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Grant Assistance Report

Project Number: 42149 December 2010

Proposed Grant Assistance People’s Republic of Bangladesh: Institutional Support for Migrant Workers’ Remittances (Financed by the Japan Fund for Poverty Reduction)

CURRENCY EQUIVALENTS (as of 1 December 2010)

Currency Unit - taka (Tk)

Tk1.00 = $0.01 $1.00 = Tk70.32

ABBREVIATIONS ADB – Asian Development Bank BFID – Banks and Financial Institutions Division (Ministry of Finance) BMET – Bureau of Manpower, Employment and Training INAFI – International Network of Alternative Financial Institutions JFPR – Japan Fund for Poverty Reduction MEWOE – Ministry of Expatriate Welfare and Overseas Employment MFI – microfinance institution MOF – Ministry of Finance MRA – Microcredit Regulatory Authority NGO – nongovernment organization PIU – project implementation unit POS – point of sale TOT – training of trainers

NOTES

(i) The fiscal year (FY) of the government ends on 30 June. “FY” before a calendar year denotes the year in which the fiscal year ends, e.g., FY2010 ends on 30 June 2010.

(ii) In this report, “$” refers to US dollars.

Vice-President X. Zhao, Operations 1 Director General S. H. Rahman, South Asia Department (SARD) Director B. Carrasco, Financial Sector, Public Management and Trade Division, SARD Team leader M. Ozaki, Finance Specialist (Rural and Microfinance), SARD Team members H. Zhang, Economist (Financial Sector), SARD R.L. Fontejon, Administrative Assistant, SARD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

JAPAN FUND FOR POVERTY REDUCTION (JFPR)

JFPR Grant Proposal

I. Basic Data

Name of Proposed Activity Institutional Support for Migrant Workers’ Remittances

Country Bangladesh

Grant Amount Requested $2.0 million

Project Duration 3 years

Regional Grant Yes / √ No

Grant Type √ Project / Capacity building

II. Grant Development Objective(s) and Expected Key Performance Indicators

Grant Development Objectives (GDO) Sustainable welfare improvement and poverty reduction among Bangladeshi migrant workers, including returnee workers, and their families through (i) easier access to reliable formal remittance services, (ii) improved awareness and availability of remittance information, (iii) training to increase remittance and financial literacy, (iv) access to opportunities to invest remittance income, and (v) access to support in setting up microenterprises. Expected Key Performance Indicators (i) At least 20,000 rural migrant workers’ households have access to formal remittance services. (ii) Each migrant household saves or invests $300 more annually. (iii) At least 20,000 rural households receive remittance and financial literacy training. (iv) At least 12,000 rural households receive skills training and microenterprise development support.

III. Grant Categories of Expenditure, Amounts, and Percentage of Expenditures

Category Amount of Grant Allocated

($) Percentage of Expenditures

1. Equipment and supplies 709,250

35.4

2. Training, workshops, seminars, public campaigns

254,000

12.7

3. Consulting services 665,000 33.3

4. Project management support 227,000 11.4

5. Contingencies 144,750 7.2

TOTAL 2,000,000 100.0

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JAPAN FUND FOR POVERTY REDUCTION

JFPR Grant Proposal Background Information

A. Other Data Date of Submission of Application 3 August 2010 Project Officer Mayumi Ozaki, Finance Specialist (Rural and Microfinance) Project Officer’s Division, E-mail, Phone

Financial Sector, Public Management and Trade Division (SAFM); [email protected]; +632-632-5347

Other Staff Who Will Need Access to Edit/Review the Report

Bruno Carrasco, Director, SAFM

Sector Finance Subsectors Microfinance, finance sector development Theme Economic growth, capacity development Subthemes Widening access to markets and economic opportunities;

institutional development Targeting Classification Targeted (TI-H) Name of Associated ADB-Financed Operations

Not applicable

Executing Agency

Ministry of Finance (Banks and Financial Institutions Division), Government of Bangladesh

Grant Implementing Agencies

Bangladesh Bank (Chowdhury Mohidul Haque, Executive Director, tel: 880-2-7167988, e-mail: [email protected])

Ministry of Expatriates’ Welfare and Overseas Employment (Begum Shamsum Nahar, Joint-Secretary, tel: 880-2-7164520; e-mail: [email protected])

B. Details of the Proposed Grant

1. Description of Components, Monitorable Deliverables and Outcomes, and Implementation Timetable

Component A Component Name Remittance and Investment Opportunities Development for the Rural

Poor Cost ($) $1,816,550 Component Description To improve access to affordable and safe remittance services

among Bangladeshi migrant workers and their families, the component will facilitate card-based remittance services through microfinance institutions (MFIs) by developing partner–agent relationships between banks and MFIs with a partnership agreement. Under the agreement, an MFI will function as a remittance agent of a bank. The participating MFIs will issue at least 18,000 debit cards to their rural clients for remittance transactions. Capacity development and technology solutions will be provided to the MFIs. Specifically, the component will equip 700 rural branches of the participating MFIs with point of sale (POS) terminals and computers to connect to the banking systems of the partner banks. For bank–MFI connectivity, remittance payment and microfinance software will be developed for central database including

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know-your-client data on each client, remittance, and other transactions of each client. The MFIs will provide intensive remittance and financial literacy training to their rural clients. The participating MFIs will undergo training of trainers (TOT) in remittances to be able to train their clients. A total of 20,000 migrant workers’ households in 20 districts with high migration concentration will be the target of the component. Target communities will be selected on the basis of initial surveys of communities to assess the degree of poverty, migration status, and access to MFIs and other remittance services. The selection of districts will also be based on information from the Bureau of Manpower, Employment and Training (BMET) 1 database of overseas employment data by district. The target beneficiaries will be selected after a preliminary beneficiary survey of about 25,000 households to be conducted by the participating MFIs. As most of the remittance recipients are women, emphasis will be given to remittance and financial literacy education for female heads of households and migrant workers’ household members.2 To promote remunerative investment of remittance income, MFI clients will also be provided with information and training in financial investment products for migrant workers such as government bonds, savings schemes, insurance products, and investment opportunities in the capital markets.3

Monitorable Deliverables/Output (i) At least seven bank–MFI partnerships developed (ii) Information technology support (remittance and microfinance

software, POS terminals, computers, printers, and uninterruptible power supply) provided to 700 rural branches of the participating MFIs

(iii) 20 target districts selected on the basis of community surveys and the BMET database

(iv) Preliminary beneficiary survey conducted among 25,000 households

(v) TOT provided to 125 staff of the participating MFIs (vi) Remittance and investment financial literacy training provided to

20,000 rural clients of the participating MFIs (vii) At least 18,000 debit cards issued to MFI clients

Implementation of Major Activities Number of months for grant

(i) Development of bank–MFI partnerships (5 months) (ii) Recruitment of MFI remittance organizers (3 months)

1 BMET is a department attached to the Ministry of Expatriate Welfare and Overseas Employment. It conducts

institutional training through its technical training centers, establishes new training institutes through development projects, conducts informal and special training courses, issues emigration clearances to migrant workers, maintains a computer database network for migrant workers, and regulates and monitors recruiting agencies. BMET has 38 technical training centers throughout the country.

2 Females compose less than 1% of all Bangladeshi migrant workers. As a result, most remittance recipient households are headed by females.

3 In Bangladesh, the government and private financial institutions have various financial investment products specifically for migrant workers. Available remittance investment products include savings facilities for nonresident Bangladeshis, nonresident foreign currency deposits, US dollar premium bonds, and wage earners’ development bonds.

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activities (iii) Development of remittance and microfinance software (5 months)

(iv) Client survey and area selection (6 months) (v) Procurement of information technology equipment (6 months) (vi) Installation of information technology equipment (15 months) (vii) Development of training materials (6 months) (viii) Conduct of TOT courses by MFIs (9 months) (ix) Conduct of MFI training of clients in remittance and investment

financial literacy (from 10th month onward) (x) Launch of remittance services under bank–MFI partnership

(from 10th month onward) Component B Component Name Remittance Information Dissemination and Awareness Creation Cost ($) $101,000 Component Description A constraint on the use of formal remittance services by migrant

workers is the lack of financial literacy and the scarcity of information on remittance services. With information on service prices and features, migrant workers and their families (migrant workers’households) will know which remittance services are the most cost efficient, and a competitive market can develop. A remittance awareness creation campaign will be launched to inform migrant workers and their families about the benefits of using formal remittance services and the risks of informal methods of remittance. The information programs will also provide returnee migrant workers with information on investment and employment opportunities. The awareness and information campaign will use leaflets, posters, brochures, information booklets, short films on television, and programs on radio.

