IFC partners with SHB to boost lending for SMEs

March 21, 2023 | 16:27
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Saigon-Hanoi Commercial Joint Stock Bank (SHB) is the latest Vietnamese bank to join IFC in expanding access to finance for small- and medium-sized enterprises, especially women-owned businesses.
IFC partners with SHB to boost lending for SMEs

Under a new deal, IFC is providing a $40 million loan, the first phase of an overall planned $120 million financing package, to help SHB to provide more support for local enterprises and boost their participation in the global supply chain.

More than one-third of the funding will be exclusively targeted for women-owned small- and medium-sized enterprises (SMEs), with support from the Women Entrepreneurs Opportunity Facility (WEOF) and the Women Entrepreneurs Finance Initiative (We-Fi) through a performance-based incentive, which encourages financial institutions to provide financing to women-owned small businesses.

IFC’s investment is expected to help SHB more than double the number of SME loans as well as the outstanding loan volume for women-owned businesses by 2025. While SMEs are critical to Vietnam’s economy, generating 40 per cent of GDP and 50 per cent of jobs, they are having difficulty accessing finance, with about 62 per cent of total SME financing needs unmet. An IFC study estimates Vietnam’s financing gap for SMEs is around $21.7 billion.

"We believe that with timely support policies and solutions, and capital flows like this package from IFC, SMEs will be able to unlock their potential, expanding production and pursuing sustainable development," said Ngo Thu Ha, SHB CEO.

"With support from IFC and international lenders, SHB will be able to further strengthen its solid foundation and buffer, grow stably and sustainably, and comply with international standards.”

Charlotte Keenan, Hlobal director of Goldman Sachs 10,000 Women - an ongoing initiative to foster economic growth by providing women entrepreneurs around the world with a business and management education and access to capital, said, “We are pleased to continue to empower female entrepreneurs to accelerate growth and recharge their businesses through access to capital. We look forward to supporting SHB as it expands lending to women-owned businesses in Vietnam.”

Notably, about one-fifth of the financing package will be lent to SMEs participating in supply chains. This complements IFC’s ongoing advisory support to help SHB scale up its SCF business – a new segment in the local market which offers efficient and lower-cost financing solutions to suppliers participating in supply chains.

“It’s vital that smaller businesses and especially those owned by women, are supported and able to access the funding they need to grow and expand their businesses,” said Thomas Jacobs, IFC Country Manager for Vietnam, Cambodia and Lao PDR.

“Our new partnership with SHB will help the bank strengthen its core business of serving smaller enterprises and allow those businesses to benefit from financing to link in with global supply chains, a move that will ultimately contribute to economic growth and job creation in Vietnam.”

The IFC is also working with international lenders to mobilize a $50 million financing package to further improve SHB’s capacity in SME lending. A $75 million trade guarantee line under the IFC’s global trade finance programme is expected to be provided to SHB in the coming months. IFC will also advise SHB to improve its risk management and environmental, social and governance standards.

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By Luu Huong

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