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Bangladesh
>> Regional Overview >> Bangladesh Overview ACTIVITY DATA SHEET
PROGRAM: Bangladesh
TITLE AND NUMBER: Growth of Agribusiness and Small Business, 388-005
STATUS: Continuing
PLANNED FY 2001 OBLIGATION AND FUNDING SOURCE: $ 5,700,000 DA
PROPOSED FY 2002 OBLIGATION AND FUNDING SOURCE: $ 5,600,000 DA
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: FY 2006Summary: The transformation of agriculture from monocrop (rice), subsistence farms to diversified, market-oriented agribusinesses and the overall expansion of small business are critical for creating job opportunities and eliminating poverty in Bangladesh. This objective directly addresses this needed transformation.
Three intermediate results support this objective: 1) more market-oriented policies, laws, and regulations; 2) stronger business support institutions; and 3) improved performance of selected enterprises in targeted sectors. USAID provides information, know-how, and loan guaranties to private enterprises and private financial institutions in order to expand both agribusiness and small business and supports policy change in favor of a more open, market-driven economy. This objective utilizes agriculture, economic growth, and microenterprise funding from the DA account.
USAID technical assistance to policy makers, private enterprises and private financial institutions will help transform agriculture from rice and subsistence farms to diversified, market-oriented businesses. Agriculture still employs over 60% of the labor force, but it constitutes less than 25% of the gross domestic product. The expansion of agribusiness, with its market-driven, private-sector approach is key to raising productivity and incomes on the farm as well as creating off-farm opportunities in input supply and processing. Small businesses, other than agribusiness, are also critical for creating job opportunities for displaced farm workers as well as new entrants to the labor market.
Key Results: All three indicators under this objective-sales, exports and jobs-exhibited positive growth, although slightly lower than expected due to the gap between the first and second phases of the agribusiness program. The 6% currency devaluation took place too late in the year to have any impact on FY 2000 results but should have a positive impact on exports in FY 2001. It should also be noted that over 33% of the estimated growth in jobs, i.e., new jobs, benefited females. In addition, a significant portion of the increase in incomes generated under USAID-funded programs accrued to female workers.
Performance and Prospects: As a follow-up to past success in removing interest rate ceilings on bank lending to small- and medium-size enterprises, in FY 2001 USAID initiated a collaborative effort with other donors to reform existing laws related to secured financing. Such reforms will lead to an increased flow of capital to small businesses by reducing the risk of lending to borrowers. Prospects for passage of a new secured finance law are good in light of the work that has been completed thus far, including the completion of work on draft legislation. In FY 2000, work also began in e-commerce, i.e., the use of Internet technologies for the marketing, payment, and distribution of goods and services, which is becoming increasingly vital in 21st century commerce. This new initiative stems in part from the announcement (during the Prime Minister's visit to the United States. in September 2000) of Bangladesh as an "Internet for Economic Development" partner. Efforts continue in FY 2001 to push the needed policy and regulatory reform to open up the sector, but prospects for further emphasis beyond the current fiscal year will depend on progress achieved in this area.
In the area of business support institutions, USAID is focusing on three key sets of institutions: banks, trade associations, and agricultural research institutes. During FY 2000, USAID successfully negotiated two new loan portfolio guaranty programs in support of small business-including agribusiness-with local private banks. Prospects in this area are excellent; not only have the two participating banks started to develop new business using the guaranties, but they are also actively collaborating with other USAID-funded programs in the search for new private sector clients. In FY 2001, a third bank will be included, and lending under the program will be expanded.
Under the agribusiness program, a new body of agribusiness trade associations has been formed to pursue a better policy and institutional environment for agribusiness. Prospects for further strengthening of such trade groups are good in light of the innovative approaches outlined for the new agribusiness activity, which was launched in FY 2001. With further funding in FY 2002, the Agri-based Industries and Technology Development Program will realize further development of agribusiness trade and professional groups. Finally, using food aid-generated local currency, USAID is supporting potentially far-reaching reforms of the Wheat and Horticulture Research Centers over the period 2001-2003. These recently initiated reform activities will give operational autonomy to the former and will strengthen their linkages to the private sector.
During FY 2000, USAID continued to provide information and technical expertise to individual entrepreneurs to help lower the risks and costs of expansion. Approximately 240,000 enterprises, including small farms, fish ponds, nurseries, and home gardens, benefited from such programs. Of these, some 196,000 were owned and/or operated by women. Other activities included the sponsorship of participants in at least seven international trade fairs, which resulted in export orders of approximately $1 million. Several of the successful exporters subcontracted with local micro-enterprise suppliers to fulfill their orders, resulting in the creation of several thousand new jobs. The agribusiness activity worked with almost 28,000 market leaders in horticulture, seed, shrimp, and poultry to introduce new technologies or products, such as fresh water shrimp (which in addition to being in high commercial demand, is also more environment-friendly than brackish water production) and higher yielding, true potato seed. Under the low cost pond aquaculture program, data show that the actual yield per pond was almost double what had been projected, leading to greatly increased interest in the program on the part of Bangladeshi farmers and pond owners. During FY 2000 the village and household vegetable gardening activity worked with 90,000 households and led directly to the creation of about 2,000 new village nurseries, resulting in several million dollars' worth of new vegetable production. Prospects for continued success in expanding jobs and incomes by directly improving the performance of key enterprises are excellent given the mix of new and well-established ongoing activities, and the enthusiasm of Bangladeshi entrepreneurs to expand and diversify their products and markets.
