Garment manufacturers, especially small and medium ones, will get $50 million in “affordable” loans from the IFC to remedy their factories up to standards set by international retailers, the global lender said. The funding comes under the Corrective Action Plans (CAP) designed by the western retailers’ engineers with an avowed aim of making Bangladesh’s garment industry safer for workers. The IFC (International Finance Corporation), a member of the World Bank Group, announced Tuesday a comprehensive programme under which the amount will be disbursed through five local banks. In addition, the IFC signed separate cooperation agreements with Alliance and Accord that represent dozens of world’s leading garment brands and buyers. The programme is in addition to the support already provided by some individual brands to their suppliers, according to Accord and Alliance Dhaka offices. Earlier, both the groups had expressed their concern over slow progress in remediation which the manufacturers attributed to fund crisis that delayed fixing the problems. “Despite a strong desire to improve worker safety, many factories have found it difficult to access the capital necessary to make the improvements necessary to meet buyers’ standards,” the IFC said in a statement issued Tuesday. Under the programme, the funding agency will give $10 million each to five Bangladeshi banks which will allow participating banks to increase lending to garment factories, specifically to improve their structural, electrical and fire (SEF) safety infrastructure. Prime Bank Limited has already signed up to the initiative, and four other Bangladesh banks are expected to follow in the coming weeks, the statement added. People involved in the programme said negotiations were going on with Brac, EBL, UCB and City banks in this regard. “Broad, innovative partnerships are necessary to improve the safety of workers in this critical industry,” said IFC CEO and EVP Jin-Yong Cai. “Banks, international buyers, and manufacturers have a shared interest in this issue because it’s indispensable to making Bangladeshi garment factories more competitive and sustainable.” The Accord and the Alliance will each contribute $250,000 to support the programme implementation. Together with the IFC, the Accord and the Alliance have both provided training to participating banks on the factory- remediation process and understanding the resulting SEF CAPs, and they are monitoring factory progress on compliance against these CAPs. In a separate statement Ellen Tauscher, Independent Chair of the Alliance, said: “We are pleased to join forces with the IFC to launch this initiative, which promises to provide much-needed support to factory owners, speed the process of implementing repairs and help protect millions of garment workers.” Access to financing is traditionally both cumbersome and expensive in Bangladesh, with most loans being difficult to secure, offered at prohibitively high interest rates and requiring short-term repayment, the Alliance said in its statement. “The financing programme is an important contribution to the Accord’s ongoing efforts to ensure necessary remediation at inspected factories and meets an express request of local industry,” Rob Wayss, Executive Director of the Accord, told the FE. The financing programme has the priority to support factories, particularly the smaller and medium-sized ones, who are in need of access to this type of affordable long-term financing, he added. Replying to a question, he said this credit facility will offer affordable interest rates of maximum 4.5 per cent and allow loans to be paid back over a period of three to five years. Welcoming the move, Md Shahidullah Azim, vice-president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said though belated, both the groups have realised needs of the present situation. “The programme will help the factories to accelerate their remediation work, especially the SMEs–40 per cent of the total sector,” he added.
