in June 2021, to strengthen Bangladesh's social-protection programmes and resilience of vulnerable groups.
It also complements the $50 million additional financing to the ongoing Microenterprise Development Project, approved in December 2020, to help restore economic activities of micro-enterprises affected by COVID-19, the ADB said.
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