In general, the demand for capital in this segment is increasing, along with the growing role and contribution of small and medium enterprises in general to the economy .
“The backbone of the economy”
That role and contribution is the backbone of many developing economies, and Vietnam is no exception, according to Ms. Natalia Bogomolova - Business Manager of Financial Institutions Group, Asia - Pacific region of International Finance Corporation (IFC) speaking at the signing ceremony of a high-level loan worth 120 million USD with Saigon - Hanoi Bank (SHB) at the end of March.
Ms. Natalia Bogomolova specifically cited that small and medium-sized enterprises (SMEs), including those owned by women, are generating about 40% of the country's GDP and about 50% of total employment. At the same time, Vietnamese women-owned businesses account for a quarter of the country's total enterprises. Vietnamese female entrepreneurs bring in average annual revenue equivalent to that of men and grow at a rate of over 20%.
IFC experts added that a 2017 market survey by the organization showed that Vietnamese SMEs lacked about $22 billion in capital. Of this, women-owned SMEs lacked an estimated $5 billion. Or more recently, in a 2020 report by the Vietnam Federation of Commerce and Industry (VCCI), one-third of women-owned businesses said that access to finance was the top barrier to doing business.
Ms. Ngo Thu Ha - General Director of SHB and Ms. Natalia Bogomolova - Business Manager of Financial Institutions, IFC Asia Pacific Region signed the cooperation agreement.
That is one of the reasons for IFC to continue to cooperate and increase financing for SHB, aiming to increase support for domestic SMEs, including women-owned enterprises and SMEs participating in supply chain finance.
“ IFC’s investment is expected to help SHB double the number of SMEs loans and outstanding loans to women-owned businesses in their portfolio by 2025 ,” said Ms. Natalia Bogomolova.
According to Ms. Natalia, more than one-third of IFC’s funding will be dedicated to women-owned businesses. Through IFC’s investment, SHB will develop a gender strategy for women-owned SMEs, improve the products offered to women-owned businesses, and build a mechanism to monitor and track its portfolio of women-owned SMEs.
Increase connectivity for strategic segments
For many years, small and medium enterprises in general, and women-owned enterprises in particular, have been SHB’s strategic customer segment. With a clear focus, close attention and understanding, SHB has developed solutions and policies suitable for this segment, and especially strengthened connections with international preferential capital sources.
Speaking to the press, Ms. Ngo Thu Ha - General Director of SHB said that Moody's maintained SHB's B1 credit rating in the April 2023 update in the context of the global market experiencing many fluctuations and challenges in 2022 and early 2023; being highly appreciated by the State Bank and international financial institutions for its contributions to developing green credit, credit for SMEs including women-owned enterprises, as well as compliance with international standards in operations, has created conditions for SHB to access higher international funding limits, thereby being more proactive in providing resources to accompany and support SMEs.
According to SHB General Director, in addition to preferential value, this capital source has medium and long-term characteristics, helping to stabilize the structure of mobilized capital, especially in the current context where mobilized capital of Vietnamese commercial banks in general is still mainly short-term.
In 2022, SHB will strengthen and expand its cooperation with many international financial institutions to diversify capital sources, with the total amount of 26 ODA projects reaching more than 2.6 billion USD; additional capital from the trade finance limit reaching nearly 800 million USD; medium and long-term capital borrowed from international organizations reaching nearly 400 million USD.
Along with capital, SHB cooperates closely with experts from the WB, ADB, IFC... to implement companion programs to support and advise SMEs, including women-owned businesses, on business development solutions and adapting to market fluctuations, as well as specifically in cash flow management, using credit sources reasonably and effectively.
In the coming time, SHB Bank will continue to promote and further expand the scale of loans to accompany and contribute to supporting SMEs.
Through the cooperation process, Ms. Natalia Bogomolova said, IFC saw that SHB's development strategy focused on credit to the female entrepreneur community, and IFC saw that it was possible with support from the Women Entrepreneurs Finance Initiative (We-Fi) and the Women Entrepreneurs Opportunity Fund (WEOF) through a performance-based incentive program, provided to SHB, to encourage financial institutions to provide finance to women-owned small businesses.
In this strategic direction, SHB General Director Ngo Thu Ha said that in the coming time, the bank will continue to promote and further expand the scale of loans to accompany and contribute to supporting SMEs and women-owned businesses, as the development direction expected by IFC and international financial institutions.
At the same time, SHB will continue to promote its strengths in developing credit in priority areas and green credit according to the sustainable development strategy oriented by the Government and the State Bank of Vietnam.
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