IFC to invest $30m in Pran Group to boost Bangladesh's private sector resilience, job creation

Infographics: TBS

The International Finance Corporation (IFC) has earmarked a $30 million investment for Pran Dairy Limited (PDL) and Habiganj Agro Limited (HAL), subsidiaries of PRAN Group, a leading entity in Bangladesh's food and beverage sector.

The investment aims to support severely impacted businesses, especially those relying on imports for raw materials amid a shortage of US dollars in Bangladesh. Besides, it seeks to help to improve the resilience of the food processing market while creating jobs, fostering gender diversity, and strengthening the economy.

Uzma Chowdhury, director of Finance at PRAN-RFL Group, told The Business Standard that the financial assistance is $15 million each for Pran Dairy and Habiganj Agro.  

The six-year loan with a two-year grace period will be used to pay for the import of raw materials, Chowdhury added. 

This is the first of IFC's USD term loans for working capital purposes in Bangladesh, which will enable Pran Dairy and Habiganj Agro to sustain operations, boost exports, and preserve over 30,000 jobs.

Additionally, the IFC will collaborate with the PRAN Group to enhance the participation of women and foster inclusion in their workplace through appropriate policies and practices.

The food and beverage sector is a key pillar of Bangladesh's economy, said the release. The food processing industry accounts for approximately 13% of the manufacturing production value and employs 19% of the industrial manufacturing workforce, with a projected compound annual growth rate of 12%.

However, the prevailing shortage of foreign exchange, coupled with elevated energy prices and power shortages, has disrupted the import of raw materials while constraining the lending capacity of local commercial banks.

In light of these challenges, IFC's longer-term US dollar financing will facilitate access to foreign exchange, assisting Bangladeshi companies in navigating the crisis.

Uzma Chowdhury said, "As a net importer, regular access to US dollars is crucial. However, due to the current shortage, accessing USD funds for working capital has been challenging. By providing scarce US dollar working capital, IFC will ensure the long-term stability of our operations and enable us to contribute to the country's economic stability."

As part of its advisory services, IFC will also aid the PRAN Group in developing the company's smallholder sourcing supply chain in Bangladesh and identifying opportunities for decarbonizing its agro-processing operations, among other initiatives.

Martin Holtmann, IFC country manager for Bangladesh, Bhutan, and Nepal, said, "Reaffirming our commitment to supporting clients during crises, IFC's financing seeks to alleviate the current shortage of foreign exchange while fostering private sector growth in Bangladesh.

"We are optimistic that it will enhance food security while prioritising support for strategically important industries through innovative solutions. By supporting the PRAN Group, IFC will contribute to diversifying Bangladesh's export base, which is crucial for job creation, expanding market opportunities, and enhancing economic resilience."

Since 2010, IFC has invested over $3.8 billion to promote private sector growth in Bangladesh.