Review of Equity Entrepreneurship Fund (EEF)

Study Team: Dr. Zaid Bakht (Team Leader) and Dr. Monzur Hossain

Sponsor: Bangladesh Bank

1.The EEF was set up by the government to encourage investments in promising but somewhat risky food processing and agro-based industries and ICT related industries, and thereby contribute to employment generation and socioeconomic upliftment of the country. The distinctive feature of the fund is that the financial support is in the form of equity and not credit. The underlying concern is to facilitate investments by young, educated and enterprising investors who do not have the ability of placing adequate collaterals for institutional credit to finance investment. The fund was operated directly by Bangladesh Bank during 2001-2009 and was later handed over to ICB with overall responsibility of policy guideline and monitoring remaining with Bangladesh Bank. 

2.The EEF can be used for setting up new units or expansion or development of existing units in food processing and agro-based industries and ICT related industries. The applying unit must be registered under the Company Law of 1994 as a Private Limited Company. Interested entrepreneurs are required to submit EOI in prescribed form and if the EOI is accepted then the applicant will have to prepare a Project Proposal (PP) and have it appraised by any commercial bank or financial institution and then submit the PP through this lien bank/financial institution to ICB. If the PP is finally approved, Sanction Letter for specified amount is issued in favor of the project. The project size in the case of ICT industries has to be a minimum of Tk. 20 lac and a maximum of Tk. 5 crore. In the case of food processing and agro-based industries the lower and upper limits are Tk. 20 lac and Tk. 10 crore respectively.EEF contribution can be a maximum 49% of the project size.