World Bank Group member IFC has announced a programme designed to make Bangladesh’s garment industry safer for workers, providing US$50m to local banks and forming partnerships with leading international buyers. This is IFC’s first deployment of long term financing to Bangladeshi banks.

Bangladesh’s ready-made garment industry employs more than four 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.

Under the programme, IFC will provide US$10m 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), which represents dozens of the world’s leading garment brands. The two organisations will assist garment factories to undertake the SEF upgrades, and monitor compliance.

“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.

Rob Wayss, executive director of the Accord, said “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. 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.”

It is expected that the programme will be scalable and replicable in other countries around the world.

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