The International Finance Corporation (IFC) provided US$30 million to BRAC Bank to support small and medium sized enterprises (SMEs) and larger companies hit by the impacts of Covid-19 pandemic.
The investment will help to keep businesses open and preserve jobs, which is critical to sustaining the Bangladeshi economy, according to a statement.
The financing package is 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.
The 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.
The statement quoted managing director and CEO of BRAC Bank Selim RF Hussain as saying “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.”
“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 per cent of businesses in Bangladesh and employ over 20 per cent of the adult population. Their cash flows have been heavily disrupted by the ongoing Covid-19 pandemic, added the statement.
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 Covid-19 impacts.
“Clearly, the impacts of COVID-19 are continuing to exact a heavy toll on businesses trying to keep operating and keep staff employed,” the statement quoted 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.
