The Asian Development Bank (ADB) has approved a $50 million loan to help restore the economic activities of microenterprises in Bangladesh, which have been severely affected by the COVID-19 pandemic, reports UNB.
The loan will scale up the ongoing Microenterprise Development Project, approved by ADB in 2018 to provide a $50 million credit line to Palli Karma Sahayak Foundation (PKSF), a government development finance and capacity building organisation.
Under the ongoing project, the PKSF, through its 77 partner organisations, has so far provided loans to 39,580 microenterprises, generating 91,430 jobs in rural areas.
The new credit line to the PKSF will provide loans to at least an additional 30,000 microenterprises affected by COVID-19, 70 percent of which are women-led. The project will strengthen the capacity of 120 partner microfinance institutions in microenterprise lending, such as credit appraisal, pricing, and financial and portfolio management and monitoring.
It will expand the application of the pilot mobile-based microenterprise financing application to an additional 10,000 borrowers, which facilitates loan applications, disbursement, and collection. The project will identify three additional microenterprise products for expansion and support microenterprise cluster development.
ADB Principal Country Specialist for Bangladesh Jyotsana Varma said the additional financing will supplement the ongoing project by injecting liquidity in the rural economy by providing cheaper financing to microenterprises, helping them continue their business and retain their employees, especially women entrepreneurs who have been heavily hit by the pandemic.
He said that the project will increase access to financing from microfinance institutions and further contribute to the growth of microenterprises in the country.