Release number IFAD/42/07

Rome, 10 October 2007 – A new US$57.8 million development project will help provide credit to nearly 117,000 microentrepreneurs in Bangladesh enabling them to expand existing small enterprises and develop new ones. Nearly 90 per cent of the borrowers will be women. The Finance for Enterprise Development and Employment Creation Project will also create thousands of jobs for extremely poor rural people. 

The project will be largely funded by a US$35 million loan from IFAD. It is cofinanced by the Palli Karma-Sahayak Foundation (PKSF) and its partner non-governmental organizations, who will contribute US$22 million and US$700,000 respectively. Participants in the projects will also contribute US$60,000. The loan agreement was signed in Rome by M. Fazlul Karim, Ambassador of the People’s Republic of Bangladesh to Italy, and Lennart Båge, President of IFAD.

The project will train microentrepreneurs to manage their businesses more effectively. It will also show them how to add value to on-farm and off-farm products during the various stages of the market chain, from the purchase of raw materials to the sale of finished products.

“Besides those who receive loans to expand or start businesses, about 200,000 extremely poor people who lack basic assets such as land will also benefit as more jobs are created by microentrepreneurs,” said Nigel Brett, IFAD’s country programme manager for Bangladesh. “There are many possible rural businesses that could be financed. These could be anything from livestock and fruit and vegetable enterprises to tailoring, leather work and furniture production.”

The project will be national in scope but with a focus on rural areas. It will extend loans to PKSF partner organizations, which are non-governmental organizations operating in all 64 districts of Bangladesh. It will also support the training of partner organization staff in microenterprise lending and the appraisal of small business ventures.

The main participants will be existing, successful microcredit and microenterprise borrowers. Their businesses are vital for the growth of the rural economy.

“The microenterprises create vital jobs for much poorer people who live well below the poverty line and often don’t have adequate housing or enough to eat,” said Brett. “They often lack the confidence and ability to risk taking a microcredit loan to start an enterprise and would rather find employment in small local businesses. Without these jobs, they are often forced to leave home in search of work, which creates further hardship for the migrants and their families left behind.”

IFAD supports the efforts of the Government of Bangladesh to reduce poverty and increase the productivity of poor rural people in ways that are both sustainable and environmentally friendly.

IFAD-supported operations in Bangladesh work to improve rural small entrepreneurs’ access to markets and financial services. They also focus on increasing women’s access to economic opportunities, continuing the progress already made towards the empowerment of women in the country.

To date, IFAD has supported 24 programmes and projects in Bangladesh with loans of US$424 million that have benefited 8 million households.

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IFAD is an international financial institution and a specialized United Nations agency dedicated to eradicating poverty and hunger in rural areas of developing countries. Through low-interest loans and grants, IFAD develops and finances programmes and projects that enable poor rural people to overcome poverty themselves. There are 191 ongoing IFAD-supported rural poverty eradication programmes and projects, worth a total of US$6.6 billion. IFAD has invested US$3.1 billion, with cofinancing provided by partners including governments, project participants, multilateral and bilateral donors. These initiatives will help about 82 million poor rural women and men to achieve better lives for themselves and their families. Since starting operations in 1978, IFAD has invested US$9.8 billion in 751 programmes and projects that have reached more than 310 million poor rural women and men. Governments and other financing sources in recipient countries, including project participants, contributed US$9.2 billion, and multilateral, bilateral and other donors provided another US$7.2 billion in cofinancing.