Blended finance model to support CMSMEs in climate-vulnerable areas

The urgent need to catalyse collaborations towards climate finance for cottage, micro, and small enterprises in Bangladesh's most vulnerable areas was the focus of a national workshop held today in Dhaka.

Jointly organised by the SME Foundation and UNDP Bangladesh, the event brought together policymakers, financial institutions, regulators, and development partners to discuss a proposed blended finance framework for Cottage, Micro, Small, and Medium Enterprises (CMSMES). This initiative is part of the UNDP's regional climate finance programmes, funded by the governments of Sweden and the UK.
 
The framework, developed through months of stakeholder consultations, aims to unlock investments for community-based adaptation, promote women's economic empowerment, and support the growth of climate-resilient enterprises in high-risk regions.
 
Welcoming participants, Sonali Dayaratne, Deputy Resident Representative of UNDP Bangladesh, who also chaired the event, highlighted the organisation's role in developing inclusive financing mechanisms. "UNDP and the SME Foundation are committed to ensuring climate-vulnerable CMSMES are not left behind. But to truly scale impact, we must close the adaptation finance gap and ensure the cost of resilience never falls on those least able to bear it."
 
Delivering his address as Chief Guest, Md. Mushfiqur Rahman, Chairperson of the SME Foundation, urged a more responsive and fair system: "Climate finance must be affordable and fast. Delays, high interest, and rigid credit histories discourage small entrepreneurs. We need solutions that meet them where they are."
 
Sayed Kutub, Additional Secretary, Financial Institutions Division, Ministry of Finance, echoed the call for coordinated action, stating, "Bangladesh faces a significant adaptation finance gap. Blended finance offers a practical way to unlock investment, especially for small businesses on the frontlines of climate risk."
 
Nurun Nahar, Deputy Governor of Bangladesh Bank, highlighted the importance of mainstreaming sustainability across the financial system, noting that blended finance can de-risk investments and accelerate resilience.
 
Reaffirming the government's policy commitment, Sultana Yasmin, Joint Secretary, Ministry of Industries, said, "Access to finance for CMSMES is a national priority. The insights from today's workshop will shape our upcoming SME Policy 2025 to support climate-vulnerable enterprises better."
 
Md Nazeem Hassan Satter, Deputy Managing Director of SME Foundation, stressed the importance of a more collaborative approach "Our partnership with UNDP marks a significant step toward supporting climate-vulnerable MSMES. To scale impact and ensure long-term resilience, we call on all partners, including banks, MFIS, insurers, and development agencies, to join us in this collective effort."
 
Technical sessions during the event explored financing strategies, risk-sharing mechanisms, and regulatory considerations to help operationalise the proposed facility. Maria Stridsman (Embassy of Sweden), Farzanah Chowdhury (Green Delta Insurance PLC), A B M Feroz Ahmed (British High Commission Dhaka), Hosna Ferdous Sumi (The World Bank), Mr Chowdhury Liakat Ali, (Bangladesh Bank), Azad Md Abul Kalam, FCA (Sajida Foundation), and Mr Syed Abdul Momen (BRAC Bank PLC) are among the participants. 

They called for coordinated action to strengthen the resilience of climate-vulnerable CMSMES, highlighting the economic risks of climate change and the need for development partners to align support with local realities. Discussions emphasised climate-smart financial products, inclusive policies, and the need for disaster funds, especially to promote systemic resilience.