WASHINGTON, July 7, 2015 /PRNewswire-USNewswire/ -- The Alliance for Bangladesh Worker Safety (Alliance) has brokered a first-of-its-kind agreement with the International Finance Corporation (IFC) to help suppliers finance factory repairs. Through the resulting credit facility, the IFC will provide USD $10 million each to five Bangladeshi banks—USD $50 million total—for affordable loans to factory owners making necessary safety repairs.
"We are pleased to join forces with the IFC to launch this initiative, which promises to provide much-needed support to factory owners, speed the process of implementing repairs and help protect millions of garment workers," said Ellen Tauscher, independent chair of the Alliance. "By working together to drive results, we can help an entire industry embrace and implement a new, sustainable standard for safe workplaces."
Access to financing is traditionally both cumbersome and expensive in Bangladesh, with most loans difficult to secure, offered at prohibitively high interest rates and requiring short-term repayment. In contrast, this credit facility, known as the Bangladesh RMG SEF Safety Remediation Financing Program, will offer affordable interest rates and allow loans to be paid back over a period of three to five years, dramatically lowering the risk and financial burden for factory owners.
The Alliance, which represents 26 global retailers and brands, played a catalytic role with the IFC in establishing the fund and will donate $250,000 to fund its operation.
The Alliance will provide on-the-ground resources—including a sizable team of qualified inspectors—to monitor that factory owners are making progress toward completion of their corrective action plans (CAPs). CAPs are provided to every factory and outline the specific fire, structural and electrical repairs necessary to bring factories into compliance with international standards. Timely progress on the CAPs is required under this arrangement in order for factory owners to maintain favorable loan terms. Alliance professionals will also provide technical assistance to banks on the remediation process and facilitate introductions between factory owners and lenders.
In addition to its work on factory inspections and remediation, the Alliance has developed several worker empowerment programs, including fire safety trainings that have reached more than 1.2 million workers and security guards. The Alliance also launched the RMG sector's first-ever telephone helpline—Amader Kotha, or Our Voice—to which workers can anonymously report safety and other concerns.
About The Alliance for Bangladesh Worker Safety
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. More information about the Alliance can be found at www.bangladeshworkersafety.org.
SOURCE The Alliance for Bangladesh Worker Safety