Dhaka, Bangladesh (BBN)-The International Finance Corporation (IFC), a member of the World Bank Group, has announced a wide-ranging safety programme for Bangladesh garment sectors.
The IFC will help suppliers finance factory repairs by providing US $10 million each to five Bangladeshi banks—USD $50 million total—for affordable loans to factory owners making necessary safety repairs.
The Alliance for Bangladesh Worker Safety (Alliance) has brokered the first-of-its-kind agreement with the IFC to help suppliers finance factory repairs.
With the IFC initiative, the campaign for safety in Bangladesh readymade garment sector has received a boost.
This is IFC’s first deployment of long term financing to Bangladeshi banks.
In a press statement, IFC said 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.
According to the statement, IFC will provide $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), who represent dozens of the world’s leading garment brands.
The two organisations will assist garment factories to undertake the SEF upgrades, and monitor compliance, the statement said.
“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 $250,000 to support the program 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.
The Alliance for Bangladesh Worker Safety is a legally binding, five-year commitment between 26 global apparel brands dedicated to improving safety in Bangladesh’s ready-made garment (RMG) factories.
The Alliance holds each member and its factories accountable to operating workplaces that effectively ensure building and fire safety.
In partnership with the government of Bangladesh, trade unions and employers, the Alliance helps implement lasting reforms that improve worker safety throughout the Bangladesh garment industry and that ultimately create sustainable and positive economic development for Bangladesh.