ADB Loans to Boost Urban Governance, Infrastructure in Bangladesh

ADB Loans to Boost Urban Governance, Infrastructure in Bangladesh

ADB Loans to Boost Urban Governance, Infrastructure in Bangladesh

The FINANCIAL -- The Asian Development Bank's (ADB) Board of Directors has approved a loan package totaling $200 million to strengthen urban infrastructure, service delivery, and governance in Bangladesh’s pourashavas (municipalities).

“The country’s pourashavas still need significant investment to not only improve service delivery and the urban environment but also strengthen resilience to climate change,” said  ADB Urban Development Specialist Alexandra Vogl. “This additional ADB financing for the well performing Third Urban Governance and Infrastructure (Sector) Project builds on the work of two previous ADB projects, expanding work in the pourashavas where we are already working and into five new ones.”

Bangladesh’s economy has been growing at a healthy pace, averaging 6.6% gross domestic product growth in 2014-2016, but the government faces the challenge of achieving sustainable and inclusive growth in the face of rapid urbanization. For example, in 2015, only 32% of the urban population had a piped water supply and 58% access to improved sanitation. Other challenges included fecal sludge management and underdeveloped or badly maintained drainage. These issues are more acute in pourashavas because of inadequate governance, lack of community participation, and capacity constraints, according to ADB.

Another critical issue facing Bangladesh is climate change, as the country faces rising temperatures; more frequent and intense rainfalls, storms, and flooding; and danger to coasts from rising sea levels. In the face of these, pourashavas need to enhance their institutional know-how to maintain infrastructure and services.

ADB provided an $65 million loan for a first performance-based urban project to support governance reforms and infrastructure improvements in 27 pourashavas during 2003-2007. A second project followed in 2008-2016 backed by a loan of $87 million widening the support to 51 pourashavas. Further supported by an ongoing third project, with an ADB loan of $125 million approved in 2014, urban infrastructure and governance has significantly improved. Examples include increasing local revenue generation, installing computerized tax and accounting systems and establishing town coordination committees supporting citizen participation and installing computerized tax and accounting, while channeling investments to meet infrastructure needs based on phased governance improvement criteria.

With particular emphasis on promoting climate resilience and gender equity, the additional ADB financing approved this week will enable the continued funding of priority infrastructure and governance improvements in 35 pourashavas with a total population of 3.1 million. The project will also allocate funds based on governance performance to the top-performing remaining pourashavas in the country.

Specifically, the additional financing for the third project, bringing total ADB financing up to $325 million, will contribute to build or improve 600 kilometers (km) of roads and 300 km of drains, and install or upgrade 180 km of pipes for water supply with 60,000 metered household connections. Slum improvement work will be undertaken in all project towns that have slums while sludge management facilities will be built in 14 project towns and solid waste sites built or improved in 20.

This work will focus on drawing up plans to tackle poverty reduction, gender issues, slum improvement, community participation, and improving municipal financial management by completing ongoing work on computerization of tax records and billing systems. The implementation period for the project is August 2017 to June 2021.