Day: November 15, 2022

MANILA, PHILIPPINES (15 November 2022) — The Asian Development Bank (ADB) has approved a $200 million loan to strengthen microfinance in Bangladesh, supporting microenterprises, particularly those owned by women and those located in regions with high climate risks.

The Microenterprise Financing and Credit Enhancement Project will increase the liquidity of microfinance institutions (MFIs), which are key lenders to microenterprises, by channeling funds through Palli Karma Sahayak Foundation (PKSF). PKSF is a state-owned microfinance and development organization that onlends to partner MFIs.

“Poverty in Bangladesh has declined significantly in the last decade, but employment opportunities remain limited in rural areas. Microfinance is one way to enable microenterprises to grow and generate rural employment,” said ADB Senior Financial Sector Specialist for South Asia Manohari Gunawardhena. “This initiative builds on previous ADB support to PKSF to further boost available funding for MFIs as well as encourage commercial bank funding by reducing perceived credit risks.”

Due to small-sized operations, lack of collateral, and weak operational capacity and information systems, MFIs find it difficult to secure commercial bank financing to onlend to microenterprises.

Eligible MFIs to receive financing through PKSF will dedicate at least 10% of their lending portfolio to microenterprises coming from regions facing adverse climate risks, such as flood, cyclones, and drought. The project also targets that at least 80% of microenterprise borrowers be owned or led by women. The project will develop a business plan update and digitalization road map for PKSF as well as a diagnostic review of its partner MFIs’ operational costs to enhance their viabilities.

To encourage commercial bank funding, the project will help pilot a credit guarantee fund at PKSF that will cover the credit risk for small and medium-sized MFIs. This complements ADB’s ongoing Microfinance Program under its private sector operations, which targets larger MFIs.

A technical assistance (TA) amounting to $1 million will help develop the credit guarantee fund as well as partner MFIs’ capacity to enhance women’s entrepreneurship skills. The TA will help promote environmentally responsible microenterprise financing through advisory services for those affected by climate risks.

This new project builds on the success of the $50 million Microenterprise Development Project that was approved in 2018 and received additional $50 million financing in 2020 to support microenterprises affected by the COVID-19 pandemic. More than 90% of the supplementary funding has been disbursed as subloans to 94 MFIs as of June 2021.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

Source: Asian Development Bank

MANILA, PHILIPPINES (15 November 2022) — The Asian Development Bank (ADB) has approved a $500 million loan to further promote financial inclusion in Indonesia through reforms that will enhance access to financial services for vulnerable groups, most notably micro, small, and medium-sized enterprises (MSMEs); women; youth; and those living in rural areas.

The second subprogram of the Promoting Innovative Financial Inclusion Program supports and complements the government’s efforts to promote financial inclusion under Indonesia Vision 2045. Reforms promoted under the subprogram are anchored on digital infrastructure, financial technology, and private sector collaboration, along with an enhanced regulatory framework to supervise market conduct and consumer protection. Efforts to build up financial and digital financial literacy will also be intensified to promote responsible financial inclusion.

“The reforms undertaken through the subprogram will help boost living standards of low-income populations, encourage the development of MSMEs, bring in more employment opportunities, and address poverty and social inequality,” said ADB Financial Sector Specialist for Southeast Asia Poornima Jayawardana. “The country’s efforts to achieve climate and disaster resilience and post-COVID-19 economic recovery will also be supported through this subprogram.”

KfW, the German state-owned development bank, will cofinance the subprogram with a loan equivalent of €300 million ($301.3 million).

Indonesia has the fourth-largest unbanked population in the world. Close to half of its adult population does not have a formal financial account, which is considered the basic measure of financial inclusion. Indonesia faces a lack of national and regional financial inclusion data and supporting infrastructure; limited access to finance for MSMEs and other underserved groups; and inadequate financial supervision, consumer protection, and financial literacy. The second subprogram reforms support the Indonesian government’s continued focus on addressing these multi-faceted challenges to financial inclusion.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

Source: Asian Development Bank

PHNOM PENH, CAMBODIA— A partnership between the Asian Development Bank (ADB) and Electricite du Cambodge (EDC), Cambodia’s national power utility, to develop a 100-megawatt (MW) National Solar Park reached a milestone with the park’s first 60 MW solar photovoltaic (PV) power generation plant connecting to the national grid. ADB President Masatsugu Asakawa marked the occasion with a visit to the solar park on 11 November, during which he initiated the start of power delivery.

“Solar generation will need to be a key part of Cambodia’s efforts to expand access to affordable power while also transitioning to cleaner energy,” said Mr. Asakawa. “ADB is pleased to have supported the establishment of the National Solar Park, which is a landmark project not only for Cambodia but for all of Southeast Asia.”

The National Solar Park Project has demonstrated the potential to develop large-scale solar PV in a cost-effective manner in Cambodia by mobilizing both public and private resources. Under the project, an international competitive tender was organized to bid out power generation units to the private sector in two phases of 60 MW and 40 MW.

ADB provided end-to-end support for the project. This included delivering transmission interconnection infrastructure, roads, and drainage systems; transaction advisory support and advice to EDC on the private investment component of the project, including the selection of a private sector sponsor; and structuring and mobilization of private sector financing for the construction of the 60 MW power generation plant.

Phase I of the tender, for the first 60 MW, was organized in 2019 and awarded to the firm Prime Road Alternative. The process resulted in a record-low price for utility-scale, grid-connected solar PV in Southeast Asia, at $0.039 per kilowatt-hours (kWh). The remaining 40 MW was tendered in 2020 and awarded to Trina Solar Co. Ltd. This led to another record low procurement price for the region at $0.026 per kWh.

“ADB was one of the early players in helping Cambodia increase its household access to grid electricity from 17% in 2008 to almost 90% in 2021, while also helping to reduce electricity costs nationwide,” said Minister attached to the Prime Minister and Managing Director of EDC Keo Rottanak. “ADB was the nation’s first development partner to fund an earlier 10 MW grid-scale solar farm and with the new National Solar Park today, ADB is with Cambodia once again in scaling up the nation’s solar contribution to more than 10% of the total generation mix in capacity terms.”

With ADB’s continued support, including a transaction advisory services mandate with EDC to help develop 2 GW of solar power, Cambodia is set to create the necessary conditions for a cleaner and more sustainable energy transition. Under the reference scenario in Cambodia’s recently approved Power Development Masterplan (2021­–2040), which was developed with technical assistance from ADB, the share of solar PV in the country is expected to reach 1,000 MW by 2030 and exceed 3,000 MW by 2040.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

Source: Asian Development Bank