Dhaka: ADB gives $87-mn loan for urban dev

Dhaka: A loan agreement of $87 million was signed between the government and the Asian Development Bank for funding schemes for improvement of the basic services and infrastructures in municipal towns of Bangladesh.

Musharraf Hossain Bhuiyan, secretary of the Economic Relations Division and Paul J Heytens, country director of ADB signed the agreement on behalf of their respective sides at the ERD, Sher-e-Bangla Nagar in Dhaka.

The Second Urban Governance and Infrastructure Improvement (Sector) Project will be carried out from 2009 to 2014 in three phases with the government, ADB, Gesellschaft fur Technische Zusammenarbeit and Kreditanstalt fur Wiederaufbau jointly reviewing progress at least twice a year.

Local Government Engineering Department under the ministry of local government, rural development and cooperatives will implement the project in cooperation with the participating municipalities.
German development institutions Gesellschaft fur Technische Zusammenarbeit and Kreditanstalt fur Wiederaufbau will provide co-financing equivalent to $4.7 million and $36.1 million respectively.

The government of Bangladesh will provide an additional $31.7 million. The towns involved in the project will supply the equivalent of $7.3 million, and the beneficiaries an additional $700.000.

Some 3.8 million people are expected to benefit from the Second Urban Governance and infrastructure improvement (Sector) Project which will expand access to and delivery of water, sanitation, solid waste management and other urban services in an initial 35 targeted municipal towns, including slum areas, said a release on the deal.

‘More towns will be included as the project is implemented. The project expects increases in income employment and land values in all participating towns by 2015, with 60 per cent of residents in targeted slums to have access to improved services,’ it said.

The loan, sourced from ADB’s Special Funds, will be released in phases. The fund disbursements to each town are performance-based and are linked to governance reform and improvement in urban services.

The project draws on lessons from the ongoing Urban Governance and infrastructure improvement (Sector) Project which found that improvements to urban infrastructure and services are more effective and lasting when they are tied to governance reforms, it said.

By linking financial help to governance change ADB will be providing an incentive for town leaders to reform their governance procedures and engage people who were previously excluded from the decision-making process. The amount of funds to be allocated to each town will depend on progress made on reforms.

Each participating town will have to use at least 5 per cent of their allocated funds to improve basic services in slum areas, while gender-action plans will be established to ensure that women are fully involved in governance and planning process.