Bangladesh Project goes on violating JICA agreement terms

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The Japan International Cooperation Agency (JICA) has expressed dissatisfaction over the central bank’s alleged violation of agreement on projects being financed by the Japanese lender.

Officials said Bangladesh Bank (BB) has allegedly changed the implementation authority and directors of two projects without having consultation with the lender in accordance with the provisions of the agreement.

“It is very unfortunate that JICA had not been officially consulted or informed before both the changes…,” the lender said in a recent letter to BB deputy governor Mr. Shitangshu Kumar Sur Chowdhury.

It also reads: “… it is clearly mentioned in the signed project memorandums of both the projects that the implementation agency will not transfer or replace core staff during the implementation of the project except for the case with unavoidable reasons, which shall be consulted and agreed by JICA.”

The SME and Special Programmes Department (SME SPD) of the BB has been implementing the Foreign Direct Investment Promotion Project (FDIPP). But it was later transferred to Foreign Exchange Investment Department without any consultation with the JICA.

The SME SPD was also responsible for implementing two more JICA funded projects — Urban Building Safety Project (UBSP) and recently completed Financial Sector Development Project for Development of SMEs.

A common Project Implementation Unit (PIU) within the SME SPD was responsible for implementation of all the three projects.

Recently, the central bank also changed the project director of another JICA-funded project, Small and Medium Sized Farmers Agriculture Productivity Improvement and Diversification Project, which was being implemented by the Agriculture Credit Department of the BB.

Officials said the JICA expressed concern that the changes would cause delay in project implementation due to a possible snag on fund disbursements in the absence of an approved signing authority.

JICA also pointed out that the BB has not yet deployed agreed number of human resources for a project despite its implementation started back in 2014, which is a clear violation of the terms and condition of the agreement. “As per the signed agreement, we expected consultation among BB and JICA before any change in the department and PIU,” the JICA said in the letter further.

“We are very much concerned that there will be considerable delay in the procurement of consultants, the election of participating financial institutions and other ongoing project activities.”

The lender sought to know from the BB its plan for the transition and the current state of activities of the projects, saying that ‘smooth and seamless implementation of these projects is of our prime concern’.

In the past, the bilateral and multilateral lenders on several occasions requested the government not to change project officials, especially PDs, in the midst of project implementation as it causes delay.

When contacted, a senior central bank official told Monday that the high-ups of the BB took decisions in bringing the changes. He admitted that there was a breach of agreement between the BB and the JICA while making these unilateral changes in the project. JICA’s concurrence was necessary all along, he added.

The official said a JICA team was scheduled to hold a meeting with deputy governor Mr. Chowdhury on Tuesday evening to discuss the issues. However, the developments in the meeting could not be known until filing of this report as officials could not be reached immediately.

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Mr. Kauser Bhuiyan is a former EU diplomat and Wall-Street professional who gained nearly two decades of professional experience at Accenture, Bloomberg, European Commission and Stein & Partners. He learned professional skills in the areas of Change Management Consulting, International Financial Market, Economic Co-operation and Sustainability Advisory services in Frankfurt, Zurich, London, New York, Brussels, Islamabad and Dhaka. Mr. Bhuiyan can be reached at to[at]bangladeshinside.com
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