Monitorable Deliverables/Output (i) Initial information dissemination and awareness survey and strategy development

(ii) Production of campaign materials (leaflets, posters, radio programs, etc.)

(iii) Conduct of campaign to create mass awareness and disseminate information on remittances, remittance investment, and employment opportunities

Implementation of Major Activities: Number of months for grant activities

(i) Initial information dissemination and awareness survey and strategy development (4 months)

(ii) Campaign materials production (4 months) (iii) Mass awareness creation and information dissemination

information campaign (from 6th month onward) Component C Component Name Microenterprise Development Support for Migrant Workers’

Households Cost ($) $82,450 Component Description Rural poor households generally lack the necessary skills and

knowledge to invest their remittance income in businesses or income-generating activities. This component will support migrant workers’ households, especially returnee migrant workers and their families, in setting up microenterprises. The component will provide business identification and development services, managerial skills development training, entrepreneurship development support,

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backward and forward linkages, and links to financial and other support services. The priority beneficiaries will be (i) returnee migrant workers whose labor contracts were terminated because of deteriorating economic conditions in the host countries, and (ii) female heads of households and migrant workers’ household members. Potential microenterprise beneficiaries will include livestock, craft, and food processing ventures and retail shops, among others.

Monitorable Deliverables/Output (i) Client survey and selection (ii) Skills training and microenterprise development support at the

technical training centers of BMET, Ministry of Expatriate Welfare and Overseas Employment (MEWOE)

Implementation of Major Activities: Number of months for grant activities

(i) Client survey and selection (4 months) (ii) Dissemination of information on enterprise development training

(6 months) (iii) Skills and enterprise development training (from 9th month

onward) (iv) Enterprise development support (from 9th month onward)

2. Financing Plan for Proposed Grant to be Supported by JFPR

Funding Source Amount ($)

JFPR 2,000,000.00

Governmenta 29,000.00

Other Sources (participating banks and microfinance institutions)b

385,750.00

Total 2,414,750.00

JFPR = Japan Fund for Poverty Reduction. a For components B and C. b For component A.

3. Background

1. Bangladesh has a huge labor surplus. The number of Bangladeshi workers going abroad has been continuously on the rise, and the country sends out about 300,000 workers each year to various countries. The remittance inflow has correspondingly been growing: the formal remittance income in 2009 was about $9 billion. The remittance inflows have contributed to rural household spending on food, housing, education, and health care. Poverty incidence expressed as percentage of the population living below the national poverty line declined from 50% in 2000 to 40% in 2006 partly because of the increased inflow of remittances, especially in the rural areas. Despite a slowdown in growth in the number of migrant workers and remittance inflow, remittances continue to be the most important foreign exchange source of the country and grew by 15% in 2009 over the previous year. 2. The formal remittance system4 has yet to achieve substantial outreach in the rural areas, however. It is estimated that more than 50% of remittances to Bangladesh are made through

4 Formal channels include bank drafts, telegraphic transfers, and electronic transfers through banks, foreign

exchange centers, and money transfer companies. MoneyGram and Western Union are the largest money transfer companies with extensive networks worldwide. There are also local (Bangladeshi) money transfer companies.

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informal channels.5 Informal fund transfers are made through the hundi system,6 traders, or friends. In the informal system, the transactions are undocumented and the risks are high. Money transferred through informal channels could finance smuggling, money laundering, or other illegal activities.

3. Key constraints on the use of formal channels by migrant workers are (i) lack of access in the originating countries to the Bangladeshi network of banks and exchange houses; (ii) infrastructure and technology challenges that place payment innovations beyond the reach of many Bangladeshi recipients of remittances; (iii) lack of financial literacy and awareness of formal remittance services; and (iv) limited access to branches of commercial banks, particularly private banks, in the rural areas of Bangladesh. This problem of limited outreach is compounded by a lack of cooperation and interoperability between banks and MFIs.

4. For migrant workers’ households, informal remittances are not effectively linked to financial investment products and productive use of income. Without accounts at formal financial institutions, migrant workers’ households tend to spend remittance incomes on food and clothes (20% of remittance income), house construction and repairs (15%), land purchase (11%), repayment of loans for migration (11%), and other miscellaneous items.7 While spending on consumption raises standards of living, the increase in income does not lead to sustainable welfare improvements and long-term socioeconomic change in the migrant workers’ households. Without access to savings or investment facilities, those households, fearing the loss of money due to theft or flood, are forced to spend on nonproductive items.

4. Innovation

5. Despite the beneficial effects of remittances on social and economic development and poverty reduction, projects that address remittance issues have been rare among the development partners. At the Asian Development Bank (ADB), two regional technical assistance projects on remittance have been completed: a 2006 study on remittances and poverty in Central

5 Because the transactions are anonymous, the exact amount of informal remittance flow to Bangladesh is not known,

although various estimates have been made. Remittances through informal channels compose about 75% of all remittances to Bangladesh, according to the International Monetary Fund. The International Network of Alternative Financial Institutions (a local nongovernment organization) reported that such transfers accounted for 54% of total remittances to the country in 2006.

6 Hundi, also known as hawala, is an informal money transfer system based entirely on the honor system and using a huge network of money brokers, primarily in the Middle East, North Africa, and South Asia. A customer approaches a hawala broker in one city and gives a sum of money to be transferred to a recipient in another. The hawala broker calls another hawala broker in the recipient’s city, gives instructions about the disposition of the funds, and promises to settle the debt at a later date. No promissory instruments are exchanged between hawala brokers, individual transactions are not recorded, and debts are settled in a variety of ways, and not necessarily in cash. Besides commissions, hawala brokers often earn a profit by circumventing official exchange rates. Hawala is attractive to customers because the transfer of funds is fast and convenient, and the commission is usually far lower than that charged by banks. The advantages are most pronounced when the receiving country applies distortive exchange rate regulations, or when the banking system in the receiving country is less complex. Furthermore, the transfers are informal and not effectively regulated by governments—a major advantage to customers with tax, currency control, immigration, or other legal concerns.

7 Remittances are typically spent on food and clothes (20.45%); medical treatment (3.22%); child education (2.75%); agricultural land purchase (11.24%); homestead land purchase (0.96%); home construction and repair (15.02%); land mortgage (2.24%); the taking of mortgage of land (1.99%); repayment of loan (for migration) (10.55%); repayment of loan (other purpose) (3.47%); investment in business (4.76%); savings or fixed deposit (3.07%); insurance (0.33%); social ceremonies (9.07%); gifts or donations to relatives (0.94%); the sending of relatives on pilgrimage (0.92%); community development activities (0.09%); the sending of family members abroad (7.19%); furniture (0.69%); others (1.05%). (Source: Siddiqui, Tasneem, and Chowdhury R. Abrar. 2003. Migrant Worker Remittances and Micro-Finance in Bangladesh. Dhaka: International Labour Office.)

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Asia and South Caucasus,8 and a 2004 study on the remittances of workers from Southeast Asia.9 The proposed project will be ADB’s first remittance investment project. The project design and monitoring framework is in Appendix 1. 6. The project will make extensive use of information and knowledge sharing. At the outset, consultation workshops will be held with key project stakeholders including the Ministry of Finance (MOF), MEWOE, Bangladesh Bank, commercial banks, MFIs, and community-based organizations. Project information will be widely publicized through media to create and increase awareness. The project will be reviewed regularly, and its output and outcome will be disseminated through online and print media, workshops with MFIs, and roundtables with high government officials. Participating banks and MFIs are also expected to publicize the project activities on their internet homepage and through other information channels.

