Remediation financing in Bangladesh’s ready made garment sector: An overview

High interest rates and a lack of financial literacy are highlighted as major obstacles to factories in the Bangladesh Ready Made Garment (RMG) sector from obtaining remediation financing according to a report launched by the International Finance Corporation (IFC) and International Labour Organization (ILO) in Dhaka today.

IFC and the ILO jointly commissioned this study on remediation financing to assess the needs and constraints faced in Bangladesh’s Ready Made Garment (RMG) sector. The study was to analyze both the cost of safety remediation for structural, electrical and fire safety work in RMG factories, and the factory’s ability to finance this work – either through their own resources, through buyers’ support, or through accessing loan capital. Within this analysis would be an overview of financing options available to RMG factories, including a review of Bangladesh’s banking sector and the credit facilities recently developed by international organizations specifically for RMG remediation. Lastly, the study would identify key challenges to remediation by looking at bottlenecks in the availability and cost of safety inputs, as well as the capacity of sector stakeholders to provide the necessary services.