IFC expert expects SHB to double credit to women-led businesses

In general, credit demand in this segment has been steadily on the rise, along with the growing role and contribution of small and medium-sized enterprises to the economy.

The backbone of the economy

This role and contribution serve as the backbone of many developing economies, including Vietnam, said Natalia Bogomolova, Asia-Pacific Regional Industry Manager for Financial Institutions Group of International Finance Corporation (IFC), at the signing ceremony for a high-level loan agreement worth US$120 million with Saigon-Hanoi Bank (SHB) at the end of March.

She added that small and medium-sized enterprises (SMEs), including women-led businesses, account for about 40% of the country's GDP and about 50% of total employment. In addition, women-led businesses in Vietnam represent a quarter of the country's total number of enterprises. Vietnamese women entrepreneurs generate annual revenues equivalent to their male counterparts and experience growth rates exceeding 20%.

According to the IFC expert, a market survey conducted by the organisation in 2017 indicated a capital shortfall of around US$22 billion for Vietnamese SMEs, with an estimated US$5 billion gap specifically for women-led SMEs. A report by the Vietnam Chamber of Commerce and Industry (VCCI) in 2020 showed one-third of women-led businesses identified access to finance as a primary barrier to their business operations.

These are some of the reasons why IFC continues to collaborate with and enhance funding for SHB, with the aim of strengthening support for domestic SMEs, including women-led businesses, and SMEs engaged in the supply chain.

"The IFC investment is expected to help SHB double the number of loans to SMEs and credit for women-led businesses in their investment portfolio by 2025," said Natalia Bogomolova.

She noted that over one-third of IFC's funding will be dedicated to women-led businesses. Through IFC's investment, SHB will develop a gender strategy for women-led SMEs, establish monitoring and tracking mechanisms for the portfolio and improve products offered to female entrepreneurs.

Enhancing connectivity

In recent years, SMEs in general, and women-led businesses in particular, have been a strategic segment for SHB. With a clear focus, close alignment, and understanding, SHB has developed seamless solutions and policies for this segment, especially by strengthening connections with international concessional funding sources.

In an interview with the media, Ngo Thu Ha, CEO of SHB, said SHB has successfully maintained a B1 credit rating by Moody's in the April 2023 update, amid a global market undergoing major changes and challenges in 2022 and early 2023.

Meanwhile, the bank has been highly regarded by the State Bank of Vietnam (SBV) and international financial institutions for the bank's contributions to green credit development and credit provision to SMEs, including women-led businesses.

In addition, compliance with international standards in operations has enabled SHB to access higher international funding limits that allow SHB to be more proactive in supporting and accompanying SMEs.

According to the CEO, besides the preferential value, IFC funds have medium to long-term maturity, which helps stabilise the funding structure, especially considering that the mobilised funds of Vietnamese commercial banks, in general, are still predominantly short-term.

In 2022, SHB has expanded and strengthened cooperation with various international financial institutions to diversify funding sources. The bank has obtained over US$2.6 billion from 26 ODA projects, nearly US$800 million from commercial funding limits, and nearly US$400 million in medium to long-term loans from international organisations.

Alongside funding, SHB has been in close collaboration with experts from the World Bank (WB), Asian Development Bank (ADB), IFC, among others, to implement support programs and advisory services for SMEs, including women-led businesses. These programmes focus on developing business solutions and adapting to market changes, as well as providing specific guidance on cash flow management and utilising credit sources effectively and efficiently.

Through IFC and SHB collaboration, Bogomolova said IFC recognises that SHB's development strategy places a strong emphasis on providing credit to women entrepreneurs, and this can be achieved with support from the Women Entrepreneurs Finance Initiative (We-Fi) and Women Entrepreneurs Opportunity Facility (WEOF) through performance-based incentive programmes provided to SHB, which encourages financial institutions to provide finance to small businesses led by women.

In this strategic direction, the SHB's CEO affirms the bank's commitment to enhance and expand the scale of credit in support of SMEs, including women-led businesses, in alignment with the expectations of IFC and international financial institutions. Additionally, SHB will leverage its strengths in credit development in priority sectors and green credit, following the sustainable development strategy outlined by the Vietnam Government and the central bank.