Bangladesh's small firms to benefit from loans worth $200 mln

Manila-based Asian Development Bank (ADB) said it will provide $200 million in loans to small and medium-sized enterprises (SME) in rural Bangladesh to help them expand by improving access to credit, particularly among businesses set up by women.

In Bangladesh, SMEs account for about quarter of the country's output, but their growth, especially in rural areas, is constrained by access to finance and electricity, and poor transportation.

"Rural firms and firms run by women struggle to get loans from banks, meaning both they and the Bangladesh economy lose out," said Peter Marro, Principal Financial Sector Specialist, in ADB's South Asia Regional Department.

"We want to help cottage industries and SMEs to expand and flourish."

The 7.2 million SMEs in Bangladesh account for 90 percent of all companies and employ up to 80 percent of the non-agricultural workforce in Bangladesh.

Those run by women, most engaged in subsistence trade and retail, are typically more starved of SME finance than those run by men, the ADB said, as women tend to be less educated.

Medium- to long-term loans will be targeted at small firms outside of the metropolitan areas of Dhaka and Chittagong, with at least 15 percent allocated for women entrepreneurs, ADB said on Thursday in a statement.