The World Bank (WB) has approved $410 million to improve municipal governance and basic urban services in district towns and municipalities in Bangladesh and benefit 3.4 million people in around 100 urban communities across the country.
The Municipal Governance and Service Project will provide financial support to 26 urban government bodies with high economic growth and job creation potential, located along growth corridors leading from Dhaka towards Chittagong, Rangpur, Sylhet, Mymensingh. It will also cover three district towns in the south.
“Bangladesh experienced some of the most rapid urbanization in South Asia. Yet, the cities offer inadequate infrastructure and low levels of urban services, particularly in district towns and municipalities,” said Johannes Zutt, World Bank Country Director for Bangladesh. “In response to urban governance challenges, this project aims to make the urban local bodies become strong, responsive and inclusive local government institutions able to provide better urban services and undertake immediate response operations in times of major emergencies.”
The country’s urban population rose from 15% in 1980 to 28% in 2010. Municipalities and towns play key roles in supporting economic growth, jobs creation and poverty reduction and are growing rapidly. However, they face severe challenges such as weak municipal finances and governance systems, insufficient administrative capacity, and inadequate basic urban services that constrain them from developing into competitive, innovative and livable places.
Through a demand-driven approach, the project aims to build roads, water and sanitation systems, markets, bus terminals, and municipal services centers in these communities. It will build a culture of responsible operations and routine maintenance of infrastructure assets. The communities will receive a base allocation. Those that demonstrate improvements in basic urban services and urban governance will also get a performance-based allocation.
“The project incorporates a number of innovations to improve municipal governance and basic urban services,” said Shenhua Wang, Senior Urban Specialist at the World Bank. “The application of a performance-based evaluation and allocation system would reward urban government bodies with more funds based on improvements in governance, citizen participation, capital investment planning, financial management, and revenue enhancement.”
The credits from the International Development Association (IDA), the World Bank’s arm for the world’s poorest countries, have 40 years to maturity with a 10-year grace period and carry a service charge of 0.75%.
The World Bank Board also endorsed the Bangladesh Country Assistance Strategy (CAS) Progress Report for the period for the fiscal years 2011-2015. The CAS Progress Report tracks the performance of the World Bank Group’s Country Assistance Strategy for Bangladesh. The Bank Group’s program for the remainder of the CAS period will place greater emphasis on strategic selectivity by enhancing financing in areas such as infrastructure and energy which are necessary to support growth and jobs; strengthening governance; and boosting knowledge, partnerships and leveraging financing. The institution’s new commitments to Bangladesh in IDA financing during the CAS period FY2011-2015, including the just approved Municipal Governance Support Project, stands at 4.5 billion.
“Bangladesh represents a remarkable development story. It reduced the number of people living on less than $1.25 a day from 58.6% in 2000 to 43.3% in 2010 – a rate that was 60% faster than the rest of the developing world except China,” said Johannes Zutt. “For the World Bank, Bangladesh is an important partner in its global goal of eliminating extreme poverty and boosting shared prosperity by 2030. We are committed to supporting Bangladesh’s goal of becoming a middle income country by its 50th Birthday.”