Bangladesh launches funding program for young entrepreneurs
Young Bangladeshis will receive collateral-free loans, grants and business support under program eventually targeting 5,000 entrepreneurs every year
DHAKA, Bangladesh (MNTV) — Bangladesh is turning to young entrepreneurs to create jobs and expand economic opportunities beyond its major cities, launching a national financing program that will provide grants and collateral-free loans to thousands of young people seeking to build their own businesses.
The initiative, known as Udyog, will initially finance 640 entrepreneurs before expanding nationwide, with Bangladesh Bank aiming to support 5,000 young business owners every year.
The program comes as Bangladesh faces the challenge of creating enough jobs for its large young population.
The International Labor Organization has identified job creation and economic diversification as major priorities for the country, with young people facing significantly greater difficulties finding work than the wider population.
Instead of relying solely on companies and government institutions to absorb new workers, the program seeks to help young Bangladeshis create their own sources of income — and eventually jobs for others.
Each selected entrepreneur will be eligible for up to 2 million Bangladeshi taka ($16,300) based on the actual needs of the proposed business. Half will be provided as a grant and the remaining half as a low-interest bank loan carrying an interest rate of 4% to 7%.
Crucially, borrowers will not have to provide collateral, removing a major obstacle for young people who may have viable business ideas but lack property or other assets normally demanded by banks as security.
Bangladesh Bank estimates that a successful small entrepreneur creates an average of three to five additional jobs.
If businesses supported under Udyog achieve similar results, financing 5,000 entrepreneurs annually could eventually translate into thousands of additional employment opportunities each year.
Such small businesses could have a wider role in Bangladesh’s economy, where the informal sector accounts for as much as 85% of employment.
The World Bank says expanding entrepreneurship and improving access to finance can help young people generate income while allowing successful microenterprises to grow and employ others.
The program will also deliberately reach beyond Bangladesh’s largest urban centers. Banks will use their existing branch networks to identify promising entrepreneurs at the sub-district level, potentially directing capital toward smaller towns and rural communities where access to formal financing and employment opportunities can be more limited.
The first phase will cover 64 sub-districts across eight districts, representing each of Bangladesh’s eight administrative divisions. Ten entrepreneurs will initially be selected from each area, with applicants eligible up to age 28.
Unlike a conventional business competition with predetermined prizes, banks will assess each entrepreneur’s proposal and determine how much capital the business actually requires before approving financing.
The grant also comes with an accountability mechanism. If a recipient fails to repay the loan portion on time, the grant will be converted into an interest-free loan, while the entrepreneur could be classified as a defaulter and barred from obtaining further loans.
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