5. Sustainability

7. Selecting qualified banks and MFIs that are supervised by their regulatory authorities will ensure the sustainability of the project. No remittance operations will be subsidized. The participating institutions will be requested to submit business plans with financial projections and will be required to incorporate the remittance services begun under the project in their long-term business operations.

6. Participatory Approach

8. The Government of Bangladesh (MEWOE, MOF, and the Planning Commission), Bangladesh Bank, MFIs, banks, and community-based organizations were extensively consulted during project conceptualization and design. The consultations were held to identify issues and constraints on the development of effective mechanisms for linking the poor and low-income groups to formal remittance services. 9. During project implementation, progress and the degree of satisfaction among beneficiaries will be periodically assessed and evaluated. The assessment will be participatory and will be done as part of the group mobilization activities of the participating MFIs. The project will take a flexible approach to implementation. Any issues and concerns identified by the beneficiary groups will be promptly and adequately reflected in the project design. At the completion of the project, its impact will be assessed to gauge overall effectiveness and identify any need for modification before the project is expanded and replicated.

Primary Beneficiaries and Other Affected Groups Other Key Stakeholders The primary beneficiaries of the project will be migrant workers and their families, as well as returnee migrant workers. Most migrant workers come from a poor background. According to a household survey of Bangladeshi migrant workers and their families (Siddiqui and Abrar 2003; see publication details in footnote 7 above), one-third of the migrant workers have had only a few years of education (up to class 5), and 12% are illiterate. About half of them worked as laborers before migration. The majority of the workers (about 70%) are below 30 years old. Among the mostly female

The MOF, through its Banks and Financial Institutions Division (BFID), will be the project executing agency. Bangladesh Bank will be the implementing agency for component A. As the central bank, it regulates and supervises financial institutions including banks, exchange houses, and money transfer companies. The International Network of Alternative Financial Institutions (INAFI) Bangladesh will be an

8 ADB. 2006. Technical Assistance for Remittances and Poverty in Central Asia and South Caucasus. Manila. 9 ADB. 2004. Technical Assistance for Southeast Asia Workers’ Remittance Study. Manila.

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Primary Beneficiaries and Other Affected Groups Other Key Stakeholders families (household members) of migrant workers, about 46% are illiterate and have no sources of income other than marginal farming.

implementation partner of Bangladesh Bank for component A. This global network of microfinance nongovernment organizations (NGOs) has extensive experience in implementing remittance-related activities. The MEWOE will be the implementing agency for components B and C. Under it, the BMET will provide skills and enterprise development training under component C.

7. Coordination

10. On 12 July 2008 an ADB mission met with Masami Tamura, counselor for development cooperation and economic affairs of the Embassy of Japan in Dhaka; Akemi Yoshida, first secretary of the embassy; and Yasuo Fujita, chief representative of the Japan Bank for International Cooperation. The discussion centered on the current status of migrant workers’ remittances, the implications for poverty reduction, and mechanisms for enhancing remittance outreach to improve the welfare of the migrant workers and their families. The mission learned of no particular concerns or problems, and received only generally supportive comments. A follow-up meeting on 18 July 2010 elicited general support for the project from Miki Yamamoto of the economic and development cooperation division, Embassy of Japan.

8. Detailed Cost Table

11. A summary cost table is in Appendix 2. Appendix 3 contains detailed cost estimates and Appendix 4 presents the funds flow arrangements.

C. Link to ADB Strategy and ADB-Financed Operations

1. Link to ADB Strategy

12. Inclusive growth is one of four strategic pillars identified in ADB’s long-term strategic framework 2008–2020 (Strategy 2020).10 This underlines the importance of giving the poor better access to markets and basic productive assets through sound policies and institutions, and improving access to education and other economic resources, such as credit, particularly among women. Extensive financial services to the poor and rural areas are also part of ADB’s core strategic areas of intervention under Strategy 2020. Other related strategies are as follows:

10 ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, 2008–2020.

Manila.

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Document Document Number

Date of Last Discussion Objective(s)

Country Strategy and Program Bangladesh 2006–2010

Country Partnership Strategy: BAN 2005–2013

October 2005

(i) Accelerating growth in rural areas and developing agriculture and nonfarm economic activities led by the private sector; (ii) assisting small and medium-sized enterprises; (iii) improving rural infrastructure, including reducing natural and human-induced shocks; and (iv) improving access to information and communication technology. (The country operations business plan for Bangladesh 2009–2011 contained no changes in the country partnership strategy results framework under the country strategy and program 2006–2010.)

2. Link to Specific ADB-Financed Operation

13. The project is an independent intervention and has no specific links to ongoing ADB-financed projects in Bangladesh.

3. Rationale for Grant Funding versus ADB Lending

14. The main aim of the project is to make remittance and other financial services more accessible to unbanked people in Bangladesh with the help of technology-based (POS terminals and cards) services. Access to finance is considered a basic need like clean water or road access. Poor people need finance to take advantage of economic opportunities and improve their lives. However, for the majority of the poor people in Bangladesh, formal banking services are out of reach. A key constraint on the ability of banks to extend their outreach to the poor and low-income population is cost. The use of technologies such as the internet and mobile networks will allow banks and their clients to interact remotely on trust, with minimum physical infrastructure requirements. 15. The project will test a new enabling product technology for improving access to remittance services. Loan financing is not suitable at this time, given the pilot nature of the project. If the impact assessment at project completion supports it, the wider use of this type of technology-based inclusive financial product, with loan financing, will be considered.

D. Implementation of the Proposed Grant

1. Names of the Implementing Agencies Bangladesh Bank for component A; MEWOE for components B and C

16. All procurement under the Japan Fund for Poverty Reduction (JFPR) grant will conform to ADB’s Procurement Guidelines (2010, as amended from time to time). Consultants will be recruited according to ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time), and grant funds will be disbursed according to ADB’s Loan Disbursement Handbook (2007, as amended from time to time). The government will keep separate accounts and records for the JFPR project and have them audited yearly according to sound auditing standards, by auditors acceptable to ADB. Certified copies of the audited reports will be submitted to ADB within 6 months after the close of the financial year. The JFPR project will comply with ADB’s Safeguard Policy Statement (2009). It is classified as category C with respect to the environment, involuntary resettlement, and indigenous people; no issues are envisaged. The project

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implementation arrangement is in Appendix 5, and the project implementation schedule is in Appendix 6.

2. Risks Affecting Grant Implementation

Type of Risk Brief Description Risk Mitigation Measures

Governance Participating banks and MFIs may handle remittance services poorly. Such services might be exposed to the risk of money laundering or other illegal activities.

All formal financial institutions (banks, finance companies, etc.) are regulated and supervised by Bangladesh Bank, the central bank. The Microcredit Regulatory Authority Act was passed in 2006, and MRA, established in 2006, is required to monitor and supervise MFIs. The project will elicit rigorous supervision of the participating MFIs by MRA. Further, under the Money Laundering Prevention Act (2002), all financial institutions handling foreign exchange transactions are subject to investigation by Bangladesh Bank. The project will also train the participating banks and MFIs thoroughly in the code of conduct and good governance.

Project implementation capacity

Participating MFIs may not have enough skills and capacity for remittance operations.

Substantial training will be provided to MFIs in all aspects of labor migration and remittances. Public and private institutions, including BMET of MEWOE, will be mobilized for the training. Participating MFIs must meet specific criteria such as legal and licensing status, computer literacy, and capacity for remittance operations.

Beneficiary awareness and willingness

Poor people may have limited awareness of and interest in using formal remittance channels and related investment products.

Extensive public awareness campaigns will be carried out and financial literacy training will be provided to target beneficiaries. Participating MFIs will also be trained to advise and counsel their member beneficiaries on remittances and related investment products. Beneficiaries will be educated as well in the potential risks and costs of using informal remittance channels.

Timeliness of equipment procurement and installation

Procurement and delivery of equipment may not be aligned with the implementation progress and equipment may become obsolete or damaged due to long storage.

The Project will install computers, POS terminals and other equipment in branches of the participating MFIs. The bidding document for the equipment procurement will specify the shipping and delivery of equipment in batches according to the implementation progress. The procurement contract will specify the delivery schedule that is consistent with the project progress.

