Stimulus For Small Businesses, Farmers: Public agencies fail to disburse whole fund

Government and semi-government agencies failed to disburse the entire Tk 570 crore earmarked for the pandemic-hit small traders, entrepreneurs and farmers for the last fiscal year under a stimulus package.

The agencies that haven't been able to start the disbursement or have done it partially blamed the worsening pandemic situation, lack of bank accounts among the potential recipients, and the difficulty in selecting the real recipients for the slow pace of execution.

In January, the government allocated Tk 1,500 crore under the stimulus package, and eight government and semi-government agencies received Tk 570 crore in March for the last fiscal year.

The rest will be disbursed in the current fiscal year.

The agencies are the SME Foundation, the Palli Daridro Bimochon Foundation (PDBF), Joyeeta Foundation, the Bangladesh Small and Cottage Industries Corporation (BSCIC), the Small Farmer Development Foundation (SFDF), the Bangladesh Rural Development Board (BRDB), the Social Development Foundation (SDF), and the Bangladesh NGO Foundation.

The agencies had to formulate a policy to lend to the cottage, micro and small enterprises in rural areas with no access to formal banking channels.

Only two agencies – SME Foundation and the BSCIC – pulled off the disbursement target set for the fiscal year of 2020-21.

The dismal disbursement rate has kept pace with the slower-than-expected implementation of the broader stimulus packages rolled out for the CMSMEs after the pandemic hit Bangladesh.

Of the eight agencies, the PDBF, which received Tk 100 crore for FY21, hasn't started the disbursement yet.

"As many of the recipients have no bank accounts and the pandemic situation is not good, it is getting delayed," said Shahidul Haque Khan, acting director of the foundation.

Finding out the right entrepreneurs is another challenge, he said.  "Hopefully, we can start giving out loans before Eid."

Joyeeta Foundation received Tk 10 crore for FY21. It has just initiated the process in association with Brac Bank.

"We are giving loans in Dhaka and outside of Dhaka," said Rafiqa Sultana, an assistant manager of the foundation, which will get Tk 40 crore in FY22.

The Small Farmer Development Foundation (SFDF) managed to lend half of Tk 50 crore allocated for FY21.

"We distributed about Tk 25 crore by June. But due to the deteriorating coronavirus situation and complexity in selecting the actual recipients, we couldn't lend the full amount," said Abul Kalam Azad, a deputy general manager of the SFDF.

The SFDF is giving out funds to the marginal farmers in the rural areas. It is running the loan programme in 173 upazilas under 36 districts. The farmers with five acres of land will qualify for the loan.

The BRDB received the highest Tk 150 crore, among the eight entities, for the disbursement in FY21. It managed to lend 40 per cent of the amount.

"We finalised the list, and all the amount was sent to the upazila level. But our staff could not move freely due to the current pandemic as law enforcement agencies don't allow them to do so," said Supriya Kumar Kundu, director-general of the BRDB.

The agency has written to the authorities, including the district administration, seeking permission so that its employees don't face any restriction to disburse the full amount before Eid.

The BRDB will get Tk 150 crore in FY22.

The SME Foundation disbursed the full Tk 115 crore through agreements with 12 banks and non-bank financial institutions in FY21 among 1,044 entrepreneurs. It will get Tk 200 crore in FY22.

The loans are being provided to entrepreneurs across the country. The foundation has targeted to allocate 25-30 per cent of the fund among women entrepreneurs.

The BSCIC attained the disbursement goal of Tk 50 crore for FY21 by June 20, with 490 women and 928 male entrepreneurs receiving the loans. It will get Tk 50 crore in the current fiscal year.

The Social Development Foundation (SDF) has started the disbursement one and a half months ago. It could not distribute the entire amount of Tk 100 crore allocated for FY21.

"We need three more months to disburse the fund," said AZM Sakhawat Hossain, managing director of the foundation.

"Many of our staff have been infected with Covid-19, and the strict lockdown has prompted the closure of offices in many areas."

The SDF will get Tk 200 crore in FY22.

The disbursement status of the Bangladesh NGO Foundation, which was given Tk 10 crore for FY21, could not be known. 

The eight entities have received the fund as grants, meaning they will not have to return the money to the finance ministry. They will form a revolving fund to keep the principal amount and interest.

Borrowers can avail of the loan at 4 per cent interest. The lenders will charge this interest as transaction costs.

The loan has a repayment period of two years, including a six-month grace period.