IFC provides US$40 million to facilitate SMEs’ post-pandemic recovery
The International Finance Corporation (IFC), a member of the World Bank Group, is providing a US$40 million loan to help small and medium enterprises (SMEs) in Vietnam make a resilient recovery after the COVID-19 pandemic through the Southeast Asia Commercial Joint Stock Bank (SeABank).
This is the first phase of an up to US$150 million financing package, which will help expand lending to SMEs, especially women-owned businesses, increase access to climate finance and boost international trade opportunities.
The package will comprise up to US$80 million from IFC's own account and US$50 million to be mobilized from international lenders, in addition to a US$20 million trade finance line.
While the investment aims to increase SeABank's SME lending portfolio, at least US$20 million will be earmarked for women-owned SMEs, with support from the Women Entrepreneurs Finance Initiative.
With a strategy to expand its reach to women-owned and -led SMEs, IFC's funding will help the bank triple its current lending for women-owned SMEs, accounting for about 25% of its total SME portfolio by 2024.
Climate finance is a new area in Vietnam with a US$753 billion climate investment opportunity between 2016 and 2030 as the country aims to reduce greenhouse-gas emissions by 9% by 2030 to mitigate the climate change impact. IFC is helping SeABank support the country with US$30 million to be allocated for climate-friendly projects.
Further, IFC's support is expected to help SeABank build a US$60 million climate-finance portfolio by 2024.
"IFC's long-term financing and technical advice will enable SeABank to focus on two strategic segments - women-owned SMEs and climate financing. Given the pandemic, IFC's timely investment also allows us to extend support to more businesses at a critical time, while contributing to the stability of Vietnam's overall financial market," said Le Thu Thuy, general director of SeABank.
Besides, IFC's US$20 million trade guarantee line under its Global Trade Finance Program will boost SeABank's capacity to provide financing for importers and exporters to minimize the disruption of trade given the ongoing pandemic.