Low-cost WB funds for entrepreneurs
Bangladeshi entrepreneurs in the power, energy and bridges sectors can access low-cost funds for up to 20 years thanks to a new credit from the World Bank.
The funds became available after the government signed two agreements with the Washington-based lender involving $457 million yesterday.
Of the amount, $357 million will be used to help develop private sector-led infrastructure projects under the Investment Promotion and Financing Facility Project II (IPFF II).
The project will build local financial institutions' capacity to provide long-term funds to private companies to undertake infrastructure projects in sectors such as power and energy, ICT, land ports, roads, and bridges, said a WB statement.
“By bringing private sector provision for infrastructure development and expanding exports to sectors where the country has already shown comparative advantages, Bangladesh can create more and better-paid jobs and boost prosperity for its citizens,” said Qimiao Fan, WB's country director for Bangladesh.
Due to limited capacity and market constraints, local financial institutions traditionally could not meet the longer-term financing demand for building infrastructure.
Built on the success of an earlier project, the IPFF II will help local financial institutions to lend to private sector infrastructure ventures through the Bangladesh Bank for a longer term of 8 to 20 years, beyond the usual term of 5 to 7 years, according to the statement.
The other one—the $100 million Export Competitiveness for Jobs Project—will aim in diversifying exports in labour-intensive and globally competitive industries such as leather goods, footwear, plastics and light engineering.
“Both the projects will help Bangladesh create more and better jobs for its population,” the World Bank said.
The WB said it will help create 90,000 more jobs by focusing beyond the garment sector and diversifying exports in other labour-intensive sectors.
The project will help firms access international markets, overcome technology, infrastructure and skills shortfalls and enable them to comply with international quality standards.
These improvements will help Bangladesh increase the number of exporting firms in target sectors by about 30 percent.
Nine out of 10 Bangladeshis work in the informal sector, often in poor working conditions. The project will provide industry-specific training to students, workers, and particularly women.
By the end of the project, average wage is expected to grow by 33 percent, the WB said.
“These two projects will contribute to the country's vision of achieving upper-middle income status by its 50th birthday,” said Kazi Shofiqul Azam, secretary of the Economic Relations Division.
Both the agreements were signed by Azam and Fan.
The credits came from the International Development Association (IDA), the WB's credit arm for grant and no or low interest.
The credits are interest-free and repayable in 38 years, including a six-year grace period, and carry a service charge of 0.75 percent.
The IPFF II also includes $100 million credit from the IDA's scale-up facility that has a 30-year term, including a nine-year grace period.