Dhaka, Bangladesh, April 27, 2021— Small and medium-sized enterprises (SMEs) and larger companies hard hit by the impacts of the COVID-19 pandemic are set to benefit from a $30 million loan to BRAC Bank Limited from IFC, a member of the World Bank Group. The investment will help to keep businesses open and preserve jobs, which is critical to sustaining the Bangladeshi economy.
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) program 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 program 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 makeup 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 COVID-19 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 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," 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.
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
About the IDA Private Sector Window
As part of the record $75 billion IDA18 replenishment, the World Bank Group created the $2.5 billion IDA Private Sector Window to catalyze private sector investment in the poorest and most fragile countries. Recognizing the key role of the private sector in achieving IDA18 objectives and the Sustainable Development Goals, the window provides concessional funds for co-investment alongside IFC and Multilateral Investment Guarantee Agency (MIGA) private investments. Concessional funds help to mitigate risk and reduce barriers, which unlocks and crowds in private investment in emerging markets. For more information, visit: https://ida.worldbank.org/psw