Bangladesh

Dhaka Metropolitan Area has over 22 million inhabitants, and the number of people living in the capital increases by 500,000 a year. Access to drinking water for all is a major challenge: to meet demand, its production will need to double by 2030. Yet the city used to cover 70% of its needs through groundwater withdrawals. This is too much for them to be replenished. Since 2002, the authorities aim to address the situation by exploiting surface water. These abundant sources are located near the capital, but they are polluted, and the process to make them clean is complicated.

AFD is co-financing two new drinking water treatment plants to improve the distribution of water resources. They will draw water from rivers further away from the city. They are cleaner, and the project will ensure that they remain so.

In January 2015, we launched a project in partnership with the Asian Development Bank, which aims to increase drinking water production by 500 million liters a day. Some 3 million people will benefit from a more efficient drinking water supply, and 6,000 new connections will be installed. It is completed by a second project, which aims at reducing groundwater withdrawals, improving the quality of the drinking water service, and increasing its production from 450 to 900 million liters a day. It will cover the water needs of 4.5 million people. AFD is the lead donor for this financing, in which Germany’s KfW, the European Investment Bank, and the Danish International Development Agency are participating.

Furthermore, AFD managed a European Union grant to finance the connection of a large number of slums to the water distribution network. Indeed, drinking water supply in the capital’s precarious districts is one of the priorities of the Government of Bangladesh. This project helps connect over 3000 people from low-income communities.

AFD is also supporting the port city of Chittagong in providing collective sanitation services to a part of the population, projected to reach almost 270,000 inhabitants in sewered areas by 2030. This will be done through the construction of a collection network and household connections, as well as a sewerage treatment plant, which will treat up to 50 million liters a day.

We are also financing the implementation of a program to strengthen urban governance and institutional capacity, and capital investment for improved municipal infrastructure and service provision in 88 municipalities throughout the country.

In Bangladesh, power cuts are frequent, including in the capital. The instability of the power grid seriously hinders the country’s economic and industrial development. Aside from drastically increasing its power generation capacity, the power sector operators also need to secure their electricity supply to support the economic and social development of the country.

AFD is supporting the Dhaka Power Distribution Company to extend, strengthen, and modernize its network to meet the growing demand. A first project, started in 2015, financed the extension of the distribution grid by 14 electrical substations. 5 million inhabitants gained access to more reliable electricity, and 250,000 new households (mostly low-income) have been connected.

By 2025, AFD will further support the improvement of the power factor through the construction of 6 more transformers and the extension of 4 substations. Additionally, a €12 million grant from the European Union will support the implementation of a pilot Smart Grid project to make DPDC's distribution grid more efficient.

Additionally, AFD is financing two financing institutions (Infrastructure Development Company Limited and Bangladesh Infrastructure Finance Fund Limited) through environmental credit lines. These two projects promote private investments for industrials towards Renewable Energy, Energy Efficiency, Environmental Performance, and Women Entrepreneurship.

Bangladesh is a predominantly rural country (61% of the population), but is experiencing rapid population growth in urban areas: the number of city dwellers is currently estimated at 66 million people but is expected to exceed 100 million by 2050. With some 38,000 inhabitants per km², the capital Dhaka is today the most densely populated megacity in the world. Until recently, it was also the only city without any public transport system. This leads to constant traffic jams, which hamper economic activity and pollute the air.

AFD is improving urban mobility by developing low-carbon public transport.

For example, in Dhaka, we are co-financing the construction of a Bus Rapid Transit (BRT) line, which will connect the north of the city to the airport.

We will also finance these 137 high-capacity buses, which will run on a reserved lane. This project will improve productivity in Dhaka City and increase access to jobs and urban facilities for the entire population.

Travel time in the connected areas will be halved, and the associated local pollution through greenhouse gas emissions is expected to be reduced by 40,000 metric tons of CO2 equivalent per year.

With 4,500 exporting factories, Bangladesh is the second-largest textile product manufacturer in the world, after China. The sector accounts for 80% of the country’s exports (mainly to Europe and the USA) and employs some 5 million people.

The Rana Plaza collapse (1,138 people killed in April 2013) highlighted the lack of and/or failure to comply with social and worker protection standards. Certain buyers subsequently set up groups, such as Accord and Alliance, to conduct factory audits and improve working conditions for employees.

Through the Bangladesh Bank, AFD funding enables exporting factories to finance the work necessary to bring buildings up to safety standards. Investments to improve working conditions, limit pollution, and improve the environmental footprint of RMG factories, including better effluent, water, and energy management, are also eligible.

As an incentive, the European Union and KfW are financing an investment bonus scheme, which softens the loan conditions for factories. Complementary to that, GIZ provides technical assistance to factories and commercial banks to facilitate these investments.

Another project to support similar investments in the leather industry is under preparation.

The Covid-19 pandemic illustrated how crucial healthcare and social protection systems are for mitigating economic and health impacts on the most vulnerable populations. In this unprecedented context, AFD extended its support to the Ministry of Social Affairs as early as 2020 in a modernization program of cash transfers, in collaboration with the World Bank.

In 2021, AFD extended its involvement to strengthen the health and social protection systems in Bangladesh with a budget support loan. It is supplemented by a technical assistance program including the training and management of medical personnel involved in the country's response to Covid-19.