BMET = Bureau of Manpower, Employment and Training, MEWOE = Ministry of Expatriate Welfare and Overseas Employment, MFI = microfinance institution, MRA = Microcredit Regulatory Authority, POS = point of sale.

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17. The project will not require land acquisition or displace people. It will neither target nor benefit indigenous peoples from the Chittagong Hill Tracts and the Plains, and will therefore have no negative impact on them. The summary poverty reduction and social strategy is in Appendix 7. The gender action plan is in Appendix 8.

3. Incremental ADB Costs

18. No request for funding for any incremental ADB cost is being made under this project.

4. Monitoring and Evaluation

19. The performance monitoring and evaluation of the JFPR project will comprise the following tasks: (i) the setting up of baseline data and output targets by the project management unit (for the project) and the implementing agencies (for the beneficiaries); (ii) the collection and recording of data on implementation performance by participating banks and MFIs, and the management of the data by the project management unit; and (iii) the collection of performance and impact data by the implementing agencies at project completion. To assess the gender-specific benefits, sex-disaggregated data will be collected for impact and performance monitoring. A separate NGO will also be hired to assess the impact on poverty. The key performance indicators and monitoring and reporting mechanisms are summarized below.

Key Performance Indicator Reporting Mechanism Plan and Timetable for M&E

At least 20,000 rural migrant workers’ households receive remittances through formal remittance channels.

Bank, MFI reporting

Project progress reports

ADB missions

Bangladesh Bank report

Semiannual, annual, and at project completion

Each migrant worker’s household saves or invests $300 more annually.

Bank, MFI reporting

Project progress reports

ADB missions

Interviews with beneficiary households


At least 20,000 rural households receive training in remittances and remittance investment.

Bank, MFI reporting

Project progress report

ADB missions



At least 12,000 migrant workers’ households receive microenterprise development training.

Bank, MFI reporting

Project progress report

ADB missions



ADB = Asian Development Bank, M&E = monitoring and evaluation, MFI = microfinance institution.

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5. Estimated Disbursement Schedule

Fiscal Year (FY) Amount ($)

FY2011 $900,000

FY2012 $600,000

FY2013 $500,000

Total Disbursements $2,000,000

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----------------------------------------------------------------------------- Appendixes

1. Design and Monitoring Framework 2. Summary Cost Table 3. Detailed Cost Estimates 4. Funds Flow Arrangement 5. Implementation Arrangements 6. Implementation Schedule 7. Summary Poverty Reduction and Social Strategy 8. Gender Action Plan

Appendix 1

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DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Targets and Indicators with Baselines

Data Sources and Reporting

Mechanisms Assumptions

and Risks Impact Sustainable welfare improvement and poverty reduction of migrant workers’ households

10% yearly increase in the average income of a migrant worker’s household in project targeted beneficiaries from 2014 onward (measured at the initial baseline survey and impact assessment)

Project completion report Impact assessment report

Assumption Generally favorable rural economic condition, conducive to the growth of microenterprises Risk Limited domestic economic opportunities, inducing returnee migrant workers to migrate again

Outcome Increased use of formal remittance and investments by migrant workers and their households in project targeted areas

Use of formal remittance channels by at least 20,000 rural migrant workers’ households $300 yearly incremental increase in savings or investment of a migrant worker’s household by 2014 (measured at the initial baseline survey and impact assessment)

Bangladesh Bank reports Bank, MFI reports Project completion report Project review missions Consultants’ reports Impact assessment study

Assumption Willingness and availability of capable MFIs to enter into the remittance business Risk Limited implementation capacity of MFIs for remittance services

Output Remittance and Investment Opportunities Development for the Rural Poor

Necessary IT support through procurement and installation of computers, POS terminals, printers and other equipment for MFI branches) are in place by (Q2–Q4 2011) Conduct of at least five TOT courses for 125 staff of participating MFIs, of which 40% are female heads of households and migrant workers’ household members, by Q2 2012 Conduct of at least 1,000 1-day training courses in remittances and remittance investment for about 20,000 MFI clients, of which 25% are female heads of households and migrant workers’ household members, by the end of 2013

Bank, MFI reports Project review missions Consultants’ reports Assessment reports Report on workshops and training Impact assessment report Project completion report

Assumptions Willingness of formal financial institutions to partner with MFIs Fair and transparent legal agreement process between formal financial institutions and MFIs Risks Limited legal capacity and risk of dispute between formal financial institutions and MFIs Insufficient access to markets and infrastructure for microenterprises

Appendix 1 15

Design Summary

Performance Targets and Indicators with Baselines

Data Sources and Reporting

Mechanisms Assumptions

and Risks Remittance Information Dissemination and Awareness Creation Enterprise Development Support for Migrant Workers’ Households

Use of formal remittance services by at least 20,000 MFI clients under the bank–MFI partnership arrangement by the end of 2013 Information dissemination strategy in place by Q2 2011 Leaflets, posters, booklets, and short films widely disseminated, and launch of mass information dissemination program, by Q3 2011 Provision of skills training to at least 12,000 returnee migrant workers’ households, of which 60% are female heads of households and migrant workers’ household members, by the end of 2013 Provision of enterprise development support to at least 12,000 migrant workers’ households, of which 60% are female heads of households and migrant workers’ household members, by the end of 2013

Assumption Availability of effective communication tools in rural areas Risk Insufficient counterpart budget of the Ministry of Expatriate Welfare and Overseas Employment to support the campaign Assumption Generally favorable rural economic conditions and access to basic infrastructure Risk Limited capacity of domestic labor market to absorb additional labor

Activities with Milestones Component A: Remittance and Investment Opportunities Development for the Rural Poor 1. Partner MFI branch selection (Q1–Q2 2011) 2. Preliminary beneficiary survey (Q1–Q2 2011) 3. Client survey and area selection (Q1–Q2 2011) 4. Consultant recruitment (Q2 2011) 5. Recruitment of MFI remittance organizer (Q2–Q3 2011) 6. Development of bank–MFI partnership (Q3–Q4 2011) 7. Launch of advocacy meetings (Q3 2011) 8. Development of partnership agreements with banks (Q3–Q4 2011) 9. Equipment procurement (Q2–Q3 2011) 10. Development of remittance and microfinance software (Q1–Q3 2011) 11. Installation of POS terminals and computers at MFI branches (Q3 2011–Q4

2012) 12. Organization of Exposure Visits for MFIs (Q3 2011–Q2 2012) 13. Training Material Development for MFIs (Q2–Q3 2011) 14. Training of Trainers for MFI staff (Q3 2011–Q2 2012) 15. Client Training (Q4 2011 onwards)

Input (i) Japan Fund for

Poverty Reduction grant financing: $2,000,000

(ii) Counterpart

financing: $414,750

Appendix 1

16

Activities with Milestones 16. Launch of remittance service (Q3 2012 onwards) 17. Launch of investment product and services (Q4 2012 onwards) 18. Product monitoring (Q3 2012 onwards) Component B: Remittance Information Dissemination and Awareness Creation 1. Consultant recruitment (Q1 2011) 2. Initial information dissemination and awareness survey and strategy

development (Q1–Q2 2011) 3. Production of information dissemination materials (Q2–Q3 2011) 4. Information dissemination campaign (Q4 2011 onward) Component C: Enterprise Development Support for Migrant Workers’ Households 1. Consultant recruitment (Q1 2011) 2. Client survey and selection (Q2–Q3 2011) 3. Skills training for migrant workers’ households (Q4 2011 onward) 4. Enterprise development support for migrant workers’ households (Q4 2011

onward)

Input Consultants (i) Remittance

development officers (national, 24 person-months x 20)

(ii) Remittance organizers (national, 24 person-months x 100)

(iii) Remittance training officer (5 person-months x 1)

(iv) Project manager (24 person-months x 1)

(v) Deputy project manager (24 person-months x 2)

(vi) Remittance training specialist (national, 15 person-months x 1)

(vii) Microenterprise development specialist (national, 15 person-months x 1)

IT = information technology, MFI = microfinance institution, POS = point of sale, TOT = training of trainers. Source: Asian Development Bank.

