Boost to Bangladesh’s small business sector

Boost to Bangladesh’s small business sector
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February 2015

An innovative new programme aimed at promoting financial inclusion and supporting Bangladesh’s burgeoning small business sector, launched in Dhaka at the beginning of the month.

The Business Finance for the Poor in Bangladesh (BFP-B) Programme is a 22.5 million Euro, five-year DFID-funded project designed to improve access to financial services for some of the most under-served enterprises and individuals in the country. Despite Bangladesh’s global influence on microfinance, there is still a way to go in ensuring widespread financial inclusion: according to World Bank data, only 17% those over 15 years saved at a financial institution during 2011 and only 23% took out loans during the same year.

The programme, currently being rolled-out by the Bangladesh Bank, aims to create over 30,000 additional jobs and provide more than 95 million euros in loan funding for small businesses. Incorporating innovative supply- and demand-side initiatives including a challenge fund, a credit guarantee fund and supporting regulatory frameworks, BFP-B represents a holistic approach to financial inclusion at a national level.

OPM led the design of the BFB-P, working alongside partners, Nathan Associates and MicroSave to identify existing constraints to financial inclusion and develop initiatives to address these. Speaking at the launch event last week, the Governor of Bangladesh Bank, Dr. Atiur Rahman, highlighted how the programme’s focus on previously under-served sectors could support internal demand through improved incomes and livelihoods, helping to cushion the economy against the effects of external shocks and stresses.

Sukhwinder Arora, senior consultant at OPM who led the project design team said: ‘This is a really exciting initiative. The small business sector has the potential to act as an engine for growth, spearheading inclusive economic development across the country. However, realising the potential of the sector depends on entrepreneurs being able to get working capital and investment capital – as well as other financial services – based on their business performance and potential rather than simply based on what they can offer as collateral or whom they know. This programme seeks to help businesses to plan and invest to fully realise their potential and deepen economic linkages to some of the most neglected sectors of the market.’

The OPM team is working with partners, Nathan Associates, to provide strategic guidance and support as the programme is rolled-out over the next five years. The Dhaka-based programme team is working closely with key stakeholders including small businesses, business associations, commercial banks, microfinance institutions and regulatory bodies and DFID to implement the programme.

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Boost to Bangladesh’s small business sector

February 2015

An innovative new programme aimed at promoting financial inclusion and supporting Bangladesh’s burgeoning small business sector, launched in Dhaka at the beginning of the month.

The Business Finance for the Poor in Bangladesh (BFP-B) Programme is a 22.5 million Euro, five-year DFID-funded project designed to improve access to financial services for some of the most under-served enterprises and individuals in the country. Despite Bangladesh’s global influence on microfinance, there is still a way to go in ensuring widespread financial inclusion: according to World Bank data, only 17% those over 15 years saved at a financial institution during 2011 and only 23% took out loans during the same year.

The programme, currently being rolled-out by the Bangladesh Bank, aims to create over 30,000 additional jobs and provide more than 95 million euros in loan funding for small businesses. Incorporating innovative supply- and demand-side initiatives including a challenge fund, a credit guarantee fund and supporting regulatory frameworks, BFP-B represents a holistic approach to financial inclusion at a national level.

OPM led the design of the BFB-P, working alongside partners, Nathan Associates and MicroSave to identify existing constraints to financial inclusion and develop initiatives to address these. Speaking at the launch event last week, the Governor of Bangladesh Bank, Dr. Atiur Rahman, highlighted how the programme’s focus on previously under-served sectors could support internal demand through improved incomes and livelihoods, helping to cushion the economy against the effects of external shocks and stresses.

Sukhwinder Arora, senior consultant at OPM who led the project design team said: ‘This is a really exciting initiative. The small business sector has the potential to act as an engine for growth, spearheading inclusive economic development across the country. However, realising the potential of the sector depends on entrepreneurs being able to get working capital and investment capital – as well as other financial services – based on their business performance and potential rather than simply based on what they can offer as collateral or whom they know. This programme seeks to help businesses to plan and invest to fully realise their potential and deepen economic linkages to some of the most neglected sectors of the market.’

The OPM team is working with partners, Nathan Associates, to provide strategic guidance and support as the programme is rolled-out over the next five years. The Dhaka-based programme team is working closely with key stakeholders including small businesses, business associations, commercial banks, microfinance institutions and regulatory bodies and DFID to implement the programme.