ADB expects surge in private sector demand for investment services in Bangladesh

The Asian Development Bank (ADB) expects that there will be a “significant growth in demand” from the private sector for its investment services in Bangladesh, a senior official said.

The increased demand is likely as a new government has been in power since February, and things have started to stabilise, said Isabel Chatterton, director general of the Private Sector Operations Department at ADB.

She made the remarks in response to a query at a media briefing on Monday on the sidelines of the four-day ADB Annual Meeting taking place in Samarkand, Uzbekistan.

She said Asia and the Pacific face a multi-trillion-dollar infrastructure financing gap, with rising development needs that public finance alone cannot meet.

“Private capital is essential as development needs far exceed public resources,” she said. “Private finance can scale solutions, but policy uncertainty and unmanaged risks still deter investment.”

ADB officials said the multilateral bank helps transform high-potential sectors into investable markets. “We crowd in private capital.”

Under private sector operations, the total outstanding balances and undisbursed commitments of ADB’s private sector transactions in Bangladesh stood at $784.7 million as of 31 December 2024, representing 5.21 percent of ADB’s total private sector portfolio.

ADB’s cumulative public and private sector loan and grant disbursements to Bangladesh amount to $27.48 billion, according to the bank.

“We are very, very active in the Bangladesh market,” she said.

ADB’s private sector operations include financing trade and supply chains, the microfinance programme, and energy projects.

Under the microfinance programme, ADB works through financial entities in Bangladesh, which in turn support microfinance activities.

“So, what we do is we give them loans,” she said. “In our case, it depends on demand from the banks, and it could vary, but very often these credit lines get disbursed very quickly.”

But disbursement slows in the event of unexpected developments in an economy, in what she described as “a natural catastrophe or other unforeseen events.”

Chatterton said demand for loans from the private sector keeps growing, and banks and microfinance institutions know that their sectors are doing very, very well.

She said ADB’s microfinance programme has helped mobilise $800 million for microfinance institutions in Bangladesh.

The ADB, in October last year, signed a $30 million agreement with Envoy Textiles under its sustainability-linked loans programme. Such loans are performance-based instruments tied to measurable indicators, such as rooftop solar capacity and greenhouse gas emissions reductions.

Chatterton said such initiatives are going to incentivise emissions reductions in the textile sector.

“As many of you know, Bangladesh is well known for its thriving garment manufacturing industry. We were very pleased last year to support Envoy through our engagement.”