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ADB, VPB ink US$500 million social loan deal
Offering aims to expand access to finance for women-owned SMEs in Vietnam
The Asset 11 Nov 2022

The Asian Development Bank (ADB) and the Vietnam Prosperity Joint Stock Commercial Bank (VPB) have signed a loan package of up to US$500 million to expand access to finance for women-owned small and medium-sized enterprises (WSMEs) and social loan projects in Vietnam.

The financing comprises a US$100 million loan from ADB’s ordinary capital resources that will be dedicated to WSME financing and a US$300 million syndicated parallel loan with US$100 million from the Sumitomo Mitsui Banking Corporation (SMBC), US$100 million from the Australia and New Zealand Banking Group, and US$100 million from Maybank Securities. The financial package also includes a US$100 million facility that was co-financed by Japan International Cooperation Agency (JICA) and SMBC and signed last October 2021.

The parallel loans were jointly mobilized by ADB and SMBC, who were also joint mandated lead arrangers and bookrunners for the JICA facility. The parallel loans will be used to support micro, small, and medium-sized enterprises (MSMEs) and social loan projects.

Social loans finance activities and projects that address social issues or achieve positive social outcomes. Eligible projects can include loans to MSMEs and WSMEs, support for public and private healthcare products and services, development of public and private educational infrastructure facilities, and support for affordable housing.

SMEs account for 40% of Vietnam’s gross domestic product and half of all employment. Access to commercial finance is a challenge, particularly for women borrowers who often face constraints, such as lack of collateral, low financial literacy, higher risk perception by banks and limited awareness among banks of the potential of the women’s market.

The financial package will help VPB design new products and procedures to enhance its support to WSMEs. A US$750,000 performance-based grant funded by We-Fi will incentivize VPB to expand its services to female borrowers and undertake a first-of-its-kind randomized control trial study in Vietnam on financial inclusion for WSMEs.

“Covid-19 has severely affected many businesses, so improving their access to finance is a vital step to post-pandemic recovery, particularly for women-run businesses, which face greater difficulties in accessing capital,” says Ashok Lavasa, ADB vice-president for private sector operations and public–private partnerships.

Nguyen Duc Vinh, VPB’s CEO, adds: “These funds will help VPB promote lending programmes for SMEs, WSMEs and other companies providing services, such as health care, education, sanitation and transport, by giving them access to relatively low-cost capital.”

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