Agrosor-MFCE (Microenterprise Financing and Credit Enhancement)PBK Project

The microenterprise (ME) sector in Bangladesh has been a crucial driver of economic development. Currently, 1.15% of nearly 195 enterprises are microenterprises, contributing approximately 3.53% to private sector employment. Despite its significant role in promoting economic growth, the microenterprise sector faces several financial and non-financial challenges. In the 2023-2024 fiscal year, PKSF has financed 60 million Taka to Pally Bikash Kendra (PBK), underscoring its commitment to supporting this vital sector.

In this context, PKSF has launched the Microenterprise Financing and Credit Enhancement (MFCE) Project, funded by the Asian Development Bank (ADB), to create sustainable employment by providing comprehensive support to microenterprises. Building on the success of the Microenterprise Development Project (MDP), which concluded on June 30, 2023, the MFCE project aims to enhance microenterprises’ access to finance for members in a more sustainable and impactful way.

Project Objective: To create sustainable employment by providing financial support to the microenterprises.

Working Area: The MFCE Project will be implemented across 1 district by 600 members.

Project Duration: The project will span 5 years, from May 16, 2023, to June 30, 2028.

Project Budget: The MFCE Project will be funded with a 60 million Taka loan provided by PKSF.

Project Components:

Credit Line: Under the MFCE Project, BDT 60 million will be disbursed to microenterprise borrowers across 500 members. At least 400 new microenterprise borrowers will receive loans through this project, with a minimum of 80% being women. At least 40% of the loan proceeds will be directed to relatively poverty-stricken areas, and 10% will be allocated to climate-vulnerable regions. The project will prioritize business cluster-based microenterprises under this component.

Project Focal Areas: The MFCE project will focus on the following core areas:

1. Gender Equality and Social Inclusion (GESI): A Gender Action Plan (GAP) will be implemented in this project which will facilitate the enhancement of economic empowerment of women borrowers, foster entrepreneurship skills, and conduct gender sensitization training for PBK and its members. The project will be carried out by the members involved.
2. Environmental and Social Safeguard: The MFCE Project will aim to minimize the environmental and social impacts of microenterprises by following the Environmental and Social Management System (ESMS) Guidelines. An Initial Environmental Examination (IEE) will be conducted for each sub-sector to identify potential environmental impact of the MEs, and site-specific Environmental Management Plans (EMP) will be developed to manage and mitigate the environmental risks. Furthermore, the project will assess impacts on involuntary resettlement and indigenous people in relevant areas to implement appropriate social safeguard measures.

• Climate and Disaster Risk Management: Under the MFCE Project 34 districts have been identified as climate-vulnerable areas of the country and a disaster risk screening will be conducted in those areas. Kishoreganj district is one of them. 10% of the loan proceedings will be disbursed to MEs in these climate-vulnerable areas.

1. Poverty Reduction: The MFCE Project promotes inclusive finance and hence 40 percent of the loan proceeds will be provided to 45 poverty-stricken districts of the country.