The Alliance for Bangladesh Worker Safety, a platform of North-American retailers, has set a plan to create a credit facility of $20-35m to extend low-cost loans to its sourcing factories, especially the small and medium enterprises for remediation works. The Alliance mentioned the plan in its 18-month report highlighting progress and improvement in factory safety since it was formed in 2013. “Our goal is to create a credit facility of $20-35m via five local banks. The facility would be in US dollar denominated currency, enabling lower interest rates,” said Alliance in a statement on Monday. “The aim of the plan is to encourage these banks to extend loans to Alliance factories, especially small and medium enterprises.” The Alliance will provide technical assistance to the financing organisations on remediation progress and also cover administrative and startup costs and up to $2m in a first-loss guarantee, it added. Four Alliance members have launched innovative supplier financing arrangements while the low-cost remediation loans have been issued to an initial group of suppliers. According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA), a factory needs about half a million US dollar to complete remediation works. The Alliance said 10% of factories’ final inspection would be completed by July 9, 2015, while 100% would be done by July 2017. “I am extremely proud of the efforts undertaken by the Alliance and member companies to improve the safety of RMG factories, ensuring every garment factory is inspected, every employee is trained and empowered, and remediation is undertaken by every factory owner,” said Ellen O Tauscher, Independent Chair, Board of Directors of the Alliance in the statement. The retailers initiative also conducted follow-up remediation verification visits to 124 factories and finalised Corrective Action Plan (CAP) of 300 factories. “We hold meeting with the factory owners and technical expertise to make clear about the CAP and set ways how to remediate it,” M Rabin, Managing Director of Alliance told the Dhaka Tribune. The Alliance had completed inspection of 587 factories and 19 factories had been closed partially or fully following the inspection on fire, electrical and building safety. The issue of finance for remediation works came after the inspection by the global retailers’ platform as it prescribed CAPs to make the RMG sector safe and compliant. Safety issues in the RMG sector came under spotlight following the Rana Plaza factory building collapse, which killed 1,135 workers and injured over 2,500 people in April 2013.
