Press release number: IFAD 07/05

Rome, 7 February 2005 - About 210,000 poor farming families, many headed by women, will benefit from better access to loans, savings and other banking services through a US$ 29.7 million development project in northern Bangladesh . Small and marginal farmers will also learn improved agricultural techniques to increase farm production.

The International Fund for Agricultural Development (IFAD) and the microfinance apex institution, Palli Karma-Sahayak Foundation (PKSF) will work together to assist poor farmer families in 14 districts where poverty is particularly severe, but where there is good agricultural potential.

The project will be largely financed by a US$20.1 million loan from IFAD to the Government of Bangladesh. The loan agreement was signed today at IFAD headquarters in Rome by Anwarul Bar Chowdhury, Ambassador of Bangladesh to Italy and IFAD's President, Lennart Båge.

To ensure that microfinance and related services reach those in need, IFAD has formed a partnership with PKSF, an apex institution that channels funds to non-governmental organizations (NGOs) for microfinance services. Through this network of NGO partners, PKSF is providing loans to more than five million clients, most of them women .

For this project, PKSF will work with approximately 25 NGO partners to create 11,500 new savings and credit groups. These groups will also receive training in improved agricultural technology and crop varieties, together with support for improved access to local markets.

''Our partnership with PKSF will help to ensure that NGO partner organizations receive the financial and technical support they need to offer poor farmers sustainable financial services,'' said Nigel Brett, IFAD's country programme manager for Bangladesh . ''And by offering women farmers training in improved agricultural technologies, marketing and business management, we can reduce their vulnerability and help them overcome poverty.''

Poor farmers in Bangladesh face considerable risks due to natural disasters like floods and cyclones. This poses particular challenges for microfinance programmes that target farming communities. The project will introduce a number of risk management innovations, including a disaster reserve fund to mitigate these risks. To cater to the special financial needs of farmers, the project will also pilot innovations in lending systems, such as longer repayment periods and seasonal loans.

The project will create a knowledge base of how best to deliver microfinance to small and marginal farmers. Participants will learn from exchanging experiences, findings and failures of implementation approaches, and successful ones will be scaled up to other regions of the country.

With this loan, IFAD has provided the Government of Bangladesh with funding for 22 projects since 1978 for a total amount of US$370 million.

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IFAD is a specialized agency of the United Nations dedicated to eradicating rural poverty in developing countries. Seventy-five per cent of the world's poorest people – 900 million women, children and men – live in rural areas and depend on agriculture and related activities for their livelihoods. Through low-interest loans and grants, IFAD works with governments to develop and finance programmes and projects that enable rural poor people to overcome poverty themselves.

There are close to 200 ongoing IFAD-supported rural poverty eradication programmes and projects, totaling US$ 6.5 billion. IFAD has invested about US$ 3 billion in these initiatives. Co-financing has been provided by governments, beneficiaries, multilateral and bilateral donors and other partners. At full development, these programmes will help more than 100 million rural poor women and men to achieve better lives for themselves and their families. Since starting operations in 1978, IFAD has invested US$ 8.5 billion in 676 projects and programmes that have helped more than 250 million poor rural men and women achieve better lives for themselves and their families.