A lot has been done since the deadly 2013 Rana Plaza disaster to improve working conditions, including safety and workers’ rights, in the garment factories in Bangladesh. But buyers, who pressured makers and government for these improvements, have not kept their pledges for financial assistance. Instead, their representatives are now burdening the factories with multi-million dollar loan. In 2013, leading garment buyers from the west sent Accord and Alliance as their representatives to Bangladesh to ensure safety compliance in the factories. Accord represented some of the leading apparel brands from the European countries while Alliance represented a number of US brands. Over the next couple of years, these two bodies inspected the garment factories in Bangladesh and laid out separate Corrective Action Plans (CAPs) for each of the manufacturing units. The CAPs detailed what each of the factories had to do to be more compliant in terms of workplace safety and workers’ rights – including advices on structural, electrical and safety standards. A total of 853 RMG factories in Bangladesh are signatory to the Alliance. So far, 18 of those factories have fully implemented their CAPs and have thus become cent percent compliant. As much as 99% of the remaining factories have got their CAP implementation modules approved by the Alliance. Some 80 of those factories will be completing their CAP implementation in the next four months. All of those 18 fully compliant factories are also some of the biggest manufacturing units in the country and they spent their own money for the remediation work. According to the tripartite agreements – Alliance-government-factories and Accord-government-factories – the affiliated buyers were bound to contribute financially to the factories’ efforts to become compliant. Alliance and Accord’s prescription says there are two broad ways that buyers could contribute – through advanced payments and increased prices. For example, a buyer could give a factory $200,000 for remediation. The buyer would then take that money back by paying, say $20,000, less in the next 10 work orders. However, none of those have happened. “The global buyers were supposed to finance remediation as manufacturers implement Corrective Action Plans as per prescription from Accord and Alliance,” said Faruque Hassan, senior vice-president of garment exporters’ association BGMEA. “But, there has so far been no direct contribution from buyers,” Faruque said. Instead, Accord and Alliance have arranged a $50m fund to be disbursed as low interest loan through the International Finance Corporation (IFC) of the World Bank Group. Alliance and Accord are the guarantors of that loan in which the buyers have no contribution. Clearly, under the previously agreed methods, Bangladeshi factories would not have needed to pay any interests. A portion of that fund – around $1.5m – has already been disbursed through four commercial banks in Bangladesh among a number of factories. Another $1m is now in the pipeline, waiting to be disbursed soon. Some of the factories who are signatories to the Alliance agreement have acquired remediation funds from the banks. Factories have to get their CAP programme approved by the Alliance for acquiring fund from this. Moreover, both the commercial banks and the Alliance have to convinced about the factory’s recovery capabilities before approving funds. However, there are already allegations that the commercial banks are refusing to give funds to those factories who do not have business relations with them. “The $50m fund for remediation is not enough. Depending on the size of a factory and the type of equipment, an owner needs between Tk2 crore to Tk5 crore for remediation,” said BGMEA Vice President Faruque Hassan. “SMEs [small and medium enterprises] need special attention because 40% of the garment factories in Bangladesh belong to this category which also means that they are financially weaker than some of the bigger factories,” he said. He, therefore, urged buyers to come forward with the necessary funds and ease the terms and conditions of the IFC loan for saving the small manufacturing units.
