(Updated as on 17 November 2006)

 

 

 

 

The impact (goal) of the Project will be reduced poverty in Bangladesh through agribusiness growth that generates income and employment in rural areas.

 

Agribusiness grows at the rate of 2 percentage points above annual growth rate of GDP by 2010; agribusiness contribution to GDP is increased from 10% to 15% by 2020; and agribusiness generate at least 100,000 jobs by 2020.

 

 

The outcome of the Project will be expanded activities of rural enterprises engaged in commercial agriculture production, input supply, marketing, processing, and transportation.

 

These will generate employment in rural and peri-urban areas, increase the value added of nontraditional crops and commodities, and increase rural incomes.

 

By project completion review, investment in agribusiness activities doubles; sales of agribusiness enterprise increase by 30%; number of women agribusiness entrepreneurs increase by 50%; number of employees in agribusiness increase by 30%; value added per unit of commodities increase by 20-30%; and post-harvest losses reduce by 20-30%.

 

 

ADB Board of Directors approved the Loan for the Government of Bangladesh on 27 October 2005.

 

The Executive Committee of the National Economic Council (ECNEC) approved the Development Project Proposal (DPP) on 26 April 2006.

 

The Loan Agreement and the Project Agreement were signed on 22 June 2006.

 

The Loan Agreement became effective on 17 November 2006.

 

 

The Project is to be implemented during January 2006 to December 2010.

 

Loan closing date is 30 June 2011.

 

 

Component 1: Credit for Small-scale Agribusinesses – The Project will provide about 28,000    small-scale agribusinesses with credit through participating NGOs. Sub-loans will usually be $500 to $5,000 equivalent.

 

Component 2: Technical and Marketing Support for Agribusinesses – The Project will provide technical and marketing assistance to the sub-borrowers and promote agribusiness in general.

 

Component 3: Strengthening Capacity of Participating NGOs and Wholesale banks in Agribusiness Lending – The Project will help participating NGOs improve business plans, strengthen their institutional capability, enhance their management of loan portfolio. The Project will improve the capacity of BASIC Bank and Eastern Bank Limited in managing NGO loan portfolios.

 

Component 4: Improving the Enabling Environment for Agribusiness – The Project is to help in removing inefficiencies in the policy environment , and to make entry into agribusiness more attractive for private sector entrepreneurs.

 

Component 5: Project Implementation Support – A project implementation unit (PIU) will provide implementation support. This will consist of physical facilities, staff, transport, and consulting services. MOA will set up and staff a permanent agribusiness cell for developing policy and regulations, guiding agribusiness operations, and liaising with other ministries, PIU and ADB.

 

           

Component 1              $51.3 million

            Component 2              $ 2.2 million

            Component 3              $ 1.1 million

            Component 4              $ 1.8 million

            Component 5              $ 2.2 million

            Contingencies             $ 0.5 million

            Interest                        $ 0.9 million

 

                        Total                $60.0 million

 

 

            Asian Development Bank       $42.5 million    70.7%     ($36 million is for credit)

            Government of Bangladesh    $ 2.0 million        3.4%

            Sub-borrowers                        $15.3 million    25.5%

            Contracted Service Providers $ 0.2 million       0.4%

                                                Total    $60.0 million  100.0%

 

 

            There are two executing agencies for the Project:

            Finance Division of the Ministry of Finance (MOF) for Component 1, and   

Ministry of Agriculture (MOA) for Component 2 to Component 5.

                       

 

            There are three implementing agencies for the Project:

                        Eastern Bank Ltd. through three participating NGOs for Component 1,

                        BASIC Bank Ltd. through three NGOs for Component 1, and

                        Department of Agricultural Marketing (DAM) for Component 2 to Component 5. DAM shall also be responsible for coordinating with MOF, supervision, monitoring and reporting for Component 1 of the Project.

 

 

A Project Implementation Unit having strength of 22 personnel has been established at DAM. The Project Director will lead the PIU and shall be responsible for day-to-day project implementation including organizing training, organizing capacity building and information dissemination, liaising with BASIC Bank and Eastern Bank Limited (EBL), and monitoring and reporting activities with the support of implementation consultants.

 

 

There are two committees:

 

(i). Project Steering Committee (PSC) headed by the Principal Secretary to the Prime Minister to oversee and guide the Project and resolve policy issues, and

 

(ii) Project Implementation Committee (PIC) headed by Secretary of the Ministry of Agriculture to provide venue to coordinate project activities and resolve project implementation issues.

 

 

The Cell headed by the Additional Secretary, MOA shall be a permanent unit responsible for developing the agribusiness policy and regulations; guiding agribusiness operations; and liaising with other ministries, PIU and ADB.

 

 

            The Project has a provision of 652 person-months of consulting services of various fields, covering 93 person-months of international and 559 person-months of domestic consulting services. Services of consultants will be utilized throughout the implementation period.

 

 

            Disbursement will take place through –

                        Advance to the Government from ADB through Imprest Accounts,

                        Reimbursement after spending Government resources, and

                        Direct payment when advised the Government.

 

 

The Government will re-lend Loan funds to two Participating Banks (EBL and BASIC),

The Participating Banks will in turn on-lend to three NGOs (BRAC, ASA and TMSS), and

 

NGOs will finally deliver the Loan to the sub-borrowers for agribusiness development.

 

 

 

 

 

The Government has to repay the amount spent from the Loan starting from April 2014 and complete in October 2037, i.e. within 32 years with a grace period of 8 years.

 

Repayment period by banks will be 15 (fifteen) years with a grace period of 5 (five) years.

 

Repayment period by NGOs will be 5 (five) years with a grace period of 6 months.

 

 

ADB shall charge 1.0% on the amount disbursed during grace period and 1.5% beyond grace period on the outstanding amount.

 

The Government shall charge the Participating Banks @ 3.5% per annum on the outstanding amount,

 

The Participating Banks shall charge the NGOs @ 7.0% per annum on the outstanding amount, and

 

The NGOs shall charge the sub-borrowers at the prevailing market rate.

 

 

 

            A technical assistance (TA) grant of $600,000 has also been approved by ADB for engaging two consultants, one international for 12 person-months and one domestic for 48 person-months. The primary responsibilities of the consultants will be to help the Ministry of Agriculture and the Department of Agricultural Marketing accomplish the start-up activities on time and establish a project supervisory and monitoring capacity of DAM, and guide and advise the personnel of DAM and PIU in agribusiness promotion, project management and operation. DAM’s personnel will also be exposed to donor assisted projects along with related guidelines and NGO operation to help build up capacity to manage the Project on its own through on-the-job training.