Blended finance could be a cure for climate migrants looking for work, but they must first be trained for skills development, while funding should be provided to selective sectors, experts said at the time. of a dialogue organized yesterday.

The event, titled “Establishing a Blended Finance Mechanism Involving Climate Funds in Bangladesh: Opportunities and Challenges”, was organized by the Center for Policy Dialogue in partnership with Promoting Knowledge for Accountable Systems.

Blended finance is an evolving concept that involves development finance, a combination of public and private finance that also includes official development assistance.

“The funds should have a specific objective, such as which sector will get it, because small and medium enterprises (SMEs) are a large sector,” said Md Mahbub ur Rahman, Managing Director of HSBC Bangladesh.

“So the fund could be allocated to three or five sectors,” he added.

The cost of funds is not a big deal at the moment, but how they would be channeled and reimbursed should be clear.

“In addition, climate-vulnerable people have small skills, so they need to be trained before they are funded,” Rahman said, adding that the project should be commercially viable and it would be difficult to sustain it otherwise.

Funding is not the only solution for climate migrants, however, as BASIC Bank has shown, according to AK Enamul Haque, professor of economics at East West University.

BASIC bank was created with the aim of providing loans to small, micro, small and medium enterprises (CMSME) but it did not work.

Thus, climate migrants should be well trained because their skills are very limited, ”he said.

The risk of lending to marginalized people should be assessed and microfinance institutions could work to that end.

“These people are usually involved in agriculture, food processing and the transport sector, so these sectors can be the focus,” Haque added.

The cost of financing CMSMEs is still too high despite the country’s lower interest rate regime, said Mominul Islam, Managing Director and Managing Director of IPDC Finance.

Interest rates in the banking sector have fallen to single digits since April 1 of last year.

“To get financing, companies would have to have business licenses, but it’s not easy to get and even expensive,” he said.

So, the process should be digitized and easy.

“They also shouldn’t need CIB reports because that also increases their costs,” he added.

The benefits of the government’s Covid-19 incentive program were secured by large companies in most cases as small businesses struggled, said Asif Ibrahim, former chairman of the Chamber of Commerce and Industry of Dhaka.

This is due to the strict regulatory framework.

Thus, the regulatory policy should be easy for CMSMEs so that they can reap the benefits of blended finance.

The use of technology in loan disbursement, innovation and skills upgrading of climate-vulnerable people should be focused on, said Ibrahim, also chairman of the Chattogram Stock Exchange.

If business clusters and local associations can engage in funding, it would be more efficient and the repayment rate would also be better, said Md Mofizur Rahman, CEO of the SME Foundation.

“Train them first and then give them the funds,” he added.

Wasel Bin Shadat, CPD Visiting Principal Researcher, presented an article at the event.

Climate shift leading to migration from urban slums has become a major development challenge for Bangladesh, Shadat said.

Women entrepreneurs must be given priority, the operating and transaction costs of financial institutions must be minimized, application procedures must be faster, easier and more user-friendly, he added.

Fahmida Khatun, Executive Director of CPD, moderated the event.