In FY 2001, $5.7 million in DA funding will be used for this objective. Of this amount, $4.2 million will fund rural enterprise development and $1.5 million will go for small and medium business development.
Possible Adjustments to Plans: The run-up and immediate aftermath of the next parliamentary elections, which will take place during the current fiscal year, may have an appreciable impact on planned programs due to possible pre-election violence, general strikes, or temporary government paralysis. However, it may be possible to subsequently move ahead with some significant new reform measures. USAID will proceed with the design of a new program related to small business development that will succeed the Job Opportunity and Business Support activity and will begin in FY 2002.
Other Donor Programs: USAID actively coordinates its programs with other donors through subcommittees of the Local Consultative Group. In agriculture, the World Bank chaired the donor coordination group through FY 2000. Principal donors in this sector include the Asian Development Bank (ADB), Denmark, the Food and Agriculture Organization; the International Fund for Agricultural Development, the Netherlands, Germany, the United Kingdom, and the World Bank.
USAID chairs the donor coordination group which deals with issues related to small enterprise development. Active donors include Denmark, International Finance Corporation, the South Asian Program for Enterprise Development, Germany, and Switzerland.
Principal Contractors, Grantees, or Agencies: Louis Berger Group, Inc., for agribusiness promotion; University of Maryland Center for Institutional Reform and the Informal Sector, for enterprise promotion and policy reform; International Center for Living Aquatic Resources Management, for low-cost pond aquaculture; and Helen Keller International for home gardening and nutrition.
FY 2002 Performance Table
Bangladesh: 388-005
Performance Measures:
Indicator FY97 (Actual) FY98 (Actual) FY99 (Actual) FY00 (Actual) FY00 (Plan) FY01 (Plan) FY02 (Plan) Indicator 1: Growth in number of jobs in assisted enterprises - male NA NA 20,691 21900 22,000 23,000 26,000 Indicator 2: Growth in number of jobs in assisted enterprises - total NA NA 30,353 29232 32,000 34,000 37000 Indicator 3: Growth in number of jobs in assisted enterprises - female NA NA 9,312 7332 10,000 11,000 11,000 Indicator 4: Growth in exports of assisted enterprises NA NA 39 35 42 45 48 Indicator 5: Growth in sales of assisted enterprises NA NA 78 72 86 91 96 Indicator Information:
Indicator Level (S) or (IR) Unit of Measure Source Indicator Description Indicator 1: IR Number Contractors and recipients The measurement of new jobs is a difficult undertaking, especially in a developing country, where many persons have multiple occupations and work on a part-time or seasonal basis. Nevertheless, the concept of new jobs as a measure of growth is easily understood and widely used, and data on jobs are more readily available than data on wages. Indicator 2: IR Number Contractors and recipients The measurement of new jobs is a difficult undertaking, especially in a developing country, where many persons have multiple occupations and work on a part-time or seasonal basis. Nevertheless, the concept of new jobs as a measure of growth is easily understood and widely used, and data on jobs are more readily available than data on wages. Indicator 3: IR Number Contractors and recipients The measurement of new jobs is a difficult undertaking, especially in a developing country, where many persons have multiple occupations and work on a part-time or seasonal basis. Nevertheless, the concept of new jobs as a measure of growth is easily understood and widely used, and data on jobs are more readily available than data on wages. Indicator 4: IR Millions of US$ Contractors and recipients Growth in exports is a subset of the first SO 5 indicator, Growth in sales. It is a good indicator of the extent to which assisted enterprises (i.e. enterprises receiving direct USAID-funded assistance) are successful in penetrating what should be more dynamic, i.e. higher growth, markets. Indicator 5: IR Millions of US$ Contractors and recipients Growth in sales is a simple and readily available indicator of business growth, and is also a good proxy for measuring income growth. Sales growth is equal to the increase in all types of income (or value added) generated by assisted enterprises, including wages, rents, interest income, and profits, plus the increase in purchased material inputs required to generate that additional income. When such material inputs are purchased locally, the indicator also measures the increases in income in supplier companies, which are indirectly benefited by USAID assistance. Of course, to the extent that material inputs are not purchased locally, growth in sales overestimates the total increase in incomes generated directly and indirectly by by USAID assistance. U.S. Financing
(In thousands of dollars)
Obligations Expenditures Unliquidated Through September 30, 1999 * 4,558 DA 0 DA 4,558 DA 1,000 CSD 0 CSD 1,000 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Fiscal Year 2000 6,801 DA 4,050 DA 0 CSD 739 CSD 0 ESF 0 ESF 0 SEED 0 SEED 0 FSA 0 FSA 0 DFA 0 DFA Through September 30, 2000 11,359 DA 4,050 DA 7,309 DA 1,000 CSD 739 CSD 261 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Prior Year Unobligated Funds 0 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Planned Fiscal Year 2001 NOA 5,700 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Total Planned Fiscal Year 2001 5,700 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Future Obligations Est. Total Cost Proposed Fiscal Year 2002 NOA 5,600 DA 22,029 DA 44,688 DA 0 CSD 0 CSD 1,000 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA *9/30/99 unliquidated obligation comes from continuing activities folded under this new SO from a completed SO 388-002 and should not be treated as part of this SO's est. total cost.
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Last Updated on: May 29, 2002 |
