IFC partners with SHB to boost lending for Việt Nam’s smaller businesses

March 21, 2023 - 15:26
The Sài Gòn-Hà Nội Commercial Joint Stock Bank (SHB) has teamed up with the International Finance Corporation (IFC) to increase access to finance for small and medium enterprises (SMEs) in Vietnam.

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At the signing ceremony on Tuesday. — Photo courtesy of SHB

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HÀ NỘI — The Sài Gòn-Hà Nội Commercial Joint Stock Bank (SHB) has teamed up with the International Finance Corporation (IFC) to increase access to finance for small and medium enterprises (SMEs) in Việt Nam.

As part of the agreement signed on Tuesday, IFC is providing a US$40 million loan to SHB, which is the first step towards a total financing package of $120 million. This funding will help SHB support local businesses and enhance their participation in the global supply chain. The investment from IFC is expected to more than double the number of SME loans and outstanding loan volumes for women-owned businesses by 2025.

Furthermore, more than one third of the funding will be solely targeted at 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 programme which encourages financial institutions to provide financing to women-owned small businesses.

This is particularly important, as SMEs generate 40 per cent of Việt Nam's gross domestic product (GDP) and 50 per cent of jobs, yet 62 per cent of total SME financing needs go unmet. An IFC study estimates that Việt Nam's financing gap for SMEs is approximately $21.7 billion.

Ngô Thu Hà, the CEO of SHB, believes that with timely support policies, solutions, and capital flows such as this package from IFC, SMEs will be able to unlock their potential, expand production, and pursue sustainable development.

"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," Hà said

IFC's Global Director of Goldman Sachs 10,000 Women, Charlotte Keenan, stated: "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 Việt Nam."

Moreover, approximately one-fifth of the financing package will be on-lent to SMEs participating in supply chains. This complements IFC's ongoing advisory support to help SHB scale up its Supply Chain Finance (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. 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 Việt Nam," said Thomas Jacobs, IFC Country Manager for Việt Nam, Cambodia, and Laos.

IFC is also working with international lenders to mobilise a $50 million financing package to further improve SHB's capacity in SME lending. Additionally, a $75 million trade guarantee line under IFC's Global Trade Finance Programme (GTFP) 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 (ESG) standards. — VNS