Japan International Cooperation Agency Supports Sustainable Finance in Vietnam through Loan Agreement

Strategic Insights -

The Japan International Cooperation Agency (JICA) held a signing ceremony with Vietnam Prosperity Joint Stock Commercial Bank (VPBank) in Hanoi, Vietnam to facilitate a loan agreement under the Private Sector Investment Finance scheme. This collaboration aims to expand sustainable finance in Vietnam through co-financing with various international institutions. The project supports the growth of women-owned micro, small, and medium-sized enterprises (MSMEs) by improving access to finance and contributing to the country's economic growth.

Key Takeaways:

  • The loan agreement, worth 100 million USD, will be exclusively utilized to support lending to women-owned MSMEs (WMSMEs) in Vietnam, improving their access to finance.
  • The project contributes to several United Nations Sustainable Development Goals (SDGs), including Goal 5 (Gender equality), Goal 8 (Decent work and economic growth), Goal 9 (Industry, innovation and infrastructure), and Goal 17 (Partnerships for the goals).
  • The "SMBC-JICA Sustainable Finance Framework" was established to advance sustainable finance in financial markets and utilizes JICA's experience as a development finance institution.
  • This is JICA's first direct co-financing project with British International Investment (BII) and its second project with VPBank aimed at promoting financial inclusion for WMSMEs.
  • The project also supports the "2X Challenge," an initiative launched at the G7 Summit in 2018 to encourage investment that promotes gender equality.
  • In Vietnam, MSMEs account for over 97% of all businesses, and WMSMEs represent only about 20% of all MSMEs, highlighting the need for improved access to finance for these enterprises.

Statistics:

  • 100 million USD: the amount of the loan agreement
  • 20%: the percentage of women-owned MSMEs in Vietnam representing all MSMEs
  • 97%: the percentage of all businesses in Vietnam accounted for by MSMEs
  • 2018: the year the "2X Challenge" initiative was launched at the G7 Summit

Sources:

  • Japan International Cooperation Agency. (n.d.). Press Release: Private Sector Investment Finance Scheme Loan Agreement between Japan International Cooperation Agency and Vietnam Prosperity Joint Stock Commercial Bank.
  • Joint Press Release. (n.d.). SMBC-JICA Sustainable Finance Framework | Sumitomo Mitsui Banking Corporation.
  • Japan International Cooperation Agency. (n.d.). 2X Challenge.