The financing will come from two different programs. A total of $357 million will come from an Investment Promotion and Financing Facility Project II from the World Bank, approved in April, which aims to increase long-term financing for infrastructure and to build capacity of the local financial institutions for promoting private sector-led infrastructure financing in container terminals, land ports, roads and bridges, as well as power and energy, information and communication technology, waste management, water treatment and energy saving equipment.
The remainder of the funding will come from World Bank’s $100 million Export Competitiveness for Jobs Project, which promises to help create 90,000 jobs by focusing beyond the ready-made garments sector. It will help firms access international markets, overcome technology, infrastructure and skills shortfalls, plus enable those in the garment industry in Bangladesh to comply with international quality standards.
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The bank approved the Export Competitiveness for Jobs Project in June to help the country diversify export and create better jobs in targeted sectors.
“Bangladesh is the world’s second largest garments exporter after China and it can boost growth by diversifying its exports, and repeat the garment sector success story in other sectors,” Qimiao Fan, World Bank country director for Bangladesh, Bhutan and Nepal, said when the deal was approved. “The project will help the economy to integrate further into the world trading system, and provide better jobs to Bangladeshi youth entering the labor market in the next decade, with a particular focus in improving female labor participation.”
The project will help firms to access international markets and enhance their ability to comply with international standards through awareness building and matching grants. The project will also support marketing and branding efforts to strengthen linkages to existing and new markets. It will also address the shortage of skills development, especially in industrial training for women, as well as in infrastructure and technology.
Although the garment sector constitutes 82 percent of exports, employment growth in the sector has stalled.
The credit from the World Bank’s International Development Association, which provides grants or zero-interest loans, has a 38-year term, including a six-year grace period, and a 0.75% service charge.
The World Bank has committed nearly $26 billion in grants and interest-free credits to Bangladesh overall, and in recent years, Bangladesh has been the largest recipient of the World Bank’s interest-free credits.
Financing for both projects was formally delivered this week in the capital of Dhaka.