Bruno Carrasco S. Hafeez Rahman Director, SAFM Director General, SARD

Appe

ndix 2

17

SUMMARY COST TABLE ($)

Component A

Component B Component C

Total (input)

Percentage of Total

1. Civil works 0 0 0 0 0.0

2. Equipment and supplies 709,250 0 0 709,250 35.4

3. Training, workshops, seminars, public campaigns

189,000 40,000 25,000 254,000 12.7

4. Consulting services 558,000 54,000 53,000 665,000 33.3

5. Grant management 0 0 0 0 0.0

6. Other input 227,000 0 0 227,000 11.4

7. Contingencies (0%–10% of total estimated grant fund)a

133,300 7,000 4,450 144,750 7.2

Subtotal Financed by the JFPR Grant 1,816,550 101,000 82,450 2,000,000 100.0

Government contribution (mostly in kind) 0 19,000 10,000 29,000

Implementing agency’s contributions 385,750 0 0 385,750

Community contributions (mostly in kind) 0 0 0 0

Subtotal, Contributions 385,750 19,000 10,000 414,750

Total Estimated Costs 2,202,300 120,000 92,450 2,414,750

ADB = Asian Development Bank, JFPR = Japan Fund for Poverty Reduction. a Use of contingency funds requires prior approval from ADB. Source: Asian Development Bank.

Grant Component

Input, Expenditure Category

18 A

ppendix 3

DETAILED COST ESTIMATES ($)

Code Supplies and Services Rendered Unit No. of Cost TotalUnits Per Unit

AmountMethod of Procure-

ment

Component A. Remittance and Investment Opportunities Development

for the Rural Poor

1.1 Civil works 0 0 0 0 0 0 0

1.2 Equipment and supplies

1.2.1 Remittance payment and microfinance software development License 700 350 245,000 157,500 NCB 0 0 87,500

1.2.2 Remittance payment and microfinance software maintenance Lump sum 1 87,500 87,500 87,500 Shopping 0 0 0

1.2.3 Laptop computer Computer 700 600 420,000 210,000 NCB 0 0 210,000

1.2.4 Printers Printer 700 75 52,500 26,250 Shopping 0 0 26,250

1.2.5 POS machine including software POS 700 130 91,000 58,500 Shopping 0 0 32,500

1.2.6 Microchip plastic cards Card 18,000 2 36,000 36,000 Shopping 0 0 0

1.2.7 Internet connection Connection 700 50 35,000 17,500 Shopping 0 0 17,500

1.2.8 Central database server Lump sum 1 100,000 100,000 100,000 NCB 0 0 0

1.2.9 Server operation and maintenance Monthly fee 20 800 16,000 16,000 Shopping 0 0 0

1.3 Training, Workshops, Seminars

1.3.1 Surveys Survey 20 200 4,000 4,000 Survey 0 0 0

1.3.2 Seminars Seminar 4 1,750 7,000 4,000 Seminar 0 0 3,000

1.3.3 TOT training Training 30 500 15,000 11,000 Training 0 0 4,000

1.3.4 MFI training Training 700 250 175,000 170,000 Training 0 0 5,000

1.4 Consulting services

1.4.1 Remuneration (national consultant) Person-month 5 5,000 25,000 25,000 Consultant 0 0 0

1.4.2 Per diem (national) Day 15 100 1,500 1,500 Consultant 0 0 0

1.4.3 Local travel (national consultant) Travel 2 1,000 2,000 2,000 Consultant 0 0 0

1.4.4 Reports and communications (national consultant) Lump sum 1 500 500 500 Consultant 0 0 0

1.4.5 Miscellaneous administration support (national consultant) Lump sum 1 1,000 1,000 1,000 Consultant 0 0 0

1.4.6 Remmuneration and per diem of remittance development officers Person-month 480 200 96,000 96,000 Consultant 0 0 0

1.4.7 Remmuneration and per diem of remittance organizers Person-month 2,400 180 432,000 432,000 Consultant 0 0 0

1.5 Other project input (Project management cost—cost of the partner NGO)

1.5.1 Remuneration (project manager) Person-month 24 5,000 120,000 120,000 Consultant 0 0 0

1.5.2 Remuneration (technical officers) Person-month 48 2,000 96,000 96,000 Consultant 0 0 0

1.5.3 International travel Lump sum 2 4,000 8,000 8,000 Consultant 0 0 0

1.5.4 Local travel Lump sum 1 1,000 1,000 1,000 Consultant 0 0 0

1.5.5 Miscellaneous administration support Lump sum 1 2,000 2,000 2,000 Consultant 0 0 0

Subtotal 2,069,000 1,683,250 0 0 385,750

Costs Contributions

JFPR GovernmentOther

DonorsMFIs

Appe

ndix 3

19

Code Supplies and Services Rendered Unit No. of Cost TotalUnits Per Unit

AmountMethod of Procure-

ment

Component B. Remittance Information Dissemination and Awareness Creation

2.1 Civil works 0 0 0 0 0 0 0

2.2 Equipment and supplies 0 0 0 0 0 0 0

2.3 Training, Workshops, Seminars2.3.1 Information dissemination materials Lump sum 1 40,000 40,000 30,000 10,000 0 02.3.2 Information dissemination campaign cost Lump sum 1 19,000 19,000 10,000 9,000 0 0

2.4 Consulting services2.4.1 Remuneration (national consultant) Person-month 15 3,000 45,000 45,000 Consultant 0 0 0



2.4.4 Reports and communications (national consultant) Lump sum 1 1,000 1,000 1,000 Consultant 0 0 0


2.5 Management and Coordination of this Component 0 0 0 0 0 0 0

2.6 Other Project Input 0 0 0 0 0 0 0

Subtotal 113,000 94,000 19,000 0 0

Component C. Microenterprise Development Support for Migrant Workers'

Households

3.1 Equipment and Supplies 0 0 0 0 0 0 0

3.2 Training, Workshops, Seminars3.2.1 Skills training Training 50 450 22,500 17,500 5,000 0 0

3.2.2 Microenterprise development training Training 15 833 12,500 7,500 5,000 0 0

3.3 Consulting Services3.3.1 Remuneration (national consultant) Person-month 15 3,000 45,000 45,000 Consultant 0 0 0



3.3.4 Reports and communications (national consultant) Lump sum 1 1,000 1,000 1,000 Consultant 0 0 0


3.4 Management and Coordination of this Component 0 0 0 0 0 0 0

3.5 Other Project Input (Specify) 0 0 0 0 0 0 0

Subtotal 88,000 78,000 10,000 0 0

Subtotal, Components A to C 2,270,000 1,855,250 29,000 0 385,750

Contingency (Maximum 10% of Total JFPR Contribution) 144,750 144,750

Total Grant Costs Total 2,414,750 2,000,000 29,000 0 385,750

JFPR = Japan Fund for Poverty Reduction, MFI = microfinance institution, NCB = national competitive bidding, NGO = nongovernment organization, POS = point-of-sales, TOT = training of trainers.

Source: Asian Development Bank.

Contributions

JFPR GovernmentOther

DonorsMFIs

Costs

20 Appendix 4

FUNDS FLOW ARRANGEMENTS

1. Funds will be disbursed under the terms of a contractual agreement with a government-approved party acceptable to the Asian Development Bank (ADB). The project management unit, which will be established at the implementing agency, the Ministry of Finance (MOF), will channel funds to the implementing agencies, Bangladesh Bank and the Ministry of Expatriate Welfare and Overseas Employment (MEWOE), and participating institutions to be determined by the government. An imprest account for the funds from the Japan Fund for Poverty Reduction will be established, managed, replenished, and liquidated according to ADB’s Loan Disbursement Handbook (2007, as amended from time to time), and detailed arrangements agreed on between MOF, Bangladesh Bank, MEWOE, and ADB. The initial advance from the imprest account should be based on approved contracts and planned expenditures for the first 6 months of the project. However, total advances from the grant amount should not at any time exceed the estimated expenditures for the next 6 months or 10% of the total grant amount, whichever is less. The statement-of-expenditures procedure will be used in reimbursing eligible expenditures and liquidating the imprest account for individual payment transactions of up to $10,000 equivalent. Expenditures on equipment, training, workshops, seminars, public campaigns, and consulting services will be paid through the imprest account. Expenditures on equipment procured through national competitive bidding procedures will be paid directly. 2. The MOF, as the executing agency, will open an imprest account at Bangladesh Bank immediately after the project takes effect. Bangladesh Bank and MEWOE will each open a second-generation imprest account in their name for the project components, and will manage, replenish, and liquidate the account according to ADB’s Loan Disbursement Handbook. MOF will channel funds for the project activities to these second-generation imprest accounts from the imprest account under its management.

