Dhaka: The World Bank (WB) approved $476 million for Bangladesh to finance two projects to develop a strong financial sector and to improve agricultural productivity for one million poor farmers.

The Bank’s board of executive directors approved the funding at a meeting held at its headquarters in Washington DC on Friday, a WB press release said on Sunday.

Among the two projects, $300 million will go to the Financial Sector Support Project (FSSP) and $176.06 million for the Second National Agricultural Technology Programme.

‘These two projects will support Bangladesh to reach middle-income status by strengthening the financial sector and ensuring greater food security. These, in turn will create more and better jobs,’ said Johannes Zutt, World Bank Country Director for Bangladesh.

He said Bangladesh made remarkable progress in reducing poverty in the last decades. But the country has the potential to achieve higher growth if it addresses bottlenecks holding back economic development.

The financial sector support project aims to improve financial market infrastructure, the regulatory and oversight capacity of the Bangladesh Bank, the country’s central bank, and the access to long-term financing for private firms in Bangladesh.

The 2013 Doing Business report identified access to affordable finance among the top four obstacles for doing business in Bangladesh. The project will enable the participating financial institutions to provide long-term financing to manufacturing and export intensive firms.

The availability of long-term financing of up to five years to the private sector, and in particular to the readymade garments, footwear and light engineering sectors will spur competitiveness, investment, and growth. The financing institutions will lend at commercially determined rates and also offer Shariah-compliant financial products.

‘By providing access to long-term finance, the project will help to build a market for long-term lending in Bangladesh. The project will also provide technical assistance for capacity building of the financial institutions and industry associations.’ said Shah Nur Quayyum, Task Team Leader, Financial Sector Support Project, World Bank.

FSSP will also help to strengthen Bangladesh Bank’s supervisory and oversight functions to mitigate financial sector risks. The project will also support strengthening the financial infrastructure, including the payments system, credit reporting systems, and other areas.

The Second National Agricultural Technology Program (NATP II) aims to support some one million poor, small and marginal farmers in 57 districts. These small-scale farmers will benefit from stronger linkages with research, on-farm demonstrations of improved technologies, training and skills development, agricultural extension services, and co-funding productive assets.

The project aims to increase and diversify agricultural production, and ensure the poor farmers’ access to markets. The project seeks to increase agricultural productivity of crops, livestock and fisheries. The project will continue the formation of farmers’ groups, 35 per cent of which would consist of women.

‘The project builds on the lessons learnt and the success of the first NATP project. The World Bank, along with other development partners, has long promoted agricultural technology and its adaptation to farmers in Bangladesh,’ said Patrick Verissimo, Task Team Leader, NATP II, World Bank.

The project will improve the country’s agricultural research system through adopting a demand-driven, market-oriented and decentralised approach to agricultural research and strengthening agricultural research institutions.

The credits are being provided from the International Development Association (IDA), the World Bank’s concessional lending arm. The funding will have 38 years to maturity with a six-year grace period and carry a service charge of 0.75 per cent.