The World Bank and the Government of India today signed the $750 million agreement for the MSME Emergency Response Program to support increased flow of finance into the hands of micro, small, and medium enterprises (MSMEs), severely impacted by the COVID-19 crisis.
The World Bank’s MSME Emergency Response program will address the immediate liquidity and credit needs of some 1.5 million viable MSMEs to help them withstand the impact of the current shock and protect millions of jobs. This is the first step among a broader set of reforms that are needed to propel the MSME sector over time.
The agreement was signed by Sameer Kumar Khare, Additional Secretary, Department of Economic Affairs, Ministry of Finance on behalf of the Government of India and Junaid Ahmad, Country Director, India on behalf of the World Bank.
“The COVID-19 pandemic has severely impacted the MSME sector leading to loss of livelihoods and jobs. The Government of India is focused on ensuring that the abundant financial sector liquidity available flow to NBFCs, and that banks which have turned extremely risk averse, continue taking exposures in the economy by lending to NBFCs,” said Sameer Kumar Khare, Additional Secretary, Department of Economic Affairs, Ministry of Finance. “This project will support the Government in providing targeted guarantees to incentivize NBFCs and banks to continue lending to viable MSMEs to help sustain them through the crisis,” he added.
The World Bank Group, including its private sector arm – the International Finance Corporation (IFC), will support the government’s initiatives to protect the MSME sector by:
India’s financial system benefited from early and decisive measures taken by the RBI and the Government of India (GOI) to infuse liquidity into the market. Give current uncertainties, lenders remain concerned about borrowers’ ability to repay – resulting in limited flow of credit even to the viable enterprises in the sector. This program will support government’s efforts to channel that liquidity to the MSME sector by de-risking lending from banks and Non-Banking Financial Companies (NBFCs) to MSMEs through a range of instruments, including credit guarantees.
Strengthening NBFCs and SFBs
Improving the funding capacity of key market-oriented channels of credit, such as the NBFCs and Small Finance Bank (SFBs), will help them respond to the urgent and varied needs of the MSMEs. This will include supporting government’s refinance facility for NBFCs. In parallel, the IFC is also providing direct support to SFBs through loans and equity.
Enabling financial innovations
Today, only about 8 percent of MSMEs are served by formal credit channels. The program will incentivize and mainstream the use of fintech and digital financial services in MSME lending and payments. Digital platforms will play an important role by enabling lenders, suppliers, and buyers to reach firms faster and at a lower cost, especially small enterprises who currently may not have access to the formal channels.
“The MSME sector is central to India’s growth and job creation and will be key to the pace of India’s economic recovery, post COVID-19. The immediate need is to ensure that the liquidity infused into the system by the government is accessed by MSMEs. Equally important is to strengthen the overall financing ecosystem for MSMEs,” said Junaid Ahmad, World Bank Country Director in India. “This operation seeks to achieve both these objectives by furthering the role of NBFCs and SCBs as effective financial intermediaries and leveraging fintech to broaden the reach of finance into the MSME sector.”
The World Bank has to date committed $2.75 billion to support India’s emergency COVID-19 response, including the new MSME project. The first $1 billion emergency support was announced in April this year for immediate support to India’s health sector. Another $1 billion project was approved in May to increase cash transfers and food benefits to the poor and vulnerable, including a more consolidated delivery platform – accessible to both rural and urban populations across state boundaries.
The $750 million loan from the International Bank for Reconstruction and Development (IBRD), has a maturity of 19 years including a 5-year grace period.
World Bank Helps Bangladesh Provide Education and Skills Training to Poor Children
The government of Bangladesh today signed a $6.5 million financing agreement with the World Bank to enable around 39,000 slum children complete primary education as well as provide pre-vocational training to 8,500 school-dropped out youths in Cox’s Bazar.
This additional financing to the Second Reaching Out of School Children (ROSC II) Project will support poor children aged between 8- to 14-years in eight city corporations to complete primary education cycle. This will also help vulnerable out-of-school local youth and adolescents in Cox’s Bazar to complete three-month courses in pre-vocational and enterprise development training.
“The pandemic has disproportionately impacted the education of children from poorer households,” said Mercy Tembon, World Bank Country Director for Bangladesh and Bhutan. “The additional financing will help the slum children and the vulnerable youths build the foundations for better opportunities.”
“Bangladesh government is committed to ensuring education for all. Today, almost all children in Bangladesh step into a school,” said Fatima Yasmin, Secretary, Economic Relations Division, Government of Bangladesh.
About 690,000 children—almost half of them are girls—studied in the learning centers, known as Ananda Schools. The project has set up around 1,300 Learning Centres in slums of 8 city corporations, including Dhaka, where about 48,000 children are enrolled. At Ananda Schools, a single class teacher teaches the students until they are ready for the Grade 5 examination, allowing the poor children to proceed to the secondary schools.
Since 2019, the ROSC II project expanded its coverage to provide learning opportunities and psycho-social support to about 350,000 Rohingya children in Teknaf and Ukhia Upazilla in Cox’s Bazar. Further, 16,500 Bangladeshi youths have received skills training and job placement support.
