Multilateral lenders come to the rescue of tiny enterprises

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Multilateral lenders are joining with the federal government to boost financing for micro entrepreneurs to be able to rejuvenate the thousands of pandemic-hit micro and little enterprises.

Yesterday, the Asian Expansion Lender (ADB) said it could give a $50 million mortgage to greatly help restore the economical activities of area micro businesses.

The advancement comes as the federal government plans to allocate another Tk 3,000 crore to raise the size of the credit guarantee scheme on the small 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 Lender provides the fund.

Clean funds happen to be in the offing of Bangladesh Small and Cottage Industries Corporation and SME Foundation for providing loans to tiny and cottage industries, leading government officials and representatives of development partners said at a meeting last week.

ADB said its most up-to-date loan will level up the ongoing Microenterprise Production Task that it had approved found in 2018 to provide a $50 million line of credit to the Palli Karma Sahayak Base (PKSF), a government production finance and capacity building organisation.

Under the ongoing task, the PKSF, through its 77 spouse organisations, has so far provided loans to 39,580 microenterprises, making 91,430 jobs in rural areas, the Manila-based lender said.

"This additional financing will health supplement the ongoing job by injecting liquidity into the rural economy by giving cheaper funding to microenterprises, supporting them continue their business and retain employees, specifically women entrepreneurs who've been heavily strike by the ongoing pandemic," explained Jyotsana Varma, ADB's principal country expert 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 credit line to the PKSF provides loans to at least 30,000 pandemic-affected microenterprises, 70 % which are women-led.

While speaking on the problem of finance for little and micro entrepreneurs at a meeting organised by the Finance Division the other day, Bangladesh Bank Governor Fazle Kabir said the central lender examined the problem of loans to small company.

He said the number of microfinance institutions (MFIs) is only 750 even while big MFIs aren't interested to finance the small businesses affected by Covid-19.

Besides, rates of interest charged by the large MFIs on loans will be a lot more than 20 per cent.

"Let them do this. We are providing money to little MFIs and we will continue," Kabir explained, adding that the disbursement of tiny loans provides been low however the quantity of beneficiaries are higher than the large receipts of the stimulus deals.

The government has up to now rolled out 21 stimulus packages since March to soak up the economic shocks of the Covid-19 fallout.

Of the packages, six involving Tk 34,458 crore were aimed at occupation creation and revitalisation of the rural economy. But till November, Tk 13,053 crore or 37.88 per cent of the amount was disbursed, regarding to finance ministry officials.

Source: https://www.thedailystar.net

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