IFC partners with SHB to boost SME lending
Initial $40 million loan to help bank provide finance to local SMEs, especially those run by women.
The Saigon-Hanoi Commercial Joint Stock Bank (SHB) is the latest Vietnamese bank to join the International Finance Corporation (IFC) in expanding access to finance for small and medium-sized enterprises (SMEs), especially women-owned enterprises, according to an announcement released on March 21.
Under the new deal, the IFC will provide a $40 million loan - the first phase of an overall $120 million financing package - to help SHB provide more support to local enterprises and boost their participation in global supply chains.
More than one-third of the funding will be exclusively targeted for women-owned SMEs, with support from the Women Entrepreneurs Opportunity Facility (WEOF) and the Women Entrepreneurs Finance Initiative (We-Fi) through a performance-based incentive that encourages financial institutions to provide financing to women-owned small businesses.
The IFC’s investment is expected to help the bank more than double its number of loans to SMEs and 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 have difficulties accessing finance, with about 62 per cent of all SME financing needs unmet. An IFC study estimates that the financing gap for SMEs in Vietnam is around $21.7 billion.
“We believe that with timely support policies and solutions and capital flows like this package from the IFC, SMEs will be able to unlock their potential, expanding production and pursuing sustainable development,” said Ms. Ngo Thu Ha, CEO of SHB. “With support from the IFC and international lenders, SHB will be able to further strengthen its solid foundation, grow stably and sustainably, and comply with international standards.”
“We are pleased to continue to empower female entrepreneurs to accelerate growth and recharge their businesses through access to capital,” said Ms. Charlotte Keenan, Global Director of Goldman Sachs 10,000 Women. “We look forward to supporting SHB as it expands lending to women-owned businesses in Vietnam.”
Of note, about one-fifth of the financing package will be on-lent to SMEs participating in supply chains. This complements the IFC’s ongoing advisory support to help SHB scale up its SCF business - a new segment in the local market that offers efficient and lower-cost financing solutions to suppliers participating in supply chains.
Mr. Thomas Jacobs, IFC Country Manager for Vietnam, Cambodia and Laos, said it is 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. “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,” he added.
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 Program (GTFP) is expected to be provided to SHB in the coming months. The IFC will also advise SHB on improving its risk management and environmental, social, governance (ESG) standards.
