The funding process for factory safety in Bangladesh has finally got rolling.
On Wednesday, the United States Agency for International Development signed an agreement to provide $22 million for two new credit guarantee facilities in Dhaka, focused on improving apparel factory safety.
The bulk of the money — $18 million — will be provided via bank loans to members of the Alliance for Bangladesh Worker Safety. The Alliance is a group of 26 major global brands and retailers including Wal-Mart, Gap and Target, mostly from North America.
This guarantee partnership with Prime Bank Ltd. and United Commercial Bank was made through a financial commitment by the Alliance of $1.5 million to support the guarantee.
The second agreement will guarantee up to $4 million in bank loans to target financing opportunities to factories that are part of the Bangladesh Accord for Fire and Building Safety and the government of Bangladesh’s Tripartite Action Plan, which is supported by the International Labor Organization. The Bangladesh Accord for Fire and Building Safety has more than 190 members, including European firms such as H&M, Carrefour and Mango. The Tripartite Action Plan covers the remaining factories producing apparel in Bangladesh.
The partnership between USAID and the two banks will make long-term credit more available to small- and medium-sized suppliers in Bangladesh’s apparel sector. The money is intended to help factories make safety upgrades and structural improvements to help protect their workers and meet international standards.
USAID mission director Janina Jaruzelski and representatives from the respective banks were present at the signing ceremony.
The agreements will entitle the qualifying factories to have access to long-term U.S. dollar-denominated and Bangladesh taka loans.
The USAID package comes a week after the Swedish government committed funds of 45 million Swedish krona, or $5.4 million at current exchange, for improving conditions for garment workers in Bangladesh and to promote union rights. The agreement was signed on Saturday in New York, on the sidelines of the United Nations opening conference and will be implemented by the ILO in Bangladesh.
“We are proud to be working with Bangladesh and the ILO to strengthen workers’ rights in a vulnerable industry in which 80 percent of those employed are women. This project will put women in a stronger economic position and improve their working conditions,” said Isabella Lövin, Swedish Minister for International Development Cooperation.
The project — called “Promoting Social Dialogue and Harmonious Industrial Relations in the Bangladesh Ready-Made Garment Industry” — is expected to engage international buyers and trade union leaders and work toward creating a better dialogue between employers and employees.