Aided special fund fuels SME growth

Munima Sultana | Published: March 05, 2016 00:00:00 | Updated: February 01, 2018 00:00:00

A foreign-aided special fund fuelled performance of small and medium enterprises (SMEs) with turnover, profit and job creation marking significant increases.
Bangladesh Bank's SME and Special Programmes Department gave an account of such advances, crediting the improvements largely to loans created under Japan International Cooperation Agency's funding.
It said the fund worth Japanese Yen (JPY) 5.0 billion helped increase SME lending by 27.51 per cent.
Some 36.79 per cent increase is also found in medium-and long-term lending amounts.
The central bank data show that 513 SMEs were able to increase turnover by 49.35 per cent, profit by 16.3 per cent and employment by 15.7 per cent after having received high-compliance credits.
The data were accumulated at the end of an umbrella project for funding titled 'Financial Sector Project for the Development of SMEs (FSPDSMEs)'.
Seventy-four per cent of the SMEs are from manufacturing sector and 20 per cent of the loan-recipients repeatedly utilised JICA loan, the BB department said.
The central bank and JICA signed the loan agreement on up to Japanese Yen (JPY) 5.0 billion in May 2011 for developing SMEs as key driver for the growth in the manufacturing sector.
The fund was disbursed in two ways: Tk 4.9 billion disbursed as sub- loan through participatory financial institutes (PFIs) and Tk 3.8 billion as on-lending loan (OLL) through BB to PFIs.
"BB has been able to fully utilise the JICA fund," said SM Mohsin, Deputy General Manager at the SME department of the bank. He said this at the project's closing ceremony at a hotel on Thursday night.
Also deputy project director, Mr Mohsin said JICA's fund of around JYP 4.89 billion was disbursed before the end of the project this month.
Officials said with the completion, the BB will now create a revolving fund through principal amount of the loan soon to help push the growth upward.
The SME and Special Programmes Department organised the concluding ceremony on Thursday night to celebrate the success of the project three months ahead of the project's closure.
Bangladesh Bank Governor Dr Atiur Rahman attended the function as chief guest. Additional Secretary of BFID of the Ministry of Finance Gokul Chand Das, member in charge of the Planning Commission Abdul Mannan, Chief Representative of JICA, Bangladesh, Mikio Hataeda and Minister of Japanese Embassy Takeshi Matsunaga were special guests.
The governor said Bangladesh Bank prioritises incremental credits to manufacturing and service sectors, to create "job-rich growth". And during the last five/six years, disbursement to manufacturing and service sectors has increased significantly.
The target of disbursement set by the central bank in 2010 was Tk 389 billion. By 2015, however, the disbursement by banks and NBFIs more than tripled to Tk 1159 billion, with 725 thousand recipient SMEs, a large number of them new SMEs.
"It signifies a strong growth in SME, as evidenced by the recent economic census. Good news is SMEs are adding vibrancy to our non-farm rural economic activity," he told the meet.
The JICA chief said the JICA-funded loan was set to assist the SMEs with medium-to-long-term loans for sustainable business, as in absence of such facilities many entrepreneurs of the country could not see success in productivity increase and so on.
Among the 513 loan recipients, 379 were of manufacturing sector, 125 service and the remaining of trade and other sectors.
The JICA fund was also used for the readymade garment sector to ensure safe working environment at factories through the retrofitting of buildings-a task prompted by concerns of western consumer nations following some tragic incidents in the main export industry.
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