Dhaka, Bangladesh (CU)_ The Asian Development Bank (ADB) has granted a $150 million fund to Bangladesh to help recover cottage, micro, and small businesses (CMSEs) run by youth, home-returned migrant workers, and rural entrepreneurs, notably women-led businesses that have been disproportionately affected by Covid-19. This fund support to Bangladesh Bank will be given to participating financial institutions (PFIs), which would then assist the 30,000 CMSEs run by the recipients.
According to a news release, the project intends to support job development and assist these vulnerable communities in recovering from the pandemic’s detrimental effects. Youth unemployment also shooted up in the country as a result of the pandemic, and they are severely affected as they focus more on sectors like retail trade, lodging, and food services, which were hit hard by the pandemic.
Since the beginning of the pandemic, more than 400,000 foreign migrant workers have returned home, with many still unemployed. Rural earnings have remained poor, and work prospects other than agriculture also remained limited. Rural businesses were badly impacted, placing further strain on rural employment.
Dongdong Zhang, the ADB’s senior finance sector specialist for South Asia, spoke about the significance of this fund support. He said, “The ADB supports the Bangladesh government’s long-term strategy to tackle the country’s employment challenges, which has been exacerbated by the pandemic”. He added, “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”. The initiative intends to allocate 20% of the money to women-led microbusinesses to support in their rehabilitation.
The ADB would also offer extra $900,000 in technical support through its Technical Assistance Special Fund for Bangladesh Bank and PFIs to assist them improve their risk management skills, business processes, and information systems. Additionally, the fund will strengthen their support for CMSEs by adding mobile finance, value chain financing, and climate-smart financing.
This project also strengthens the ADB’s $250-million Strengthening Social Resilience Program, which was authorized in June 2021 to boost Bangladesh’s social protection programs and increase the resilience of vulnerable populations. Additionally, it also supports the $50 million extra finance to the existing Microenterprise Development Project, which was authorized in December 2020 and is intended to aid in the restoration of economic activities of local microenterprises that have been disrupted by the Covid-19 pandemic.