WASHINGTON, March 1, 2011 — In order to sustain high economic growth and generate opportunities for employment, the World Bank today approved a US$120 million concessional IDA credit to Bangladesh for the Bangladesh Private Sector Development Support Project. The project will facilitate investment in growth centers in the emerging manufacturing and services sectors of the economy with the aim of generating employment.
Bangladesh has achieved an average GDP growth rate of approximately 6.1% between 2005-2010 despite the global financial crisis and global food price shocks. Going forward, the Government of Bangladesh envisages a growth rate of 8% a year and a reduction of poverty to 15% of the population by 2021. The project seeks to address key constraints to growth; including access to serviced land, cumbersome procedures, access to skilled labor, and access to finance.
“To achieve Bangladesh’s development goals requires accelerated, sustainable, and inclusive growth,” said Bangladesh Country Director Ellen Goldstein, “creating productive employment for the estimated 2 million new labor entrants every year will largely depend on creating an environment conducive to private sector investment.”
The project will increase the capacity of government institutions in the development of economic zones and provide financing for necessary infrastructure in economic zones starting with the Kaliakoir Hi-Tech Park and will invest in up to two more economic zones. In addition, it will create opportunities for cooperation and knowledge sharing between enterprises within the economic zones and their suppliers by providing training and supporting linkages between firms.
The project would also benefit from approximately US$17 million of funding from the UK Department for International Development (DFID), mainly for technical assistance and capacity building for the Government of Bangladesh zone development partners.
“The new locations for economic zones and enhanced policy framework will catalyze private investment in Bangladesh by increasing capacity and reducing constraints to private sector development.” Task Leader Michael Wong said. “This is needed to fuel the economic growth necessary to achieve the Government’s job creation and poverty reduction targets.”
The credit from the International Development Association (IDA), the World Bank’s concessional lending arm, has 40-year maturity, including a 10-year grace period; it carries a service charge of 0.75 percent.
