International Finance Corporation (IFC), the private sector arm of the World Bank Group, has proposed an A loan of up to $11.35 million to Hamza Textiles Limited, a Bangladesh-based firm that provides dyeing and finishing services for fabrics.
The proposed IFC investment will help finance the modernisation of the company’s fabric production facilities. The total project cost is estimated at about $44 million.
Hamza Textiles provides services for fabrics that are utilised in the manufacturing of ready-made garments (RMG). Its services include stenting, compacting, continuous tumbler drying, continuous washing, brushing, continuous bleaching, shearing, and overall fabrics coating.
According to IFC, the project will support Hamza to increase the process and product complexity and strengthen its vertical integration. The project has strong employment effects and will create 930 additional direct jobs and hundreds of jobs in the value chain, it added.
“This project, and IFC’s sectoral focus in the RMG sector in Bangladesh is expected to contribute to preserving Bangladesh’s competitiveness as a global player in the textile and apparel market,” IFC stressed.
Aside from IFC’s A loan, which will have a tenor of eight years, the World Bank is also proposing an $11.35-million loan through its IDA PSW Blended Finance Facility.
Resources allocated to the IDA PSW are a critical source of co-investment funding and guarantees to address market failures, to de-risk projects for all capital providers, and enable IFC and the Multilateral Investment Guarantee Agency (MIGA) to support projects outside of their normal risk acceptance criteria in IDA-only and IDA- fragile and conflict-affected states (FCS).
“Without the support of the blended concessional finance co-investment, the IFC investment and the envisaged development impact as described, in particular the creation of an estimated 930 new jobs, will not be achievable as Hamza will not have access to the proposed long-term US dollar debt financing offered by IFC,” the IFC said in its disclosure.
Bangladesh has 4.5 million citizens employed in the garments industry. Apparel exports account for 20% of the country’s GDP. IFC provides factories with access to short- and medium-term financing as part of its efforts to help strengthen the position of the country’s garment sector in global supply chains.
In February, IFC proposed a $50-million loan to Brandix Apparel Limited, a wholly-owned subsidiary of the Sri Lanka-based apparel manufacturer Branded Lanka. The company has 28 manufacturing facilities across 5 countries – Sri Lanka, India, Bangladesh, Cambodia, and Haiti.