Professional Documents
Culture Documents
Fund (EEF)
Major Challenges in existing scheme and some thoughts based on
realities
Prepared for :
Prepared by :
Md. Mahfuzul Haque
201601-002
2016-01014
Batch 4
Md. Nazmul
Islam
2016-01-019
Post Graduate Diploma
in Capital
Market
Introduction
Formed in 2000-01
Equity Development
Fund
Bangladesh
Bank
49%
Vision
Creating new entrepreneurs in promising but somewhat risky agrobased, food processing and ICT sectors and encouraging
investments in such sectors by unemployed young, educated and
energetic individuals.
Contributing to employment generation and socioeconomic
improvement and GDP growth of the country is the Vision of the
EEF Scheme.
Ensuring a double bottom line returns" that seeks social returns in
addition to financial returns and GDP growth through encouraging
successful investments in thrust (Core) sectors, is the
Government's main goal.
Mission
Fostering decentralization of the economy
Capital Formation through extending financial support in promising but somewhat
risky new projects
To create opportunities for the promising young, educated, skilled and low-income
people to participate in the value-added chain through commencing corporate form of
business and thereby play an important role in increasing the Governments Revenue;
Assisting fisheries and dairy-based and processing projects of such products to meet
the nutrition needs
To develop Infrastructures in rural and under-privileged areas & ensure optimum use
of fallow land;
To meet the domestic demand as well as increase the net export value
To promote woman entrepreneurs
To diverse services to stay relevant in tomorrow's Bangladesh.
Methodology of Study
Basically descriptive and Quantitative in nature.
Some relevant data and available information has been collected regarding legal status,
financing model and exit strategy through ICB.
The participants of this group visited ICB and consulted with their executives through
face-to-face discussion and shared some experience, ideas, beliefs and values as well.
Primary data and information from the various desks of the EEF unit of ICB and
Bangladesh
Secondary information was taken from the Official websites of Bangladesh Bank and
ICB.
Quantitative data were collected & consolidated from the audited financial statements
on EEF operations since the Scheme's inception in 2000-2001 till April 2016 to establish
data trend, take a look at the cause and effects and establish relations among them.
The report reveals data relating to Sanction, Disbursement, Buy-back and
Implementation Status of EEF projects, since inception of the Scheme.
Background
To encourage the investment in potential Agro-based
and ICT, Government of Bangladesh set up an Equity
Development Fund (EDF) through budget allocation of
2000-01.
In 1 June 2009 administration of EEF has been
transferred to ICB through a sub agency agreement for
a term of ten years.
Major Stakeholders
1. GOB participates as an equity partner of the private entrepreneurs.
2. Bangladesh Bank acts as an agent of the gob to frame policies, manages
the fund of EEF, monitor performance of ICB & reports to the gob regarding
fund utilization.
3. ICB does the operational management of the fund including:
Disbursement process
EFF assistance is disbursed after fulfillment of the conditions
mentioned in the sanction letter at the following ways:
49% of the project cost is disbursed in three installments like 50%, 30%
and 20% respectively, after fulfillment of the conditions and 51% of the
sanctioned project cost invested by the entrepreneur
In the first three years shares can be bought-back at the face value. After 3 rd
year shares can be bought-back at the face value or break-up value whichever
is higher. The shares have to be bought back as per the following schedule
after the disbursement of first installment:
4th Year after 1st
Installment
Agro
20%
ICT
10%
5th
Year
20%
15%
20%
25%
8th
Year
20%
25%
Disbursement
Recovery
No. of
project
Amount
No. of
project
Amount
No. of
project
Amount
Agro
1728
3,149.44
729
1,166.27
143
185.54
ICT
116
174.92
80
97.85
26
17.35
Total
1844
3,324.37
809
1,264.12
169
202.89
6%
34%
60%
Social Aspect
Study Reports
SWOT Analysis
Social Aspect
EEF Scheme contributes to double bottom line returns
to generating a market rate of return on invested capital
it also looks for social, environmental and economic impact to
the communities
Social Aspect
Reduced poverty
communities
and
increased
the
tax
base
of
the
Social Aspect
Digital Bangladesh
EEF ICT sector is given utmost priority so that it can play
significant role in software development and communication
sector
Study Reports
Study Reports on the activities of EEF
A total of 04 studies were carried out so far on the activities of
EEF since inception
Implementation Monitoring and Evaluation Division (IMED) of
the Ministry of Planning carried out an evaluation of the
projects funded under the EEF in 2006
A further review of the activities of EEF was carried out by a
team of Bangladesh Bank officials in 2009
Study Reports
Major Findings in those Study Reports
One of the main objectives of EEF is to facilitate investment in
diverse agro based and ICT industries
objective has been largely met
The studies identified problems relating to delayed EEF
disbursement, shortage of working capital and weak
monitoring as the main reasons behind implementation delays
Less than satisfactory outcome in ICT
SWOT ANALYSIS
Strengths: (Potentially Positive Internal Factors)
ICB has 39 years of extensive experience and reputation in
developing entrepreneurial leadership
ICB has a strong IT division with skilled IT professionals who
are capable of providing IT solutions and services
Combination of technical knowhow, expertise and experience
in Project Appraisal Committee (PAC) and Sanction Board
Huge clientele base has been showing their interest in
establishing innovative Ventures throughout the country
SWOT ANALYSIS
Weaknesses:
Factors)
(Potentially
Negative
Internal
SWOT ANALYSIS
Opportunities:
Factors)
(Potentially
Positive
External
SWOT ANALYSIS
Threats: (potentially negative external factors)
Possibilities of discontinuation of Govt. funding.
Increase of EOI Applications.
Enforcement has been challenging due to Lack of structured legal
framework.
Entrepreneurs Profit hiding tendency to avoid taxes and profit sharing
with the minorities.
Lack of practice in corporate culture and demonstrated negligence in
maintain proper records in accordance with GAAP.
Rapid changes in business environment and frequent changes in rules
and regulations can impact the business.
Server crashing and hacking possibilities.