Germany offers Bangladesh €232.5m more in loans, grants

Bangladesh is likely to receive €232.5 million more in loans and grants from Germany mainly for promotion of renewable energies and to fight against climate change impacts.

Under the Bangladesh-German Development Cooperation Negotiations 2024, Germany has offered €232.5 million (equivalent to over Tk2,700 crore) in assistance, according to officials in the Economic Relations Division (ERD).

The previous round of "Bangladesh-German Development Cooperation Negotiations 2022" took place on December 8, 2022. During the meeting, €191 million in assistance for Bangladesh were finalised. The two countries signed an agreement related to the matter on 3 September 2023.

As of the May 2024 negotiations, the total volume of bilateral technical and financial cooperation since the inception of cooperation in 1972 has reached €3.5 billion, said the ERD officials.

The final decision regarding fresh €232.5 million in assistance will be made at a high-level meeting to be held in Germany's Berlin on 13-14 May.

According to the ERD officials, Germany is prioritising renewable energy, women's and girls' rights, climate change adaptation, and labour protection in the new round of negotiations. Of the total €232.5 million in assistance, €170 million will be provided in the form of loans and €62.5 million in the form of grants, they said.

Promotion of renewable energies

Germany will provide €50 million in loans for the development of the renewable energy sector, said the ERD officials. In addition, the country has proposed to give €5 million as a grant, they said.

According to the draft paper of the Bangladesh-German Negotiations 2024, the new commitment intends to increase the nascent renewable energy sector. As a priority, the commitment plans to support utility scale solar parks, preferably in close coordination or through co-financing with other donor agencies. Alternatively, a rooftop solar programme with a financial institution or the installation of a battery storage system in the grid shall be explored during further preparation.

Climate change

Germany has offered €70 million in loan to Climate Change Adapted Urban Development Programme (Phase-3). Apart from this, the country will also provide a grant of €2.5 million in this sector, according to the ERD officials.

Germany will provide a €50 million in loan for the third phase of the Urban Climate Resilient Infrastructure Project implemented by the Local Government Engineering Department, they said.

The project's objective is to increase climate resilience by financing climate change adapted infrastructure in several small and medium-sized municipalities, said the officials.

The Phase III focuses on the special needs of women and climate-induced domestic migrants and on innovative projects in the field of climate adaptation, they said. For this, a reduced interest loan of up to €50 million will be provided, the officials said.

Additionally, a grant of €2.5 million will be provided to strengthen LGED in related capacity-building activities, said the ERD officials.

The ERD officials said the German government intends to make available the grant funds of up to €18 million and €0.507 million for accompanying to strengthen the resilience of women against adverse impacts of climate change in poor urban settlements.

Other grants

Bangladesh will get a grant of €10 million for the sustainable transformation in the construction sector project, said the ERD officials.

The project aims to support decision-makers and companies in transitioning to environmentally friendly and socially responsible production in the construction materials sector and promoting innovations in construction, they said. It focuses on capacity building, access to finance for green and inclusive business models, and improved labour conditions, they said.

The ERD officials said Germany will provide €13 million in a grant for a circular economy and sustainable waste management project.

The aim is to promote approaches to circular economy and sustainable utilisation of waste, particularly of municipal and industrial (textile and electronic) waste, they said.

Apart from this, €7 million in a grant in combating domestic violence against women and children project, €6 million in a grant in protection and sustainable use of tropical broad-leaved forests project and €5 million in a grant in promotion of female leadership integration in technical and vocational education and training and higher education projects will be available, said the officials.