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ADB loan to support Bangladesh RMG industry safeguards
Apr '16
The Asian Development Bank (ADB) has signed a loan agreement with Bangladesh's BRAC Bank under the $30 million loan facility approved by ADB's Board, which will be used to finance the construction and upgrade of ready-made garment factories in the country that have taken steps to meet globally agreed standards for structural improvements and worker rights and safety.

In a press release, the ADB also said the loan will also be used to build badly needed effluent treatment facilities in the textile and garment industry. Many factories in Bangladesh still operate without effluent treatment plants, resulting in widespread water pollution which is particularly damaging in rural areas where communities rely on surface water for washing, bathing, irrigation and fishing.

“This loan, with a 5-year tenure, will help meet the need for longer term finance currently unavailable from local banks and international capital markets, and will be used exclusively by BRAC Bank to finance socially and environmentally sustainable projects,” said Biao Huang, Investment Specialist in ADB's Private Sector Operations Department.

Transforming the factories in line with agreements after the Rana Plaza tragedy of 2013, however, requires substantial outlays, with the cost estimated at around $250,000 to $400,000 per factory. Given the lack of long term funding available in Bangladesh, ADB's loan will enable BRAC Bank to offer longer tenure financing to companies wanting to upgrade and improve structural, safety and social standards at their factories.

ADB will also be working with the bank on a rollout of a gender action plan, which will ensure factory upgrades reflect the needs of women. This includes the provision of day care facilities, safety measures for females, and health clinics. Women make up nearly 80 per cent of all workers in the textile and garments industry in Bangladesh. (SH)

Fibre2Fashion News Desk – India

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