New microenterprise project to make farming profitable for half a million Bangladeshi families
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New microenterprise project to make farming profitable for half a million Bangladeshi families09 December 2019
Dhaka, 09 December 2019 – The International Fund for Agricultural Development (IFAD) and the Government of the People's Republic of Bangladesh have signed an agreement to launch a project to accelerate inclusive economic growth, sustainably reduce poverty and improve food and nutrition security for 445,000 rural families.
The financing agreement for the Rural Microenterprise Transformation Project was signed by IFAD President Gilbert F. Houngbo and Monowar Ahmed, Secretary, Economic Relations Division, Ministry of Finance, Bangladesh.
The total cost of the project is US$200 million, of which IFAD is providing an $80 million loan and a $1 million grant. The remaining costs will be covered by the implementing agency Palli Karma-Sahayak Foundation ($13 million), the beneficiaries themselves ($0.9 million) and collaborating entities in the private sector, partner organizations and non-bank financial institutions ($96.8 million).
Poverty rates in Bangladesh have decreased from 49 per cent in 2000, to 24.3 per cent in 2016. In spite of this impressive progress, an estimated 40 million people still live below the poverty line.
Rural poverty remains higher than urban poverty, and agriculture accounts for only 15.4 per cent of the GDP, but employs 41 per cent of the population.
According to Omer Zafar, IFAD’s Country Director in Bangladesh, the key drivers constraining the agriculture sector are farmers’ limited access to what they need: updated technology, viable markets, and financial services.
“Millions of small farmers and microentrepreneurs are unable to transition from semi-subsistence farming to commercial operations. A wide range of underlying causes hampers this transition process. There is scope to increase productivity, modernise technologies, differentiate produce, improve the quality of output, expand processing to add value, upgrade advisory services, increase access to financial services and promote structured markets,” said Zafar.
This new project aims to respond to these challenges by boosting the agribusiness sector and increasing the overall profitability of farming by integrating food production with selected agriculture value chains. Focusing on the districts of Chittagong, Khulna, Rajshahi and Rangpur, the project will offer small-scale farmers and microentrepreneurs access to improved production technologies, financial services and market linkages.
“The project will create synergy between producers and agribusinesses, enabling sustained income growth and employment creation,” added Zafar.
The project will also organize and train producers to have the necessary skills to meet food safety standards, enabling them to increase the quantity and improve the quality of their output. This will also ensure higher-quality produce is available for agribusinesses.
The project is in line with Bangladesh’s National Agriculture Policy which aims to accelerate the transformation from semi-subsistence to commercial agriculture through productivity gains diversification, value addition and agroprocessing.
Since 1978, IFAD has financed 34 rural development programmes and projects in Bangladesh, benefitting almost 12 million households, with a total cost $ 2.3 billion, of which IFAD has invested $913 million.
Read more about IFAD’s work in Bangladesh
Press release No.: IFAD/53/2019
IFAD invests in rural people, empowering them to reduce poverty, increase food security, improve nutrition and strengthen resilience. Since 1978, we have provided US$21.5 billion in grants and low-interest loans to projects that have reached about 491 million people. IFAD is an international financial institution and a United Nations specialized agency based in Rome – the United Nations’ food and agriculture hub.