International Finance Corporation, a World Bank wing, is set to provide Bangladeshi banks with $50m and form partnerships with leading international buyers to make Bangladesh’s garment industry safer for workers.
This is IFC’s first deployment of long-term financing to Bangladeshi banks, says an IFC press release.
Under the programme, the IFC will provide $10m each in financing to five Bangladeshi banks which will allow the 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.
In addition, the IFC signed separate cooperation agreements with the Alliance for Bangladesh Worker Safety (Alliance) and the Accord on Fire Safety and Building Safety in Bangladesh, who represent dozens of the world’s leading garment brands.
The two organisations will assist the garment factories to undertake the SEF upgrades, and monitor compliance.
The Alliance and the Accord will each contribute $250,000 to support the programme implementation.
Together with the IFC, Accord and Alliance have both provided training to participating banks on the factory re-mediation process and understanding the resulting SEF corrective action plans (CAPs), and they are monitoring factory progress on compliance against these CAPs.
“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.”
Bangladesh’s ready-made garment industry employs more than 40 lakh people in about 4,500 factories. The sector accounts for about 80% of the country’s exports.
Despite strong desire to improve worker safety, many factories have found it difficult to access the capital necessary to make the improvements, the IFC statement says.