American clothes group VF Corp will provide full guarantee for loans the World Bank gives to a number of Bangladeshi suppliers to improve factory safety.
Guarantee for 10 million dollars
Over a year ago, the Rana Plaza complex collapsed near the Bangladeshi capital, Dhaka. More than 1,100 textile workers died and the disaster has uncovered the abysmal conditions in which Western-focused clothes are made.
To help resolve that situation, VF Corp (the group which owns The North Face, Kipling, Timberland, Vans and Wrangler) has struck a deal with International Finance Corporation (IFC), part of the World Bank Group. The American group will vouch for 10 million dollars (8 million euro) in IFC loans for Bangladeshi suppliers. That way, they can improve safety for their workers. Loans range from 100,000 dollars (80,000 euro) to 1.3 million dollars (1 million euro).
Guarantee results in cheaper loans
VF Corp's guarantee allows IFC to hand out cheaper loans as it no longer has to add a higher risk interest rates for default payments.
Arunima Sportswear, Olio Apparels and Radisson Apparel were the first of VF Corp's Bangladeshi suppliers to benefit from the more favourable loan conditions.