IFC, a member of the World Bank Group, has announced a wide-ranging programme to make Bangladesh’s garment industry safer for workers, providing US 50 million to local banks and forming partnerships with leading international buyers.

Bangladesh is one of the biggest producers of clothes in the world. Its RMG sector mainly comprises of knit garments, followed by woven products, according to BKMEA, Bangladesh Knitwear Manufacturers & Exporters Association.

The country’s ready-made garment industry employs more than 4 million people—mostly women—in about 4,500 factories. The sector accounts for about 80% of the country’s exports. 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 buyer’s standards.

Long term financing

This is IFC’s first deployment of long term financing to Bangladeshi banks. Under the programme, IFC will provide US 10 million each in financing 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.

In addition, IFC signed separate cooperation agreements with the Alliance for Bangladesh Worker Safety (Alliance) and the Accord on Fire Safety and Building Safety in Bangladesh (Stichting Bangladesh Accord Foundation) that represent dozens of the world’s leading garment brands.

Innovative partnership

The two organizations will assist garment factories to undertake the SEF upgrades, and monitor compliance, the institution reports. “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 Alliance and the Accord will each contribute US 250,000 to support the programme implementation. Together with IFC, the Accord and Alliance have both provided training to participating banks on the factory remediation process and understanding the resulting SEF corrective action plans (CAPs), and they are monitoring factory progress on compliance against these CAPs.

Safety and sustainability

“The aim of the Accord on Fire and Building Safety in Bangladesh is to make the RMG sector in Bangladesh safe and sustainable.  Accord signatory companies have invested considerable financial and technical resources to meet this aim,” said Rob Wayss, Executive Director of the Accord.

The IFC remediation 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. The Accord is pleased to be working with the IFC in supporting factories, particularly the smaller and medium sized ones, who are in need of access to this type of affordable long term financing.”

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