📋 Tender Overview
Project Name
Second Small and Medium-Sized Enterprises Development Project (Phase 2)
Project Number
36200-024
Country / Economy
Bangladesh
Project Status
Proposed
Project Type / Modality of Assistance
Loan
Technical Assistance
Source of Funding / Amount
Loan: Second Small and Medium-Sized Enterprises Development Project-Phase 2
Concessional ordinary capital resources lending US$ 100.00 million
TA: Second Small and Medium-Sized Enterprises Development Project-Phase 2
Technical Assistance Special Fund US$ 500,000.00
Sector / Subsector
Finance / Small and medium enterprise finance and leasing
Gender
Description
The proposed SMEDP2-Phase 2 will consist of a $100 million concessional loan from ADB's ordinary capital resources and an attached technical assistance of $950,000 in aggregate from TASF-7 and Financial Sector Development Partnership Special Fund. It will finance the continuation and expansion of activities financed under the SMEDP2 project by increasing the number and size of commercially viable cottage, micro, small and medium enterprises (CMSMEs), as well as supporting employment in the CMSME sector.
Project Rationale and Linkage to Country/Regional Strategy
Based on the successful implementation of the ongoing project, and renewed demand for SME financing driven by the COVID-19 pandemic, the government has requested $200 million for additional financing to enhance the project impact. SMEs play important roles in economic growth and job creation in Bangladesh. They account for 99% of all enterprises, generate 23% of the gross domestic product (GDP) and employ 25% of the workforce including 86% of the non-farm workforce. Access to finance is critical to the development of SME sector in Bangladesh. Improvement has been observed because of concerted efforts by the government and Bangladesh Bank, but overall, financial access remains a major challenge for the SMEs.
12.The government prioritized the SME sector development and provided consistent policy and financial support. The SME policy (2019) highlighted the importance of the SME sector and provided the road map for its development. SME development was prominently highlighted in the Sixth, Seventh, and Eighth Five-Year Plan. Bangladesh Bank also set an annual target to boost SME financing and established various refinancing schemes to make low-cost funds available to SMEs through banks and nonbank financial institutions. Recently, new market mechanisms have been introduced to support SME financing including credit guarantees for SME lending and the development of SME-focused equity market. In April 2019, the two stock exchanges in the country established dedicated SME platforms that have easier listing requirements. Since then, nine SMEs have been listed, creating an alternative source of financing for the SMEs.
Bank loans to the SMEs grew on average 12% each year from 2014 to 2020 in Bangladesh, the highest in South Asian countries. The share of SME bank loans
