The International Finance Corporation (IFC)—a member of the World Bank—and VF Corporation, an American retail giant, will provide $10 million to the Bangladeshi suppliers of VF to ensure fire and building safety.
VF, the parent company of many well-known brands like The North Face, Vans, Wrangler and JanSport, will provide a full corporate guarantee in support of the loan, IFC said in a statement yesterday.
The fund will enable IFC and its long standing client Brac Bank to lend to the suppliers at lower interest rates and speed up fire and building safety upgrades.
The garment sector in Bang-ladesh accounts for 80 percent of the country's total export earnings and 20 percent of its gross domestic product.
The sector employs more than four million workers—80 percent of them are women—in formal jobs in over 4,500 factories.
VF is a founding member of the Alliance for Bangladesh Worker Safety, an industry group of international apparel makers and buyers, which has completed primary inspection of 587 Bangladeshi factories in five months to July.
The group has provided fire and safety training to more than 1 million Bangladeshi factory workers.
“The safety of the people making our products around the world is an imperative,” said Eric Wiseman, CEO of VF.
“Our programme with IFC helps to ensure that our suppliers have access to the necessary capital to complete safety improvement plans.”
“Employment in the apparel industry has reduced poverty for millions of women in Bangladesh,” said Serge Devieux, IFC director for South Asia.
“This financing model, which we think could work well for other buyers and suppliers, will help Bangladesh's suppliers improve work conditions and strengthen the country's ability to attract garment manufacturers.”
IFC also launched its supplier-finance programme, which allows suppliers to improve their access to working capital.