Banks lift women-led groups with financing options

Illustration photo - source: taichinhkinhdoanh.net

Last week, privately-held Vietnamese lender SeABank received a $40 million credit package from the International Finance Corporation (IFC) under the World Bank Group. This is the first phase of an up to $150 million financing package, which is slated to help SeABank expand its lending services to women-owned small- and medium-sized enterprises (WSMEs), boosting both climate finance and international trade opportunities.

While the investment aims to increase SeABank’s SMEs lending portfolio, at least $20 million will be earmarked for WSMEs, with assistance from the Women Entrepreneurs Finance Initiative (We-Fi). With a strategy to expand its reach to WSMEs, IFC’s funding will help the bank triple its current WSME lending, accounting for about a quarter of its total SME portfolio by 2024.

“IFC’s long-term financing and technical advice will enable SeABank to focus on two strategic segments, WSMEs and climate financing, and position itself as a bank of choice for women-owned businesses and climate-friendly projects over the next five years,” Le Thu Thuy, CEO of SeABank highlighted. “Given the pandemic, the 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.”

In the mould of SeABank, southern-based lender OCB has also offered a special loan package to assist WSMEs, targeting to enhance the role of female entrepreneurs in the domestic business climate. OCB has also laid out plans to boost women representation in businesses across a variety of industries, such as manufacturing and startups.

Both OCB and SeABank are ramping up their presence in WSMEs loan portfolio as a part of their environmental, social and governance practices.

As women are facing hurdles from long-standing social perceptions in entrepreneurship, those credit facilities are expected to bridge the $4.9 billion financing gap for WSMEs, which accounts for more than one-fifth of the SME financing gap in Vietnam.

Trinh Van Tuan, chairman of OCB, shared with VIR, “Women-founded firms are still making up a minority percentage of Vietnamese enterprises. As a bank dedicated to promoting gender diversity and innovative ideas, we firmly believe it is a pivotal moment for us to support these talented female founders in Vietnam. Thus, more groundbreaking achievements from women-led companies will benefit our society as a whole.”

Kyle Kelhofer, IFC country manager for Vietnam, Cambodia, and Laos said, “Our investment in Vietnamese banks reiterates our confidence in the country and strategic direction to increase financing for SMEs and climate investments, furthering green and inclusive growth, and helping Vietnam build back better after the pandemic.”

In March, state-owned bank BIDV launched a $5 million comprehensive financial solution to help mitigate the obstacles of the pandemic for WSMEs, with some offerings such as extending loan repayment terms of up to six months, supporting six months of interest. This is one of the essential initiatives to uphold WSMEs to advance their digital transformation.

Last December, Asian Development Bank inked a $5 million grant agreement, funded by We-Fi, to support Vietnamese women-led SMEs, whose access to finance has been weakened due to the pandemic. Five Vietnamese banks have volunteered to participate in the grant – ACB, BIDV, SHB, TPBank, and VPBank.

Standard Chartered Bank Vietnam also acknowledged the utmost importance of women participation in Vietnam’s economic development. Last June, the foreign bank offered a $25 million of uncommitted credit facilities for WSMEs to help them navigate through this challenging period and gain access to capital financing and high-quality financial advice.

According to the Mastercard Index of Women Entrepreneurs 2020, Vietnam ranked 25th out of 58 economies in the global ranking of best places to become a female entrepreneur.

The country also made it to ninth place in Women’s Advancement Outcomes, which measures women’s progress and the degree of marginalisation they face economically and professionally as business leaders, entrepreneurs, and workers in general.

Women-led enterprises in Vietnam account for 26.5 per cent of the total number of enterprises in the country, but most of them are small in size. Thus, the country ranked 23rd globally and second in Southeast Asia after the Philippines in terms of share of total business owners in last year’s index.

The outbreak has disproportionately impacted women, and female entrepreneurs have had to look for new ways of working, including tapping into new business opportunities and realigning existing models.