Industries hit hard due to the onslaught of the pandemic are all set to benefit from a $30 million World Bank loan to Bangladesh's BRAC Bank.
The loan from the International Finance Corporation, a member of the World Bank Group, will help both the small and medium-sized enterprises (SMEs) as well as large corporations in Bangladesh stay afloat amid the Covid-induced economic slowdown.
The investment will help to keep businesses open and preserve jobs, which is critical to sustaining the Bangladeshi economy, according to a release.
The package is, in fact, part of IFC's $8 billion global Covid-19 fast-track financing facility to support companies during the ongoing public health crisis. This new investment comes under the Working Capital Solutions (WCS) programme of the Covid-19 response envelope, which is providing $2 billion globally to emerging-market banks, enabling them to support struggling firms.
This project will also be supported by the International Development Association’s Private Sector Window Blended Finance Facility, which is also supporting IFC’s WCS programme with a first-loss guarantee of up to $215 million in eligible countries.
With the financing, BRAC Bank is expected to extend loans to its SME and corporate customers, supporting businesses that are now coping with a new wave of Covid-19 in Bangladesh.
“BRAC Bank promotes businesses of all sizes but as the pioneer of SME banking, we are particularly conscious of the needs of SMEs and micro-enterprises that play a vital role in driving economic growth and employment-generation,” said Selim RF Hussain, Managing Director and CEO of BRAC Bank.
“The Covid scenario is challenging and at the same time difficult for both banks and their SME and corporate customers. We hope that the partnership with IFC would help us to continue supporting the Covid-impacted businesses and help them recover.”
SMEs make up over 90 percent of businesses in Bangladesh and employ over 20 percent of the adult population. Their cash flows have been heavily disrupted by the ongoing pandemic. An IFC survey last October showed nearly a third of workers in Bangladesh’s micro, small and medium sized enterprises were jobless at the time, due to the Covid-induced financial downturn.
“Clearly, the impacts of Covid-19 are continuing to exact a heavy toll on businesses trying to keep operating and keep staff employed,” said Wendy Werner, IFC Country Manager for Bangladesh, Bhutan and Nepal. “This finance line to our long-standing partner, BRAC Bank, is the most recent part of IFC’s effort to help Bangladesh build back better from the Covid-19 pandemic.”
In Bangladesh, IFC has provided a total of $260 million in working capital solutions to banks and liquidity support to companies since the beginning of the Covid-19 crisis, including this new funding to BRAC Bank.
Source: United News of Bangladesh