Figure A4: Funds Flow Arrangements

$1,215,750

$144,750

Imprest Account at the Ministry of

Finance

Component C: Microenterprise Development

Support for Migrant Workers’

Households

Contingencies

Asian Development Bank

Component B:

Remittance Information

Dissemination and Awareness Creation

$94,000

$78,000

Component A: Remittance and

Investment Opportunities

Development for the Rural Poor


$467,500 (direct payment for equipment procurement)

Appendix 5 21

IMPLEMENTATION ARRANGEMENTS

A. Project Components

1. The project has three components: (i) Component A: Remittance and Investment Opportunities Development for the

Rural Poor; (ii) Component B: Remittance Information Dissemination and Awareness Creation;

and (iii) Component C: Microenterprise Development Support for Migrant Workers’

Households.

B. Key Project Management Entities

2. The following entities will ensure the successful implementation of the project: (i) The Ministry of Finance (MOF), the executing agency (through its Banks and

Financial Institutions Division [BFID]). (ii) Bangladesh Bank, the implementing agency and the recipient of the grant for

component A. (iii) The International Network of Alternative Financial Institutions (INAFI) Bangladesh,

a global network of microfinance nongovernment organization (NGOs), which will be a partner NGO and technical assistance provider supporting Bangladesh Bank in the implementation of component A. INAFI Bangladesh will assist Bangladesh Bank in (a) selecting the participating banks and microfinance institutions (MFIs), and coordinating their remittance activities; (b) mobilizing and training MFIs; (c) coordinating the procurement and installation of the information technology system for banks and MFIs; (d) coordinating the training of beneficiaries; and (e) monitoring and evaluating the progress of the project. The terms and conditions of INAFI Bangladesh’s assistance to Bangladesh Bank will be based on a subsidiary agreement between these two institutions that must be satisfactory to MOF and the Asian Development Bank (ADB).

(iv) At least seven participating banks and MFIs, to extend the remittance services to the rural areas under component A in coordination with Bangladesh Bank and INAFI Bangladesh. The selection of the participating banks and MFIs must be approved by the Microcredit Regulatory Authority (MRA) and by the MOF and Bangladesh Bank. To qualify, MFIs must (a) be registered with and licensed by the MRA; (b) have at least 50,000 member-clients; (c) have been operating for at least 5 years; (d) have at least basic computer literacy and infrastructure; and (e) have basic knowledge and understanding of remittance operations. Bangladesh Bank and INAFI Bangladesh have already shortlisted potential participating MFIs that meet those criteria. They are as follows: (a) BURO Bangladesh, (b) Shakti Foundation for Disadvantaged Women, (c) Thenghanmara Mohila Sabuj Sangha (TMSS), (d) Padakhep Manabik Unnayan Kendra (PMUK), (e) United Development Initiatives for Programmed Actions (UDDIPAN), (f) People’s Oriented Program Implementation (POPI), and (g) Society for Social Service (SSS).

(v) The Ministry of Expatriate Welfare and Overseas Employment (MEWOE), the implementing agency and recipient of the grant for components B and C.

22 Appendix 5

(vi) ADB, the funding agency, which will carry out periodic project review and evaluation.

C. Project Management Unit

3. Project facilitation and implementation will be managed and coordinated by the project management unit formed at MOF, under a project director. A project implementation unit (PIU) will be established at Bangladesh Bank and at MEWOE upon the grant effectiveness. Each PIU will be headed by a project manager and at least one full-time staff whose qualifications are satisfactory to ADB. The PIUs will implement and monitor the components, conduct and coordinate capacity development training for MFIs and client beneficiaries, and report progress to MOF and ADB. MOF will provide overall guidance and monitoring to the PIUs and hold project coordinating meetings as necessary.

D. Consultant Recruitment

4. Bangladesh Bank and MEWOE, in coordination with MOF, will recruit the following national consultants in accordance with the ADB Guidelines on the use of Consultants (2010, as amended from time to time):

1. Component A (Remittance and Investment Opportunities Development for the Rural Poor)

a. Outline Terms of Reference of Consultants

5. Remittance development officers (24 person-months x 20 persons [one package]; quality-and cost-based selection [80:20, bio-data technical proposal]). The remittance development officers will

(i) implement the project in the partner MFIs; (ii) train MFI branch staff to use the remittance payment and microfinance software; (iii) provide technical support to MFI branch staff; (iv) monitor the activities of remittance organizers; (v) monitor the progress of client training and the volume of remittances; (vi) prepare project work plans for the partner MFIs; and (vii) prepare monthly reports and send them to the MFI head office and the INAFI

Bangladesh office.

6. Remittance organizers (24 person-months x 100 persons [one package]; quality-and cost-based selection [80:20, bio-data technical proposal]). The remittance organizers will

(i) implement the project in the field for the partner MFIs; (ii) identify potential clients with the help of the branch manager and loan officers; (iii) organize and conduct client training; (iv) train MFI branch staff to use the remittance payment and microfinance software; (v) provide technical support to MFI branch staff; (vi) monitor the volume of remittances; and (vii) prepare monthly progress reports and send them to the remittance organizers.

7. Remittance training officer (5 person-months x 1 person; individual consultant selection). The remittance training officer will

(i) collect information from different sources and develop training materials;

Appendix 5 23

(ii) offer training of trainers programs among the staff and partner MFIs; and (iii) facilitate training course at field level with the help of partner MFIs.

8. Project manager (24 person-months x 1 person; individual consultant selection). The project manager will

(i) be responsible for the overall management and implementation of the project; (ii) develop strategic planning to implement the project at field level; (iii) provide leadership of the team of remittance development officers and organizers; (iv) ensure submission of activity reports as well as the financial reports of the project; (v) develop strategic partnership with banks, money transfer organizations and

information communication support service providers; (vi) conduct advocacy of the project to different stakeholders.

9. Deputy project manager (24 person-months x 2 persons; individual consultant selection). The deputy project manager will

(i) assist the project manger for the overall management and implementation of the project;

(ii) ensure the coordination and information dissemination among the partner MFIs; (iii) onsite and offsite monitoring of the project; (iv) liaise with different stakeholders; (v) provide operational and technical support to partner MFIs; (vi) prepare activity and financial reports of the project. 2. Components B (Remittance Information Dissemination and Awareness

Creation) and C (Microenterprise Development Support for Migrant Workers’ Households)

a. Outline Terms of Reference of Consultants

10. Remittance training specialist (15 person-months x 1 person: individual consultant selection). The remittance development officers will

(i) develop a strategy for disseminating remittance information and creating awareness, including a media strategy;

(ii) plan materials for information dissemination and awareness creation; (iii) train MEWOE staff in information dissemination and awareness creation; and (iv) monitor the information dissemination and awareness creation campaign and

measure its impact. 11. Microenterprise development specialist (15 person-months x 1 person: individual consultant selection method). The microenterprise development specialist will

(i) conduct the initial client survey and select the target clients; (ii) draw up a microenterprise development strategy for migrant workers’ households

and returnee migrant workers; (iii) develop a marketing and information dissemination plan for microenterprise

development; (iv) orient and train staff of the Bureau of Manpower, Employment and Training of

MEWOE; and (v) monitor the progress of training and measure its impact.

24 Appendix 5

E. Procurement

1. Assessment of Procurement Capacity

12. The project includes the procurement of goods through shopping and national competitive bidding, and the recruitment of consultants through individual consultant selection (Table A5.3). Most of the procurement and consultant selection will be done by Bangladesh Bank and INAFI Bangladesh. Bangladesh Bank has already carried out an ADB loan project in the financial and insurance sector, and is experienced in procurement and consultant recruitment. INAFI Bangladesh has experience in implementing various donor-funded projects, including a project funded by the Department of International Development of the United Kingdom, and carried out procurement and consultant recruitment. Intensive training in procurement and consultant recruitment will be provided under the project to support Bangladesh Bank and INAFI Bangladesh in cooperation with the Bangladesh Resident Mission of ADB and consultants. A formal procurement capacity assessment will be undertaken when the PIUs are established and staff are recruited.

