IFC and Bangladesh Bank Join Hands to Create an Enabling Environment to Expand Access to Finance for Women Owned SMEs

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August 10, 2017 — IFC, a member of the World Bank Group, and Bangladesh Bank have partnered to work on improving access to finance for women SME entrepreneurs of Bangladesh. The project will create a new market for the financial sector by de-risking lending to women-owned SME segment and encouraging the development of innovative financing models. It will demonstrate the business case for investing in women-owned SMEs that can spur economic growth and job creation.

There are 7.8 million small and medium enterprises in Bangladesh that employ 86 percent of total workforce. However, only 2.8 % of the SMES in Bangladesh are owned by women.  By economically empowering women entrepreneurs, this project will ensure that they can create jobs, spur innovation, and spearhead social change in Bangladesh.

Access to finance is one of the main factors that disproportionately affects women entrepreneurs and limits their ability to sustain and grow their businesses. IFC’s women SME finance market survey report estimates that the annual credit gap to the women owned SME segment is BDT 6,000 crore (or $0.77 billion) annually. The project will help create an enabling environment SME finance where finance gap for women SMEs can be reduced.

At the signing event at the central bank’s headquarters in Dhaka, Mr. S. K. Sur Chowdhury, Deputy Governor, Bangladesh Bank stated “This project is a milestone in the country’s SME sector development. Women entrepreneurs have the capability to transform the Bangladeshi economy. Bangladesh Bank is a pioneer among developing nations’ central banks in pursuing inclusive growth through supportive financial sector policies.”

Under the project, IFC will help Bangladesh Bank design a targeted credit guarantee scheme for women SME entrepreneurs. The project will review and update the existing SME policy of Bangladesh Bank to allow an improved flow of financing to women-owned enterprises and the SME sector. A comprehensive capacity development program will ensure that the central bank’s SME department staff can formulate, monitor and evaluate supportive policies for the SME segment.

Niraj Verma, Practice Manager, Finance and Markets Global Practice of the World Bank Group said, “this initiative deepens our partnership with Bangladesh Bank and we have a shared gender finance agenda. Interventions under this project will create an enabling environment to scale up the financial sector’s participation in women-owned SME sector.”

Wendy Werner, IFC’s Country Manager for Bangladesh, Bhutan and Nepal, signed the agreement and remarked “Increasing the income of women entrepreneurs can improve broad development outcomes as they reinvest their earnings in their families’ education and welfare. IFC and the World Bank Group share Bangladesh Bank’s vision of a society where the financial system is inclusive and meets the needs of all the country’s citizens.”

IFC and the Finance and Markets Global Practice of the World Bank Group has earlier supported Bangladesh Bank’s efforts to develop a range of services such as long-term finance, infrastructure finance, sustainability and risk management, financial integrity and digital financial services. The new partnership program is funded by Global Affairs Canada.

About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In FY16, we delivered a record $19 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. For more information, visit www.ifc.org