The International Fund for Agricultural Development (IFAD) will provide Bangladesh with an additional loan of $18.07 million to rebuild microenterprises and support smallholders, who have been adversely affected by the Covid-19 pandemic.
The additional financing will scale-up activities under the ongoing Promoting Agricultural Commercialization and Enterprises (PACE) project, which is being implemented by the apex development organization of Bangladesh, the Palli Karma-Sahayak Foundation (PKSF).
The funding will complement the Government of Bangladesh (GOB) and PKSF's efforts to assist microenterprises and smallholders and recover the severely affected rural economy from Covid-19 induced losses, said a press release.
This additional loan will finance activities from January 2021 to December 2022, helping restore microenterprises in farm and non-farm sectors, as well as scaling-up and strengthening successful value chains under the PACE project.
IFAD's South Asia Hub Head, Rasha Omar, said, "The impact of the pandemic is long-term in nature and requires building back the economy better."
"The additional resource is IFAD's response for rehabilitation of microenterprises and smallholder families who lost their businesses and income due to Covid-19-induced constraints. The initiative will restore their livelihoods and develop strategies to reduce future risks" she added.
The PACE project, jointly financed by IFAD, GOB and PKSF, was launched in 2015 with the aim of improving profitable business opportunities for microentrepreneurs nationwide and creating employment for the extreme and moderate poor people.
So far, the PACE project has directly benefited about 321,000 microentrepreneurs and other actors engaged in value chains in select farm and non-farm sectors through 74 value chain and 25 technology transfer sub-projects by providing them with microcredit support, technical assistance, and technological promotion, and facilitating market access.
With the additional loan, the total value of the PACE project now amounts to $129.81 million, with IFAD financing of $58.07million. Over the next two years, the project will directly benefit another 1,68,000 beneficiaries, including 48,000 microentrepreneurs and 1,20,000 value chain actors.
With the increased demand for finance to rebuild the rural economy of Bangladesh, this initiative by IFAD and PKSF to restore the microfinance sector will increase the disbursement of loans to microenterprises to restore and build back their business and agricultural activities, and enhance their resilience to absorb shocks that could be induced by future crises.
PACE will also provide awareness building training on Covid19 protection protocols developed by PKSF to manage health and hygiene on the production premises to prevent transmission of Covid-19 and other future epidemics.
The project further plans to improve the physical environment of wet markets and work with market management committees to improve cleanliness, develop health and hygiene awareness amongst buyers and sellers, and introduce a system to ensure a proper flow of human movements to separate entry and exit traffic.
In order to respond to the growing demand of shifting to e-commerce to promote contactless transactions, PKSF will use the additional financing to work with existing e-commerce businesses to facilitate the development of a microenterprise-friendly platform covering the entire supply chain. Eventually, the platform will be interactive and offer advisory services to farmers, including for pandemic management.
The additional resources will be invested in three broad agri-business subsectors: horticulture; fisheries and aquaculture; and poultry and livestock, including processed products, and cover 40 districts in Barishal, Chattogram, Dhaka, Khulna, Rajshahi, Rangpur, and Sylhet Divisions.
IFAD has a long-standing partnership with PKSF, and PACE is the fourth IFAD-financed project with this apex development organization, stated the press release.
In addition, IFAD is also financing a fifth project called the Rural Microenterprise Transformation Project (RMTP), which was launched in August 2020 and has a total budget of $200million, of which IFAD's contribution is $81 million.