Kathmandu- The International Finance Corporation (IFC) is investing $56 million in Nepal’s largest commercial bank, Global IME Bank Limited (GIBL), to support small businesses, including those owned by women, and to promote environmentally friendly projects.
This effort aims to make it easier for small and medium-sized enterprises (SMEs) to get financing, helping them to recover from the COVID-19 pandemic and to work on climate change mitigation projects like clean transport, smart agriculture, and solar energy.
Half of this loan will be specifically used to support projects that focus on the environment and businesses owned by women, while the other half will go directly to SMEs. This marks the first instance of a development financial institution offering gender-targeted financing in Nepal, according to a press statement issued by the IMF.
SMEs, which are crucial to Nepal’s economy, contributing 22% to the GDP and employing nearly two million people, face a significant financing gap, estimated at $3.6 billion. The challenge is even greater for women-owned SMEs, with over half of them having limited access to financial services. Given Nepal’s vulnerability to climate change and its goal to achieve net-zero emissions by 2045, this funding is also a step towards addressing the country’s climate finance needs.
“As the world is increasingly becoming conscious of the impact of business on climate and environment, this loan agreement reinforces our commitment to sustainability through climate and gender financing. Recognizing Nepal’s potential in the development of green energy, our commitment extends to bridging the resource gap in the energy sector. Furthermore, our initiative aims to confront gender disparity by providing financial support to economically empower women in rural Nepal. We are grateful to partner with IFC in this endeavor,” said Ratna Raj Bajracharya, Chief Executive Officer of Global IME Bank.
IFC will also help GIBL establish its climate and gender finance business lines while supporting the bank in developing a risk management framework.
“One of IFC’s strategic priorities in Nepal is to support financial inclusion and financial sector stability. Accordingly, this investment aims to strengthen the nascent gender and climate finance markets, catalyzing more private sector funding for climate-smart assets and WSMEs,” said Martin Holtmann, IFC’s Country Manager for Nepal, Bangladesh, and Bhutan. “IFC’s focused allocation aims to empower more women in the country while also creating jobs and boosting climate and economic resilience.”
This is the third partnership between IFC and GIBL. In 2022, IFC extended a trade finance facility as part of its Global Trade Finance Program (GTFP), which included a special provision for green trade financing. At the time, it was IFC’s first green trade finance line globally.