Business

ADB okays $50m for SME development

The Asian Development Bank (ADB) will support efforts of the government of Bangladesh to foster development of the country's small and medium enterprise (SME) sector, through an assistance package approved yesterday totalling $50 million.

The SME Sector Development Programme will help strengthen the policy environment for SMEs and improve their access to credit and support services, to enable the sector to attain its full potential for contributing to sustainable economic growth and poverty reduction, according to a press statement issued from ADB headquarters in Manila yesterday.

It is recognised that the country's estimated 6 million SMEs and micro enterprises -- firms of less than 100 employees -- have a significant role in generating growth and jobs.

Bangladesh's SME sector contributed up to 25 percent of the country's gross domestic product last year, about 40 percent of gross manufacturing output, 80 percent of industrial jobs, and around 25 percent of the total labour force in Bangladesh.

As part of the programme, a gender action plan has also been prepared to target women entrepreneurs and foster their participation in policy-making, training programs, and credit fund allocations.

The loans come from ADB's concessional Asian Development Fund, with interest set at 1.0 percent per annum during the grace period and 1.5 percent per annum for the rest of the term.

The programme loan has a 24-year term, including a grace period of eight years. The project loan and technical assistance loan both carry a 32-year |erm including grace period of eight years. The program loan closing date is expected to be end-:007.

The project loan will contribute to Small Enterprise Fund whose fund is $56.7 million. The Bangladesh government is providing $16.7 million and the World Bank $10 million. The expected date of completion of the project loan is June 2010. The TA loan completion date is expected in December 2007.

For its part, the Bangladesh government will contribute $3.46 million to the TA loan. It will also contribute $150,000 equivalent to the TA grant through the provision of counterpart staff, offices, transportation, and incidental expenses.

The executing agency for all loans and grants is the Ministry of Finance, Finance Division.

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