EEF: A pious move gone awry

Dhaka,  Mon,  21 August 2017
Published : 15 Jun 2017, 20:07:06
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EEF: A pious move gone awry

More than one and a half decades back, the government came up with a novel idea of developing entrepreneurship in agriculture and information and communication technology (ICT) sectors. An equity-based financing programme, named Equity and Entrepreneurship Fund (EEF), was then launched. Its subsequent unwholesome developments, particularly those  involving selection of entrepreneurs and recovery of loans that were already disbursed, give now very distressing signals. Had the programme been properly operationalised, it could have by now created a large pool of successful entrepreneurs in the sectors concerned. Far from becoming so, this 'pious' move of the government, alike many other state-sponsored programmes, has utterly lost its way. The situation has turned so bad that the ministry of finance (MoF) has been forced to ask the two key players in the operation of the EEF -- the Bangladesh Bank and the Investment Corporation of Bangladesh (ICB) -- to mend the loopholes in the policies guiding the EEF. But a great deal of damage has already been done to the EEF, now worth Tk 20 billion. 

The major problems that have surfaced in the case of the EEF are identical to the funds disbursed by the state-owned banks, commercial or otherwise. Here too, the BB and the ICB -- the state-owned institutions that have operated the EEF -- have not, as it appears to be the case, been adequately diligent in the selection of borrowers and recovery of loans. Media reports on the state of affairs with the EEF, published from time to time, have earlier highlighted the sorry state of the EEF. A good number of borrowers could not be traced at locations they mentioned in their project profiles. Many others on different pretexts did not make repayments of their loans on time. A report published in this paper on Saturday last put the loan recovery rate of projects that got maturity on completion of their eight-year tenure at mere 34.7 per cent. The rate was 36.50 per cent in the case of projects that have completed their four-year tenure. 

The EEF was designed as a revolving fund so that more and more new entrepreneurs could be given loans for building projects in agriculture and ICT sectors. The poor recovery rate has thus nullified the very purpose of creating the fund that could be otherwise very helpful in entrepreneurship development in these two very important and potential sectors of the economy. This is, thus, very much clear that a section of unscrupulous borrowers somehow managed to take loans from the EEF with the ill-motive of decamping with the money. It would be, however, unfair to blame only the institutions involved with the operations of the fund. There could be extraneous influence as well, over disbursements of EEF loans. The directives coming from the influential quarters in the disbursement of loans from this kind of a fund are quite common in this part of the world. 

 The key stakeholders in their upcoming meeting, it is expected, will closely scrutinize all the developments concerning the EEF and recast the fund management mechanism to discipline the loan recovery drive and to properly select the borrowers. The ICB that is now in charge of the operation of the EEF must not succumb to any kind of pressure in the selection of borrowers. Until the whole set of things is put in order, the government should not replenish the EEF. It has no right to waste taxpayers' money in ventures like this.
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Editor : A.H.M Moazzem Hossain
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