End of Project Evaluation Enterprise Development Project: Bangladesh
This paper assesses the success of the Enterprise Development Project (EDP) in helping establish Micro-Industries Development Assistance Society (MIDAS) as a largely self-sufficient provider of high-quality financial and non-financial services to small- and medium-scale enterprises (SMEs) in Bangladesh.
Over a short period, MIDAS has grown from a small NGO into a larger organisation providing loans. MIDAS has also greatly expanded its non-financial services and was successful in attracting and competing for contracts awarded by a variety of donors and private companies.
The accomplishments are at risk as high delinquency rates and a reduction in nominal interest rates charged to borrowers are jeopardizing MIDAS' future sustainability. Furthermore, weaknesses in the quality of non- financial services provided to other donor agencies and lack of a clear market direction could also undermine MIDAS' competitiveness in this arena.
The paper makes the following recommendations:
- MIDAS must position itself strategically by cultivating and selecting market niches based on effective demand for services, competition, donor priorities, institutional capability, and profitability;
- Donor funding is the most realistic way to currently expand the loan portfolio, develop new initiatives, and build a sound basis for sustainability;
- In the long run, MIDAS should concentrate on achieving self-sufficiency through income generated by lending to creditworthy borrowers and offering quality consulting services at full market rates;
- The loan portfolio should be targeted towards smaller firms than it currently serves because the market is less interest sensitive, has better repayment rates than larger firms, and is more consistent with donor priorities in Bangladesh.
