The Vietnamese government and the Asian Development Bank (ADB) on Tuesday entered into a deal to provide a US$5 million grant, sourced from the Women Entrepreneurs Finance Initiative (We-Fi), for Vietnamese women-led small and medium-sized enterprises (WSMEs) whose access to finance has been weakened because of the COVID-19 pandemic.

Governor of the State Bank of Vietnam Nguyen Thi Hong represented the government to sign the agreement with Andrew Jeffries, ADB’s country director for Vietnam, in Hanoi.

The grant will fund the COVID-19 Relief for Women-led Small and Medium-Sized Enterprises Project, which is aimed at incentivizing participating banks in Vietnam to restructure existing loans or extend new loans to at least 500 WSMEs.

Funds will be disbursed on a first-come, first-served basis, so that the banks will be competing for the funds and are incentivized to proactively find eligible WSMEs.

Five banks have volunteered to participate in the grant, including the Asia Commercial Bank, Bank for Investment and Development of Vietnam, Saigon-Hanoi Bank, Tien Phong Bank, and Vietnam Prosperity Bank.

The economic gains of the project are likely to come from helping WSMEs to avoid bankruptcy, preserve employment, and access credit at a time when banks are reducing lending.

The project complements the government’s financial inclusion strategy, approved in February 2020, which places special emphasis on both women and SMEs.

“Although Vietnam has managed the Covid-19 pandemic well, supply chain disruptions, economic downturns in export markets, and declines in tourism have slowed the country’s economy,” said Jeffries.

“To revive and sustain their businesses, support to access critical financing is essential for small- and medium-sized enterprises (SMEs), especially WSMEs adversely affected by COVID-19.”

Economic disruptions caused by COVID-19 fall hardest on SMEs, which have very limited resources to manage economic shocks.

In June 2020, the General Statistics Office reported that nearly 30,000 Vietnamese businesses registered to temporarily suspend their operations, a 38 percent increase over the first half of 2019.

We-Fi is governed by 14 founding contributing countries and managed by the World Bank.

It aims to mobilize more than $1 billion in commercial and international financial institution finance to improve the business environment for women-owned or -led SMEs.

In 2019, the ADB received $20.19 million from We-Fi to support WSMEs to access financing and training in Vietnam and the Pacific.

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