US apparel giant VF Corporation and IFC, a member of the World Bank Group, have
teamed up through a new programme to provide loans to Bangladeshi
garment factories to improve fire and building safety causes.
Under the innovative financial arrangement, three Bangladeshi
factories were the first to receive loans to promote worker safety. VF
Corp will be providing a full guarantee for up to 10 million dollars,
which the IFC will lend to its contract suppliers.
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Due to VF Corp’s guarantee to back these loans, the IFC was able to
lend at lower interest rates, which aids its suppliers in overcoming
many financial obstacles. VF Corp and IFC will be giving out loans to
the retailer’s supplier factories ranging from 100,000 dollars to 1.3
million dollars, as part of the retailer’s efforts to help suppliers
achieve performance standard.
“Providing these loans to help supplier factories fund the necessary
improvements is another positive step forward in VF’s efforts to
ensure the safety of the people making our products in Bangladesh,”
said Tom Glaser, VF’s President of Supply Chain.
The program set up by VF Corp and IFC also helps enable factory owners
to comply with the standards laid out by the Alliance for Bangladesh
Worker Safety (Alliance), an industry group of international apparel
manufacturers and buyers, of which VF Corp is a member of.
In the first round of loan distributions, a total of 1.3 million
dollars was given to the following three factory owners: Arunima
Sportswear, Olio Apparels, and, Radisson Apparel, who will use the
funding to invest in upgrading current safety standards, such as the
installation of fire sprinklers, fire doors and detection systems.
“The apparel industry has provided employment and reduced poverty for
millions of people in Bangladesh. This financing model, which we think
could work well for other buyers and suppliers, will help improve work
conditions and facilitate growth and development,” added Sergio
Pimenta, IFC Director for Manufacturing, Agribusiness and Services.
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