In a first-of-its-kind agreement, the Alliance for Bangladesh Worker Safety has partnered with the International Finance Corporation (IFC) to assist suppliers with the costs that come with factory repairs.
Through the new deal, the IFC will provide $50 million—distributed evenly across five banks in Bangladesh—for affordable loans to garment factory owners looking to make safety improvements.
Financing in Bangladesh often proves challenging to secure and cost-prohibitive. Interest rates can be exceedingly high and repayment periods are at times unworkable.
The Alliance-IFC credit facility, called the Bangladesh RMG SEF Safety Remediation Financing Program, will offer “affordable” interest rates, according to an Alliance statement, and can be repaid over a three to five-year period. The Alliance, an organization aimed at bettering Bangladesh’s RMG sector, which represents 26 global brands and retailers, will donate $250,000 to fund the facility’s operation.
“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,” Ellen Tauscher, independent chair of the Alliance, said in a statement. “By working together to drive results, we can help an entire industry embrace and implement a new, sustainable standard for safe workplaces.”
The Alliance said it would provide on-the-ground resources, including a team of qualified inspectors, to make sure factory owners are completing their corrective action plans outlining specific fire, structural and electrical repairs necessary to make the facilities compliant with international standards as timely progress on those action plans are required for maintaining favorable loan terms.