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USAID Announces $22 Million in Financing for Safety Improvements in Bangladesh

Ahmed Kamal Khan Chowdhury, CEO of Prime Bank; Janina Jaruzelski, Mission Director; Muhammad Ali, CEO of United Commercial Bank; and M. Rabin, Managing Director of the Alliance, signed the agreement on September 29, 2015. Troy Beckman/USAID


Four days after the International Labor Organization (ILO) and the Swedish government teamed up to introduce a program to improve ready-made garment (RMG) worker rights in Bangladesh, the United States has stepped up to fund factory safety.

The U.S. Agency for International Development (USAID) signed an agreement on Wednesday in Dhaka to provide up to $22 million to small- and medium-sized suppliers working with global apparel buyers to help finance factory upgrades and meet safety standards.

Through a partnership with Prime Bank Ltd. and United Commercial Bank, $18 million will go to members of the Alliance for Bangladesh Worker Safety, a group of 26 apparel companies and retailers—including Gap, Hudson’s Bay Company, J.C. Penney and Macy’s—that source from nearly 600 of the country’s RMG factories.

According to a statement from USAID, this arrangement was made possible “through a financial commitment by the Alliance of $1.5 million to support the guarantee.”

The remaining $4 million will target financing opportunities that are part of the Bangladesh Accord for Fire and Building Safety—signed by 200-plus apparel brands, retailers and importers from more than 20 countries—and the government of Bangladesh’s Tripartite Action Plan, backed by the ILO.

Under the new agreements, eligible RMG factories will be able to access long-term Bangladesh taka and U.S. dollar loans.

News of the funding process comes one week after a delegation from the U.S. Trade Representative’s office visited Bangladesh to review factory safety standards. The Asian nation has been lobbying to have its General System of Preferences (GSP) benefit reinstated, which it lost following the Rana Plaza building collapsed in 2013.

Currently the third-largest source of U.S. apparel imports, the country could potentially nudge Vietnam off the number-two spot if its GSP status is restored.