ADB to provide $300m for SME development

The Asian Development Bank (ADB) is set to provide US$300 million as soft loan for development of small and medium enterprises (SMEs) in the country, a high official of central bank said.
A high-profile meeting recently among officials from ADB, Bangladesh Bank (BB), economic relations division (ERD) under Finance Ministry, Small and Medium Enterprise (SME) Foundation, Bangladesh Small and Cottage Industries Corporation (BSCIC) and the Ministry of Industries in principle decided to utilise the fund for the development of SME sector in Bangladesh.
According to the central bank official, Bangladesh Bank (BB) will receive the fund at 1.75 per cent of interest from ADB and will distribute the amount to the commercial banks at an interest of 5 per cent after addition of currency risk charge.
Both the private and public commercial banks, would then disburse the amount to only among the small and medium entrepreneurs (SMEs) at a maximum interest of 10 per cent.
"Development of SME sector can only help develop the country. So we are trying to give our utmost support to the sector extending financial support both from local and external sources," Consultant of SME to the BB, Sukomol Sinha Chowdhury told the FE.
"Once the fund is distributed to the SME sector it would help many entrepreneurs flourish. Though the fund is not sufficient for development of the sector, I hope it would positively help the sector a lot," he added.
"We have completed all formalities and are hope full to finalise the deal with the DAB in the next meeting to be held in July," Mr Chowdhury added.
Shammiea Akhter Shusmita, a women SME entrepreneur, who had been awarded national- level prize for her remarkable development said many of small enterprises have immense potential to flourish, but shortage of fund is hindering their prospects.
"We the small and medium entrepreneurs have been facing acute shortage of fund. If the government provides us loan at a single digit interest, then many of our fellow businessmen would be able to rename themselves big industrialists from SME entrepreneurs to after a certain period," she added.
Hailing the government's initiative to receive the fund from ADB, Shusmita said the government should provide different types of training to the entrepreneurs along with providing fund which is very important for sustainable development.
However, the high official of BB said they had proposed the ADB authority to spend a part of the fund for training but the funding authority did not agree with their proposal.
"We had proposed ADB for allowing partial utilisation of the fund for training but the authority refused," he added.
"After release of the fund, we will again try to receive another fund from the ADB for the training of the SME entrepreneurs," he said.
However, according to the BB official, there are about12 million formal and informal micro, small and medium enterprises in the country.
Eighty per cent of which, according to the BB, have no trade licence.
Local SME sector has got around Tk 800 billion as loan from different sources in the last financial year (2013-14) and the government has a target to disburse Tk 1,003 billion in the current fiscal.   
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