2. Project Procurement Thresholds

13. Except as ADB may otherwise agree, the following process thresholds will apply to the procurement of goods and works under the project.

Table A5.1: Procurement of Goods and Works

Method Threshold International competitive bidding for works At least $1,000,000 International competitive bidding for goods At least $500,000 National competitive bidding for works Between $500,000 and

$1,000,000 National competitive bidding for goods Between $100,000 and

$500,000 Shopping for works Below $100,000 Shopping for goods Below $100,000 Any other methods of procurement approved for use (see section III of the Procurement Guidelines [2010, as amended from time to time])

Not applicable


3. ADB Review

14. Except as ADB may otherwise agree to, the following prior or post review requirements will apply to the various procurement and consultant recruitment methods used in the project.

Table A5.2: Procurement of Goods and Works

Procurement Method Prior or Post Review National competitive bidding for goods Prior Shopping for goods Post

Recruitment of Individual Consultants Individual consultant selection Prior


Appendix 5 25

4. Goods and Works Contracts Estimated to Cost below $1 Million

15. The following table groups smaller-value goods and work contracts for which procurement activity is either ongoing or expected to begin within the next 18 months. Equipment to be procured under the project will mainly be used for information technology input by the participating MFIs under component A (Remittance and Investment Opportunities for the Rural Poor). The MFIs will be requested to provide about 35% of the total cost of the equipment as counterpart contribution.

Table A5.3: Goods and Works Contracts and Consulting Services Contracts

General Description

Value of Contracts (Cumulative)

($) Number of Contracts

Procurement or Recruitment Method

Procurement of Goods and Works Remittance payment and microfinance software developmenta

245,000 1 NCB

Remittance payment and microfinance software maintenancea

87,500 1 Shopping

Laptop computers 420,000 1 NCB Printers 52,500 1 Shopping Point-of-sale machines with software 91,000 1 NCB Microchip plastic cards 36,000 1 Shopping Internet connection 35,000 1 Shopping Central database server 100,000 1 NCB Server operation and maintenance 16,000 1 Shopping Consultant Recruitment Remittance development officers (24 person-months x 20 persons)

$96,000 1 Quality- and cost-based selection

Remittance organizers (24 person-months x 100 persons)

$432,000 1 Quality- and cost-based selection

Remittance training officer (5 person-months x 1 person)

$30,000 1

Individual consultant selection

Project manager (24 person-months x 1 person)

$125,500 1 Individual consultant selection

Deputy project manager (24 person-months x 2 persons)


Remittance training specialist (15 person-months x 1 person)


Microenterprise development specialist (15 person-months x 1 person)


NCB = national competitive bidding. a Those would be packaged into one contract. Source: Asian Development Bank.

F. Accounting and Reporting

16. The project management unit will (i) maintain, or cause to be maintained, an imprest account for the Japan Fund for Poverty Reduction project; (ii) have the account and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied by independent auditors acceptable to ADB; (iii) as soon as available, but not later than 6 months after the end of the fiscal year, furnish ADB with certified copies of such audited financial statements and the related report of the auditors, including the auditors’ opinion on the use of the Japan Fund for Poverty Reduction funds and the imprest account, and the statement-of-expenditures procedure of reimbursement under the project, all in English; and (iv) furnish ADB with other information concerning the account, financial statements, and audits at ADB’s request. MOF will arrange annual financial audits of the project for reporting to ADB.

26 Appendix 5

G. Project Review

17. ADB will periodically review the project to ensure that the expected output and development impact are realized, and report the overall progress of the project to the government. MEWOE and Bangladesh Bank will establish and maintain a project performance management system that will generate quarterly, semiannual, and annual reports. The quarterly reports will contain information on the progress of (i) component activities against targets, (ii) procurement and consultant recruitment, (iii) project expenditures and disbursements, and (iv) resolution of issues and recommendations. The semiannual progress reports will contain information on the extent of achievement of the performance indicators by region, gender, and poverty classification. At the end of each year during the implementation period, a participatory poverty monitoring and poverty impact assessment will be conducted with the help of an external NGO.

H. National Competitive Bidding 1. General

18. The national competitive bidding procedures to be followed will be those prescribed for national open tendering in the government’s Public Procurement Regulations 2003, with the clarifications and modifications described in the following paragraphs.

2. Advertising

19. Bidding of national competitive bidding contracts estimated at $500,000 or more for goods, and related services or $1,000,000 or more for civil works, will be advertised concurrently with the general procurement on ADB’s website.

3. Anticorruption Policy

20. Definitions of corrupt, fraudulent, collusive, and coercive practices will reflect the latest ADB Board–approved definitions of these terms and related additional provisions (conflict of interest, obstructive practices, etc.).

4. Location of Bid Submission

21. Submission of bids at primary and secondary locations, or multiple drops for bids, will not be required or allowed. Advertisements and bidding documents will specify only one location for the delivery of bids.

5. Rejection of All Bids and Rebidding

22. Bids may not be rejected or new bids solicited without ADB’s prior concurrence.

6. Member-Country Restrictions

23. Bidders must be nationals of member countries of ADB, and offered goods must have been produced in member countries of ADB.

Appe

ndix 6

27

IMPLEMENTATION SCHEDULE

Year 1 Year 2 Year 3 Component Activity Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Component A: Remittance and Investment Opportunities Development for the Rural Poor

a. Partner MFI branch selection

b. Preliminary beneficiary survey

c. Client survey and area selection

d. Consultant recruitment

e. MFI remittance organizer recruitment

f. Launch of advocacy meetings

g. Development of partnership agreements with banks

h. Equipment procurement

i. Installation of POS terminals and computers at MFI branches

j. Organization of exposure visits for MFIs

k. Training material development for MFIs

l. TOT for MFI staff

m. Client training

n. Launch of remittance services

o. Launch of investment products and services

p. Product monitoring

28 A

ppendix 6

Year 1 Year 2 Year 3 Component Activity Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 q. Component

management and administration

Component B: Remittance Information Dissemination

a. Consultant recruitment

b. Initial information dissemination and awareness survey and strategy development

c. Production of information dissemination materials

d. Information dissemination campaign

e. Component management and monitoring

Component C: Enterprise Development Support for Migrant Workers’ Households

a. Consultant recruitment

b. Client survey and selection

c. Enterprise development support for migrant workers’ households

d. Skills training for migrant workers’ households

e. Component management and monitoring

MFI = microfinance institution, POS = point of sale, TOT = training of trainers. Source: Asian Development Bank.

Appendix 7 29

SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY

Country and Project Title: Bangladesh: Institutional Support for Migrant Workers’ Remittances

Lending/Financing Modality:

Japan Fund for Poverty Reduction (JFPR) Grant

Department/ Division:

South Asia Department/Governance, Finance and Trade Division

I. POVERTY ANALYSIS AND STRATEGY

A. Links to the National Poverty Reduction Strategy and Country Partnership Strategy The government’s national poverty reduction strategy (NPRS 2005) reaffirms poverty reduction and accelerated social development and peace as the most important long-term strategic goals of the country. Fully consistent with the Millennium Development Goal, the NPRS looks forward to halving the number of poor people by 2015, and to achieving substantial improvement in all aspects of human development. The NPRS underscores the need for an open and competitive environment that is conducive to private investment, with an emphasis on exports and the development of the rural areas, where 85% of the poor live. Like the NPRS, the Asian Development Bank (ADB) strategy for Bangladesh supports broad-based inclusive economic development and particularly good financial sector governance and rural development as well as social protection for the poor.

