Rural Microenterprise Transformation Project (RMTP)

Rural Microenterprise Transformation Project (RMTP)

Palli Karma-Sahayak Foundation (PKSF) has started implementing a new project titled “Rural Microenterprise Transformation Project (RMTP)” financed by the International Fund for Agricultural Development (IFAD). Prior to the RMTP, PKSF undertook four projects with the financial support of IFAD — Microfinance and Technical Support Project (MFTSP), Microfinance for Marginal and Small Farmers Project (MFMSFP), Finance for Enterprise Development and Employment Creation (FEDEC) and the ongoing Promoting Agricultural Commercialization and Enterprises (PACE) project.

To implement the RMTP, a financing agreement was signed between the Government of Bangladesh and the IFAD on 3 December 2019. Subsequently, a Subsidiary Loan and Grant Agreement (SLGA) was signed between the Finance Division of Ministry of Finance and PKSF on 2 January 2020.

The project goal is to sustainably increase the income, food security and nutrition of marginal and small farmers, and micro-entrepreneurs across selected value chains. The development objective is the sustainable growth of selected rural commodity value chains with comparative advantage, market demand, growth potential, and backward linkages to small farmers and micro-entrepreneurs.

The RMTP, to be implemented all over Bangladesh from 2020 to 2025, focuses on promoting potential agricultural products through value chain expansion in three major agricultural sub-sectors: i) High-value agro products and horticulture, ii) Livestock, and iii) fisheries. The project will make value chain interventions in the selected products, especially commercial agro products.

The project interventions primarily target (i) the poor, (ii) the transitional poor, and (iii) the enterprising poor. An estimated 445,000 households will be direct participants of the project, of which 100,000 are microenterprise borrowers and the other 345,000 will benefit from value chain development activities.

The benefits include enhanced financial and social service delivery, improved technical capacities of livestock paraprofessionals and para extension service providers, food safety in the project areas and beyond, better awareness of food safety and nutrition intake among participants, improved animal health, value chain development through improved market access, and development and expansion of rural businesses.

The project consists of three components: i) Value Chain Enhancement, ii) Financial Services, and iii) Institutional Strengthening and Project Management.

i)     Value Chain Enhancement:

  • This component will enable rural agricultural producers and microenterprises to sustainably expand their activities through the adoption of efficient production methods and strong market linkages.
  • The project will focus on several sub-sectors and commodities that have a comparative advantage, market demand and growth potential.
  • It is expected that 30%-50% of the sub-projects will be selected based on their nutritional potential combined with business potential. Nutrition-sensitive value chain activities will include the use of nutrition-sensitive inputs, nutrition-sensitive extension and communication, safe storage and food safety.
  • To address the increasing concerns over food safety, the project will work to introduce Global Good Agriculture Practices (GGAP) for marginal/small farmers and micro-enterprises involved in primary production of selected crops, poultry and livestock, and aquaculture commodities.
  • This component will also support downstream enterprises engaged in crop/meat/fish processing to obtain Hazard Analysis Critical Control Point (HACCP) certification.
  • The value chains that the project will support fall into three broad categories:

         (a) Crops and horticulture: high-value cereal crops, high-value fruits and vegetables and pulses, beans, seeds etc.

         (b) Aquaculture: mud crab, carp, crayfish, other local species etc. and

         (c) Livestock: dairy production, red meat, poultry, eggs etc.

ii) Financial Services:This component will provide sustainable financial services to micro-entrepreneurs and growing/larger enterprises and agribusinesses allowing sustainable growth of their practices.

The project also leverages commercial finance through non-bank financial institutions (NBFIs) for investment in growing/larger enterprises and agribusinesses to expand the market for the output of micro-enterprises.

iii) Institutional Strengthening and Project Management:This component aims to strengthen the capability of PKSF and its Partner Organizations (POs) as development organizations by leveraging trends in Information Communication Technology (ICT) through ‘Distributed Digital Ledger Technology (Blockchain)’, e-commerce and branding, financial services through crowdfunding, and new technologies to ensure that the project is managed satisfactorily.

The total fund of the project stands at $200 million, in which IFAD’s contribution is $81 million and DANIDA will provide $8.30 million. PKSF, its POs concerned, non-bank financial institutions, entrepreneurs and private sector organizations will join hands to accumulate the rest of the fund.

The Ministry of Expatriates’ Welfare and Overseas Employment will receive $1 million from the IFAD’s $81 million fund under this project to independently implement capacity building activities for family members (mainly women and the youth) of expatriates.