Major EEF policy overhaul soon to mend loopholes

The Equity and Entrepreneurship Fund (EEF) is set to see major policy changes after its operational disorders through which many borrowers fled or defaulted on loan repayment.   
Official sources said the government has asked the authorities concerned to scrutinise loopholes in project design and operational activities for a recast of the fund management.
The instructions came from a recent meeting at the ministry of finance (MoF) for bringing dynamism in EEF activities and ensuring selection of entrepreneurs properly, they added, so that fakes cannot get way with funds.
The Bangladesh Bank (BB) and the Investment Corporation of Bangladesh (ICB) have been asked to hold a workshop soon with participation of all stakeholders concerned to fix the strengths and weaknesses of EEF projects.
Besides, the workshop will have to find out the possible changes ought to be made to project design and operational activities of the EEF in the future.
The policy changes will be based on recommendations expected to come from the workshop where MoF bosses will also remain present.
The government created EEF in fiscal year 2000-2001 to extend support to two promising sectors: agro-based food processing and software. A sum of Tk 1.0 billion was allocated for the purpose.
The central bank was the implementing agency of the project until May 2009.
Later, the operational function of the fund was transferred to the ICB. The central bank, since then, has been involved in formulating fund-management policies and monitoring the investment activities under the EEF.
According to officials, since its inception, the government has allocated Tk 20 billion in favour of the fund. Of the allocation, Tk 15.13 billion went for funding agriculture and Tk 5.12 billion for information and communication technology (ICT) sector.
They said some 198 agro-projects and 32 ICT projects got maturity with completion of eight years from the release of first instalment of loan. The projects should have repaid some Tk 5.33 billion by now.
But so far, some Tk 1.85 billion could be realised from the projects which completed their eight-year tenure. The loan-recovery rate is 34.70 per cent.
On the other hand, 490 projects that have completed their four-year tenure were supposed to repay Tk 6.78 billion. But, until March this year, only Tk 2.475 billion or 36.50 per cent of total amount could be realised from those.
A senior MoF official said the major weaknesses in the project operation are in the field of entrepreneur selection. Many entrepreneurs have fled after taking loans from the fund. Many have become defaulter in loan repayment and failed to buy back government's shares as per terms and conditions.
He said the rules in case of entrepreneur selection have to be changed thoroughly to avert misuse of funds.
While conducting a field survey in 2014, Bangladesh Institute of Development Studies (BIDS) could not find whereabouts of a large number of projects at the sites mentioned in the project documents.  
Contacted over telephone Friday, executive director of the central bank's EEF Unit Mohammad Masum Kamal Bhuiyan told the FE steps were taken to realise the money from the entrepreneurs who have become defaulter.
Legal measures are also underway to identify the entrepreneurs who fled with the money after taking it from EEF Unit, he added.
Mr Bhuiyan said a workshop may be held next week to find out the loopholes of the fund management and operational activities. "These may help redesign the project for successful operation and get effective outcome in the future."
    syful-islam@outlook.com