Multilateral lenders come to the rescue of little enterprises
Multilateral lenders are joining with the federal government to boost financing for micro entrepreneurs so that you can rejuvenate the thousands of pandemic-hit micro and small enterprises.
Yesterday, the Asian Production Lender (ADB) said it would give a $50 million loan to help restore the monetary activities of hometown micro businesses.
The production comes as the government plans to allocate another Tk 3,000 crore to increase the size of the credit guarantee scheme on the tiny loans announced in July to provide a lifeline to cottage and micro-entrepreneurs, who account for more than 90 per cent of the 78.18 lakh organizations in Bangladesh.
The federal government and the World Bank provides the fund.
Fresh funds happen to be in the offing of Bangladesh Little and Cottage Industries Corporation and SME Foundation for providing loans to tiny and cottage industries, leading government officials and representatives of development partners explained at an event last week.
ADB said its most current loan will level up the ongoing Microenterprise Advancement Job that it had approved in 2018 to supply a $50 million line of credit to the Palli Karma Sahayak Basis (PKSF), a government advancement finance and capacity building organisation.
Under the ongoing job, the PKSF, through its 77 spouse organisations, has up to now provided loans to 39,580 microenterprises, generating 91,430 jobs in rural areas, the Manila-based lender said.
"This additional funding will supplementation the ongoing task by injecting liquidity into the rural economy by giving cheaper funding to microenterprises, supporting them continue their business and retain employees, especially women entrepreneurs who've been heavily strike by the ongoing pandemic," explained Jyotsana Varma, ADB's principal country consultant to Bangladesh.
"The project increase usage of financing for microfinance institutions and further contribute to the growth of microenterprises across the country," she added.
The ADB said the new line of credit to the PKSF provides loans to at least 30,000 pandemic-affected microenterprises, 70 per cent which are women-led.
While speaking on the problem of finance for small and micro entrepreneurs at an event organised by the Finance Division the other day, Bangladesh Bank Governor Fazle Kabir said the central bank examined the issue of loans to small company.
He said the quantity of microfinance establishments (MFIs) is only 750 even while big MFIs are not interested to finance the small businesses influenced by Covid-19.
Besides, interest rates charged by the large MFIs on loans will be more than 20 per cent.
"Let them do that. We are providing cash to tiny MFIs and we will continue," Kabir stated, adding that the disbursement of little loans possesses been low however the amount of beneficiaries are higher than the large receipts of the stimulus plans.
The government has so far rolled out 21 stimulus packages since March to soak up the financial shocks of the Covid-19 fallout.
Of the deals, six involving Tk 34,458 crore were targeted at job creation and revitalisation of the rural market. But till November, Tk 13,053 crore or 37.88 % of the total amount was disbursed, regarding to finance ministry officials.
