1. Background
Since
its inception in 1990 as a company not for profit under the
Company’s Act 1913 as amended, PKSF has been significantly
contributing to poverty alleviation by providing microcredit
to the poor through its Partner Organizations (POs). As of
June 2000 PKSF disbursed a total amount of Tk. 7937 million
to 2.13 million poor borrowers through 177 POs, which include
small and big NGOs including BRAC, ASA and Proshika and Ansar
VDP Bank. Ninety percent of PKSF beneficiaries are female.
PKSF has been able to maintain a loan recovery rate above
98 percent. The microcredit program of PKSF has been found
to have improved the quality of life of poor people; helped
diversification and strengthening of their survival strategies;
enhanced their security giving them access to assets and rights
and augmented their self-respect providing them choice and
independence.
The
World Bank, through the Government of Bangladesh (GOB) provided
US$ 105 million for credit and technical assistance to PKSF
under Poverty Alleviation Microfinance Project (PAMFP) to
finance its microcredit program. PKSF was able to utilize
this fund six months ahead of the project closing date. PKSF
needs more fund to finance the increasing demand of microcredit
in rural and urban areas and for covering the hardcore poor
and financing more growth oriented and employment promoting
microenterprise activities of the poor.
In
this context, the GOB requested the World Bank to provide
further assistance to PKSF through a second project to implement
its microcredit program in an expanded and diversified form.
The World Bank responded to GOB request and fielded a mission,
which undertook a very intensive and detailed pre-appraisal
of the proposed Second Poverty Alleviation Microfinance Project
(Microfinance II). Having been satisfied with the findings
of the pre-appraisal, World Bank waived the appraisal of the
project and decided to go for negotiations directly.
2.
Project Objective
The
broad objective of Second Poverty Alleviation Microfinance
Project (Microfinance II) is to make further contribution
to poverty alleviation. Its specific objectives are to:
Increase
outreach
Enlist
new POs
Continue
to provide fund to POs – both OOSA (small) and BIPOOL
(big) categories to implement their microcredit programs
Diversify
(a) Loan and (b) Clients
Enhance
PKSF and its POs’ capacity through institutional development
programs
Achieve
operational, financial and institutional sustainability of
PKSF POs’
Support
smooth and efficient growth of microcredit sector of the country.
3.
Project Scope
The
Microfinance - II project activities are classified under
two broad categories: (a) Microcredit to POs; (b) Institutional
development for enhancing the capacity of PKSF and its POs.
4.
Project Components
The
project will have two broad components – microcredit
and institutional development. The microcredit components
will have four sub-components viz;
(i) Rural microcredit;
(ii) Microcredit for progressive
borrowers for microenterprise;
(iii) Urban microcredit; and
(iv) Microcredit for hardcore
poor. The institutional development component will consist
of a number of sub-components including expansion of PKSF
office complex-cum-training center.
5.
Project Cost
The
project will involve a total cost of US$ 181.00 million of
which US$ 172.64 million will be used for credit and US$ 8.36
for institutional development. Of the total credit amount
US$ 113.21 million will be for rural microcredit; US$ 18.84
million for urban microcredit; US$ 19.23 million for hard
core poor microcredit and US$ 21.36 million for microenterprise
for progressive microcredit borrowers. Of the US$ 8.36 million
for institutional development, US$ 1.88 million will be used
for procuring goods; US$ 4.11 million for services and US$
2.37 million for works (expansion of PKSF office complex cum
training center).
6.
Project Funding
Of
the total project cost of US$ 181 million IDA will provide
US$ 151.00 million, GOB US$ 15.10 and PKSF, POs and beneficiaries
US$ 14.90 million. Of the total IDA contribution of US$ 151.00
million, US$ 5.5 million will be for institutional development
which will be given as grant to PKSF by GOB.
7.
Project Duration
The
project will be implemented in 4½ years – from
2001 through June 2005.
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