EC Country Strategy Paper for Bangladesh 2002-2006

ii. As the sector has grown significantly, there is a need for micro-finance institutions
(MFIs) to develop into sustainable and independent micro-credit operations. As
long as free donor funds are available, they have little incentive to become more
financially efficient.
iii. While many NGOs address wider social needs through their micro-credit programmes
(e.g. empowerment of women, basic literacy skills, etc.) it is important
that the social programmes be differentiated from the financial services, the latter
of which need to be financially self-sustainable.
c) The EC also experienced pitfalls, which emerged from its collaboration with NGOs. A successful
programme of NFPE implemented by a major Bangladesh NGO (GSS) collapsed
owing to mismanagement of the NGO’s leadership. The virtual demise of the NGO exposed
the vulnerability of NGOs in general in terms of their financial accountability and
donors’ capabilities for adequate monitoring.
• Lessons on implementation aspects
a) While project co-ordination between the Government of Bangladesh and the EC generally
has improved over the past years, there is still need for a further intensified dialogue between
the partners in order to arrive at a more coherent programme of co-operation. This is
notably the case in economic co-operation activities. A remedy could be more frequent
contacts with the Ministry of Finance and its Economic Relations Division, and intensified
contacts with the respective line ministries;
b) The implementation of individual projects through government ministries and agencies has
often been marred by two factors. Firstly, by a lack of institutional capacity with regard to
the implementation of projects by the line ministries, and, secondly, by the number of bureaucratic
procedures and hurdles within the administration. This has often been further aggravated
by slow and complicated EC procedures. There is therefore an urgent need for improving
the absorption capacity for development aid and the implementation efficiency of
the line ministries and public agencies in Bangladesh, on the one side, as well as a continued
streamlining of EC procedures, on the other side;
c) Human resource constraints on the side of the EC led to significant delays in the disbursement
of grants and the implementation of projects. Projects require more regular and systematic
monitoring in order to allow for an adequate assessment of the progress achieved,
as well as an early identification of bottlenecks and difficulties. At the same time, the EC
Delegation should review sectoral strategies with external assistance to develop a long-term
programming capacity. The reform of the EC external aid process addresses these problems.
XI. Programmes of EU Member States and other Donors
Most major bi- and multi-lateral donors (including all major UN agencies) are present in
Bangladesh with sizeable programmes. Seven EU Member States have diplomatic missions in
Dhaka, five of which conduct substantial development co-operation programmes.
Over the past few years all donors have defined their strategic areas of intervention for Bangladesh
through multi-annual Country Strategies. In most cases donors have reduced the number
of priority sectors in which they are presently involved. As for EU Member States, poverty
reduction has generally been set as the main objective of their development co-operation. With
the exception of DFID, most EU Member States have identified at most three or four areas or
sectors for their current co-operation strategies. The major sectors of intervention by EU Member
States are
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