The agreement was signed by Fatima Yasmin and Mercy Tembon on behalf of the Government and the World Bank, respectively.
The credit from the World Bank’s International Development Association, has a 30-year term, including a five-year grace period. The World Bank was among the first development partners to support Bangladesh following its independence. Since then, the World Bank has committed more than $33.5 billion in grants, interest-free, and concessional credits to the country.
ADB, EIB Join Forces to Protect Oceans, Support the Blue Economy
The Asian Development Bank (ADB) and the European Investment Bank (EIB) today formed a new Clean and Sustainable Ocean Partnership to support initiatives in Asia and the Pacific to help meet the Sustainable Development Goals (SDGs) and the climate goals of the Paris Agreement.
The partnership will strengthen the capacity of ADB and EIB to support high-impact projects. Both institutions will finance activities aimed at promoting cleaner oceans through the reduction of land-based plastics and other pollutants discharged into the ocean, as well as projects to improve the sustainability of socioeconomic activities that take place in oceans or use ocean-based resources.
“Healthy oceans are critical to life across Asia and the Pacific, providing food security and climate resilience for hundreds of millions of people,” said ADB Vice-President for Knowledge Management and Sustainable Development Bambang Susantono. “This Memorandum of Understanding between ADB and EIB will launch a framework for cooperation on clean and sustainable oceans, helping us to expand our pipeline of ocean projects in the region and widen their impacts.”
“Oceans play a vital role in the world economy and they are also the largest carbon sink on the planet, helping to regulate the global climate. But oceans are under enormous pressure, with implications for billions of people. The economic crisis caused by COVID-19 does not weaken our commitment to address global environmental and climate challenges,” said EIB Vice-President Christian Kettel Thomsen. “As the European Union (EU) climate bank, we are very proud to partner with ADB through this new Clean and Sustainable Ocean Partnership to further protect the oceans and preserve and promote the sustainable use of this precious natural resource.”
The partnership provides a framework for ADB and EIB to expand inter-institutional cooperation and investments in ocean health and sustainable blue economy. The following principles will guide the ADB and EIB cooperation in jointly selected areas, including: (i) alignment with the country partnership strategies of both ADB and EIB; (ii) support for the achievement of the SDGs and the Paris Agreement by countries in Asia and the Pacific; (iii) encouragement of stakeholder participation and mobilization of third-party finance; (iv) environmental and social sustainability; and (v) country ownership of investment policies and programs. ADB and EIB will mutually benefit from organizational expertise in key investment areas as well as pool resources in emerging ocean issues and solutions and accelerate growth in the oceans project pipeline and development impact.
The partnership will support projects that reduce marine plastic pollution including integrated solid waste management projects, such as recycling; circular economy principles, such as designing out plastic waste; and promoting clean rivers and waterways, including through improved wastewater management and inclusive sanitation.
The partnership will also focus on sustainable fisheries management and sustainable seafood supply chains; sustainable management, protection, and restoration of marine and coastal ecosystems and resources; integrated coastal protection activities; disaster risk preparedness; and green shipping, green ports, and maritime infrastructure, with a focus on increasing safety and environmental performance.
In addition, ADB and EIB will develop joint technical assistance programs and advisory support to help partners get sustainable blue economy and clean oceans projects off the ground.
Healthy oceans are a key priority of ADB’s Strategy 2030. In 2019, ADB launched a $5 billion Action Plan for Healthy Oceans and Sustainable Blue Economies (the Action Plan) to boost investment and technical assistance to protect and restore oceans in Asia and the Pacific. The Action Plan focuses on promoting action on ecosystem management, pollution control, and sustainable coastal and marine development, while supporting ADB’s developing members to catalyze blue finance for projects through the Oceans Financing Initiative.
EIB is the long-term lending institution of the EU owned by its Member States. As the EU climate bank, the EIB is investing in the sustainable blue economy and supporting initiatives aiming at reducing pollution and preserving the oceans. Under its Blue Sustainable Ocean Strategy, the EIB committed to double its lending to sustainable ocean projects to €2.5 billion (around $3 billion) over the period 2019–2023 and expects to mobilize at least €5 billion of investments that will contribute to improve the health of the oceans and their resources.
Principles for Strengthening Global Cooperation
Global leaders are advocating for cooperation to be the new compass for international relations and have released a set of seven Principles for Strengthening Global Cooperation. The World Economic Forum’s Global Action Group, comprised of senior members of government, business, civil society, and the expert community, developed the principles.
Børge Brende, President of the World Economic Forum, convened the Global Action Group in virtual meetings beginning in June 2020. François-Philippe Champagne, Minister of Innovation, Science and Industry of Canada; Sigrid Kaag, Minister for Foreign Trade and Development Cooperation of the Netherlands; Tarō Kōno, Minister in charge of Administrative Reform of Japan; Tito Mboweni, Minister of Finance of South Africa; Dina Powell McCormick, Global Head, Sustainability and Inclusive Growth, Goldman Sachs; and Kent Walker, Senior Vice-President, Global Affairs, Google,co-chaired the group.
