Lower-cost funding for food processors, agribusinesses

The government will support entrepreneurs – engaged in agribusiness and food processing – with low-interest loans and technical assistance to ensure food security.

To this end, the Bangladesh Infrastructure Finance Fund Limited (BIFFL) will implement the "Food Value Chain Improvement Project", financed by the Japan International Cooperation Agency (Jica).

Jica will provide ¥11.218 billion – equivalent to Tk882 crore – for the project under the 41st Official Development Assistance (ODA) package of the Japan government for Bangladesh.

Yuho Hayakawa, chief representative in Jica's Dhaka office, made the disclosure on Sunday during a virtual meeting with Industries Minister Nurul Majid Mahmud Humayun.

Yuho Hayakawa said the purchasing power of both rural and urban people in Bangladesh is increasing, so is the demand for and supply of safe food. The project for the development of agro-based industries will create new jobs, increase exports and diversify products even at this time of the Covid-19 pandemic.

"The project would also help Bangladesh achieve the Sustainable Development Goals – 1, 2 and 8," he said, seeking assistance from the industries minister for the project's implementation.

Terming Jica as one of the major development partners of Bangladesh, Industries Minister Nurul Majid said Jica has been making a significant contribution to infrastructure development, technical training, the advancement of food and food-related industries in Bangladesh.

Assuring all necessary support to implement the project, Nurul Majid said the project will help transfer technologies regarding the food sector's development and establishment of global standard factories in the sector.

The minister also sought support from Jica to ensure product diversity in the country's state-owned sugar mills.

Officials at the Economic Relations Division (ERD) of the finance ministry told The Business Standard that Jica has already signed a loan agreement for the project.

The government would pay 0.65 percent in annual interest for the loan and 0.01 percent in service charge. The maturity period of the loan is 30 years, while the first 10 years would be considered as a grace period.

The project is scheduled to be concluded by September 2026.

Earlier, Jica in a background study of the project, said capital demand for agribusiness in Bangladesh is to the tune of $1.03 billion, and the BIFFL has taken a $113 million project.

About 60 percent of agribusiness and food processing companies in the country have been facing difficulties in meeting their capital needs, assessed the study.

The survey attributed a lack of well-developed business plans, high-interest rates and complicated loan application procedures behind less accessibility to finance for these companies.

Borrowers will get financing at a 5 percent interest rate from the project.