B. Poverty Analysis Targeting Classification: Targeted Intervention Key issues. Many poor households in Bangladesh have members working abroad as migrant workers. Most of the migrant workers are from poor communities, have limited or no education, and have been working as agricultural or nonagricultural laborers. While the remittance business has been growing rapidly in Bangladesh, access to it is limited to urban and better-off groups, and reliable remittance services have not yet reached the rural sector despite the huge potential demand. Rural households rely on insecure informal remittance services and migrant workers are exposed to the risk of fraud and loss of money during transactions. Also, because of the limited financial literacy and capacity of migrant workers and their families, remittance incomes are not effectively linked to remunerative investments, thus limiting the opportunities for sustainable income and welfare improvements. Other support services, such as microenterprise development and market link support, are also insufficient in the rural areas. The lack of institutional support for migrant workers and their families is a considerable disadvantage for those households in terms of sustainable poverty reduction.

Design features. The project aims to sustain social and welfare improvements among Bangladeshi migrant workers and their families through institutional and services development, financial literacy and capacity development, and microenterprise development support. The project will have a strong emphasis on improving access to reliable remittance services with links to productive investment opportunities. For this purpose, microfinance institutions (MFIs) and nongovernment organizations (NGOs), given their long and close association with rural communities as well as their community mobilization and communication skills, will be substantially involved in the project activities to extend remittance services and provide financial literacy training and capacity development support to target beneficiaries. The project will also support microenterprise development for migrant workers’ households and returnee migrant workers to promote their reintegration into local economies and prevent repeated overseas migration due to the lack of local employment opportunities. The project will therefore focus on skills training and entrepreneurship development, especially for female heads of households and migrant workers’ household members. Microenterprise development support for female heads of households and migrant workers’ household members will not only improve household incomes, but also contribute to the empowerment of these household members. The project will be implemented in a participatory manner. Frequent needs assessments and consultations will be conducted by MFIs and NGOs with beneficiary groups to promptly address any emerging concerns and issues affecting the beneficiaries. C. Poverty Impact Analysis for Policy-Based Lending

Not applicable

30 Appendix 7

II. SOCIAL ANALYSIS AND STRATEGY

A. Findings of Social Analysis Key issues. There is a general perception that migrant workers are employed overseas and earn regular wages, and therefore are not poor. The project’s social analysis of migrant workers and their families revealed that this is not the case. According to the household survey conducted among Bangladeshi migrant workers and their families,1 one-third of the migrant workers have less than several years of education (up to class 5), and 12% are illiterate. Before migration, about half of them worked as laborers in the agriculture or non-agriculture sector. About 70% are below 30 years old. Among the female heads of households and migrant workers’ household members 46% are illiterate and have no sources of income other than marginal farming. For migrant workers’ households, informal remittances are not effectively linked to financial investment products and productive use of income. The majority of the migrant workers’ households do not have accounts at formal financial institutions. Without such accounts, remittances are spent on food and clothes (20% of the remittance income), house construction and repair (15%), land purchase (11%), repayment of loans for migration (11%), and other miscellaneous items. On average, almost 80% of remittance income goes to nonproductive uses; only 5% is invested in businesses and 3% is saved. Because savings in the form of cash at home are vulnerable to theft, flooding, and other natural calamities, rural households promptly exchange their cash for consumable items or household goods.

B. Consultation and Participation

1. Provide a summary of the consultation and participation process during the project preparation. (i) Consultations and participatory discussions with MFIs, NGOs, and community-based organizations with regard to measures for developing and extending cost-efficient remittance services to rural poor households, including awareness creation, capacity development, promotion and marketing, and impact assessment. (ii) Dissemination and discussion of policy and regulatory matters with government agencies, regulatory authorities, and financial institutions to promote rural remittance services and related investment products. (iii) Consultations and discussions with donors and development partners, to receive feedback on the project design. 2. What level of consultation and participation (C&P) is envisaged during the project implementation and monitoring?

Information sharing Consultation Collaborative decision making Empowerment 3. Was a C&P plan prepared? Yes No If a C&P plan was prepared, describe key features and resources provided to implement the plan (including budget, consultant input, etc.). If no, explain why. The project will involve substantial numbers of MFIs and NGOs during implementation. Frequent participatory meetings and consultations will be conducted. At the outset, a workshop will be held for MFIs and NGOs to develop a comprehensive consultation and participation plan. A community mobilization and capacity development specialist will also be recruited to develop, monitor, and assess the consultation and participation activities under the project.

C. Gender and Development

Key Issues. Most female heads of households and migrant workers’ household members have limited education or are illiterate. They do not have skills or assets to set up their own means of livelihood. There is therefore substantial risk of distress in case of accident, death, or unemployment of male members of migrant workers’ households. The project will support microenterprise development to promote the productive use of remittances particularly among female heads of households and migrant workers’ household members. Specific support activities will include skills development and microenterprise business identification for female heads of households and migrant workers’ household members, as well as marketing and other support for female micro entrepreneurs.

Appendix 7 31

Key actions. Measures included in the design to promote gender equality and women’s empowerment—access to and use of relevant services, resources, assets, or opportunities and participation in decision-making process:

Gender plan Other actions/measures No action/measure (to be completed by MFIs/NGOs during the C&P workshop.) The following actions will be taken for gender inclusiveness: (i) gender-focused financial literacy and capacity development training, to increase control and productive use of

remittance incomes; (ii) remittance services and related financial investment products for women to encourage them to have their own

accounts at formal financial institutions and be independent in financial management. (iii) gender-targeted microenterprise development support combined with skills development, business identification, and

empowerment training; and (iv) gender-specific output indicator monitoring and assessment, together with female-focused participatory needs

assessment and consultation during project implementation.

III. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS

Issue

Significant/Limited/

No Impact/Not Known Strategy for Addressing Issue Plan or Other Action Required Involuntary Resettlement

No impact No resettlement related issues. The project’s cottage and microenterprise development will not involve resettlement issues.

Resettlement plan

Resettlement framework

Combined resettlement plan and indigenous peoples plan

Combined resettlement framework and indigenous peoples planning framework

Environmental and social management system arrangement

Environmental and social impact matrix

None Indigenous Peoples

No impact No indigenous people related issues

Indigenous peoples plan

Indigenous peoples planning framework

Combined indigenous peoples plan and resettlement plan

Combined resettlement framework and indigenous peoples planning framework

Indigenous peoples plan elements integrated in project design with a summary

Environmental and social management system arrangement

Environmental and social impact matrix

None

32 Appendix 7

Issue

Significant/Limited/

No Impact/Not Known Strategy for Addressing Issue Plan or Other Action Required Labor

Employment Opportunities Labor

Retrenchment Core Labor

Standards

No impact No labor-related issues Plan Other Action No Action

Affordability

No negative impact No affordability issues. The Project will develop affordable remittance financial products for the poor.

Action No Action

Other Risks and/or Vulnerabilities

HIV/AIDS Human

Trafficking Others (conflict, political instability, etc.), please specify

No impact No other risks or vulnerabilities Plan Other Action No Action

IV. MONITORING AND EVALUATION

Are social indicators included in the design and monitoring framework to facilitate monitoring of social development activities and/or social impacts during project implementation? Yes □ No

1 Siddiqui, Tasneem, and Chowdhury R. Abrar. 2003. Migrant Worker Remittances and Micro-Finance in Bangladesh. Social Finance Program. Dhaka: International Labour Office.

Appendix 8 33

GENDER ACTION PLAN

Program Component Tasks Indicators Responsibility Component A: Remittance and Investment Opportunities Development for the Rural Poor

Extending remittance and financial literacy training to female heads of households and migrant workers’ household members

Remittance and financial literacy training is provided to at least 4,000 female heads of households and migrant workers’ household members.

PMU, PIU, and project coordinator

Component B: Remittance Information and Awareness Creation

Conducting information dissemination and awareness creation campaign on remittance and employment opportunities

Gender-sensitive information dissemination and awareness creation materials are produced.


Component C: Microenterprise Development Support for Migrant Workers’ Households

Providing skills training and microenterprise development support to female heads of households and migrant workers’ household members

Skills training and microenterprise development support is provided to at least 8,000 female heads of households and migrant workers’ household members.


Project Management

Collecting sex-disaggregated data Conducting gender-focused project monitoring and impact assessment

Sex-disaggregated project performance indicators are monitored and data are collected. Gender-focused project monitoring and impact assessment is carried out during project implementation.


PIU = project implementation unit, PMU = project management unit. Source: Asian Development Bank.

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