The seven principles call for prioritizing peace and security, equity, gender equality and sustainability because each of these is advanced by and is needed to advance global cooperation. Their absence can cause deep fractures as highlighted by the Global Risks Report 2021 released earlier this week by the Forum.
- Strengthen global cooperation
- Advance peace and security
- Re-globalize equitably
- Promote gender equality
- Rebuild sustainably
- Deepen public-private partnerships
- Increase global resilience
“Having leaders articulate the importance of working with one another – at a moment that so clearly calls for greater unity but lacks it – can serve as a vital step in rechannelling momentum in the right direction,” said Børge
Brende, President of the World Economic Forum. “The direction we need to head is toward greater dialogue, coordination and collective action. Only in this way can we shape a more equitable and sustainable recovery and increase our future resilience.”
Members of the Global Action Group
Mohammed Alardhi, Executive Chairman, Investcorp Holding
John R. Allen, President, The Brookings Institution
Niels Annen, State Minister for Foreign Affairs of Germany
Thomas Bagger, Head, Foreign Policy Division, Office of Presidential Affairs of Germany
Thomas Buberl, Chief Executive Officer, AXA
Mevlüt Çavuşoğlu, Minister of Foreign Affairs of Turkey
Mathias Cormann, Candidate of the Government of Australia for Secretary-General of the Organisation for Economic Co-operation and Development
Ivo Daalder, President, The Chicago Council on Global Affairs
Jeroen Dijsselbloem, Chairman, Dutch Safety Board
Jeffrey D. Feltman, Senior Fellow, United Nations Foundation
Fu Ying, Chairperson, Center for International Security and Strategy, Tsinghua University
Orit Gadiesh, Chairman, Bain & Company
Arancha González Laya, Minister of Foreign Affairs, European Union and Cooperation of Spain
Samer Haj Yehia, Chairman of the Board, Bank Leumi Le-Israel
Jane Harman, Director, President and Chief Executive Officer, The Woodrow Wilson International Center for Scholars
Mohammed Al-Jadaan, Minister of Finance, Economy and Planning of Saudi Arabia
Ann Linde, Minister of Foreign Affairs of Sweden
Susana Malcorra, Dean, IE School of Global and Public Affairs, IE University
Luis Alberto Moreno, Member of the Board of Trustees, World Economic Forum
Vali R. Nasr, Professor of International Relations, Paul H. Nitze School of Advanced International Studies (SAIS), Johns Hopkins University
Patrick Odier, Chairman of the Board of Directors, Bank Lombard Odier & Co.
Maxim Oreshkin, Aide to the President of the Russian Federation
Suresh Prabhakar Prabhu, Indian Prime Minister’s G20 Sherpa
Ayman Al Safadi, Deputy Prime Minister and Minister of Foreign Affairs and Expatriates of the Hashemite Kingdom of Jordan
Kevin Sneader, Global Managing Partner, McKinsey & Company
Achim Steiner, Administrator, United Nations Development Programme (UNDP)
World Bank Helps Bangladesh Provide Education and Skills Training to Poor Children
The government of Bangladesh today signed a $6.5 million financing agreement with the World Bank to enable around 39,000 slum...
ADB, EIB Join Forces to Protect Oceans, Support the Blue Economy
The Asian Development Bank (ADB) and the European Investment Bank (EIB) today formed a new Clean and Sustainable Ocean Partnership...
GEN Z Creates Sustainable Fashion with Recycled Materials
“Sustainability is somewhat of a trend among the new generation. We care more about the planet as mass media pushes...
Rising Pak-Turk Cultural Diplomacy: “Dirilis Ertugrul”- The Prime Catalyst
Amid massive success of famous Turkish drama series Dirilis Ertugrul, also titled as Resurrection Ertugrul in English for Netflix, is...
Is Mike Pompeo the worst Secretary of State in history?
Trump may have a race for the worst presidential title, but Pompeo is in a class of his own. James...
Mozambique’s Crisis and its Humanitarian Aid
Escalating conflict and a deteriorating humanitarian situation in Cabo Delgado has left communities completely reliant on humanitarian assistance. According to...
Skills Development Vital to Enabling Transition to Industry 4.0 in Southeast Asia
Countries in Southeast Asia should consider developing industry transformation maps in key sectors to enable the transition to the fourth...
Russia3 days ago
Russia and Belarus: An increasingly difficult alliance
Middle East3 days ago
Saudi-Turkey Discourse: Is a Resolve Imminent?
Middle East2 days ago
An Enemy Among Us
Terrorism3 days ago
Hidden History – 1977 Terrorist Attacks in Moscow
Middle East3 days ago
Is Erdogan’s Obsession with Demirtas a Personal Vendetta or a Calculated Strategy?
South Asia2 days ago
Arnab Goswami’s whatsApp leaks show power of propaganda
Eastern Europe2 days ago
Thorny path towards peace and reconciliation in Karabakh
Reports3 days ago
The World Needs to Wake Up to Long-Term Risks