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Improving working conditions in the ready-made garment sector Phase 2 (RMGP II) and Building responsible value chains in Asia through the promotion of decent work in... - Cluster evaluation

eval_number:

2743

eval_url:

https://webapps.ilo.org/ievaldiscovery/eval/2743

location:

country:

Bangladesh

region:

Asia and the Pacific

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eval_title:

Improving working conditions in the ready-made garment sector Phase 2 (RMGP II) and Building responsible value chains in Asia through the promotion of decent work in... - Cluster evaluation

recommendations:

date:

2023-11-13 00:00:00.0

themes:

theme:

Enterprises

category:

Social finance

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comments:

The ILO RMGPII project formulated a remediation finance case study, stemming from a workshop focused on access to remediation finance. This workshop witnessed participation from financial institutions, factories, private sectors, and government agencies. The resultant case study was extensively disseminated during 2018-19. Given that the ILO is not a financial entity, there have been no subsequent developments regarding financing remediation, nor are there any plans to embark on endeavours related to remediation finance in the future. However, the ILO's initiatives such as the Industrial Safety Forum, along with engagement and capacity-building efforts with entities like BGMEA, BKMEA, DIFE, and other pertinent national bodies, will continue to accelerate the progress of factory remediation work.

action_plan:

None

management_response:

Partially Completed

progress:

No implementation

admin_units:

CO-Dhaka

title:

Recommendation 6: Re-examine relevance of remediation finance and redesign and reboot if needed: Remediation finance did not find takers in the first instance when it was launched. The factories, which need remediation finance, are more vulnerable as safety risk factors are very high. Financial Institutions (FIs) consider these factories as 'high risk' assets. Most of these factories are SMEs – a scale not favoured by commercial /competitive finance. Further financial packages offered currently are found to be cumbersome. FIs prefer to provide loans against credit guarantees /collateral/against fixed assets. But many of the SMEs are established in rental space and so unable to give guarantees. Remediation of these factories is not necessarily are remediation of entire buildings, model is sometime cumbersome to handle remediation financing. Given a spate of challenges, it is no wonder that the remediation finance so far has not been successful. To get a workable model of remediation finance, several modalities are needed, such as, a) consider dynamic and more flexible financing conditions and find out alternative ways for providing the finance to factories who need it most, b) simplify documentary requirements and procedures, c) BGMEA /BKMEA can do more to persuade their membership towards taking more responsibility (motivation can come from different structure of memberships- observer, associate, full etc) and facilitate finance guarantees to their member factories, d) risk sharing credit guarantees provided by the donors and GoB. The evaluation recommends an assessment of the root causes, relevance and need for the remediation finance. Based on this assessment, redesign, and reboot of remediation finance products is needed with support from other UN agencies (such as IFC), donors and the Government of Bangladesh.

project_symbols:

BGD/19/05/MUL

url:

https://webapps.ilo.org/ievaldiscovery/recommendations/17413

information_source:

Country Office

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