Badrul Ahsan :
The government’s Equity and Entrepreneurship Fund is now facing a severe setback since its inception 16 years back as many have fled away with the money borrowed from this fund.
Data show around 65 percent of the borrowed money has been turned defaulted by these so-called entrepreneurs.
Officials say these defaulters have cashed in on the loopholes of fund management and operational activities of the fund. These defaulters also failed to buy back government’s shares as per terms and conditions of the loans from this fund.
A recent field survey carried out by the Bangladesh Institute of Development Studies (BIDS) could not find whereabouts of a large number of projects at the sites mentioned in the submitted project documents.
The government created the EEF in the 2000-2001 fiscal year to extend support to two promising sectors: agro-based food processing and software. A sum of Tk 1.0 billion was allocated for the purpose at that time.
According to official data, the government has so far allocated Tk 20 billion in favour of the fund. Of the allocation, Tk 15.13 billion went for funding agriculture and Tk 5.12 billion for the information and communication technology (ICT) sector.
Official sources said some 198 agro-projects and 32 ICT projects got maturity with completion of eight years from the release of first installment of loan. The projects should have repaid some Tk 5.33 billion by now.
But so far, some Tk 1.85 billion could be realised from the projects which completed their eight-year tenure. The loan-recovery rate is 34.70 per cent.
On the other hand, 490 projects that have completed their four-year tenure were supposed to repay Tk 6.78 billion. But, until March this year, only Tk 2.475 billion or 36.50 per cent of the total amount could be realised from those.
Bangladesh Bank (BB) was the implementing agency of the project until May 2009.
Later, the operational function of the fund was transferred to the Investment Corporation of Bangladesh (ICB). The central bank, since then, has been involved in formulating fund-management policies and monitoring the investment activities under the EEF.
“The government is set to find out loopholes of fund management and operational activities of the EEF project,” said a BB high official, preferring anonymity.
The move has been taken after finding a wide range of operational disorders through which many borrowers fled or became defaulted, he informed.
However, stakeholders at a recent meeting at the Ministry of Finance has decided to bring about major changes in the EEF rules, infusing dynamism into the EEF activities and ensuring proper selection of entrepreneurs to curb fraudulence.
The BB and the ICB have been asked to hold a workshop soon with participation of all stakeholders concerned to fix the strengths and weaknesses of EEF projects.
This workshop will have to find out the possible changes to be made to project design and operational activities of the EEF in the future.
The policy changes will be based on recommendations expected to come from the workshop where top officials from the Finance Ministry will also remain present.
A senior ministry official identified the selection process of the possible entrepreneurs as the major weakness in the EEF project operation.
He said the rules in the case of entrepreneur selection have to be changed thoroughly to avert misuse of funds.
Contacted over telephone on Tuesday, executive director of the central bank’s EEF Unit Mohammad Masum Kamal Bhuiyan told The New Nation, “Steps were taken to realise the money from the entrepreneurs who have become defaulters.”
Legal measures are also underway to identify the entrepreneurs who fled with the money borrowed from the EEF Unit, he added.
