International Finance Corporation (IFC) has partnered with Hong Kong-based supply-chain services provider in the apparel and general merchandise industry Li & Fung and its affiliate LFX to support small and medium-sized enterprise (SME) growth and digitalization in Asia’s supply chains.

IFC said in a statement on Wednesday that to help increase access to affordable supply-chain finance for smaller enterprises in Asia and integrate greater digitalization in supply-chain management, the organization has inked a partnership with Li & Fung.

According to the statement, IFC is providing a $75 million loan to Li & Fung and its affiliate LFX’s supply-chain fintech company, Air8.

This loan is a senior credit facility with an environmental and social (E&S) focus to facilitate funding to be channeled to vendors and empower a more sustainable supply chain.

The loan will support Li & Fung’s working capital needs and its supply-chain fintech affiliate Air8 in expanding its supply-chain solutions and financing services for apparel and general merchandise suppliers, particularly small and medium-sized enterprises (SMEs). IFC’s support is expected to add many new suppliers to Li & Fung’s network.

As part of our partnership and collaboration to drive sustainability, IFC will also provide guidance to improve E&S practices and performance among suppliers in Li & Fung’s network.

It is noted that the lack of working capital remains a key challenge for SMEs globally, and supply-chain finance improves their cash flow and reduces financing costs by allowing early payment of invoices.

IFC’s investment aims to increase supply-chain finance opportunities for businesses, driving trade, employment, and economies in developing countries in Asia including Bangladesh, Cambodia, China, Indonesia, Sri Lanka, and Viet Nam.

“IFC’s support will help Li & Fung accelerate its target vendors’ access to supply-chain funding and capital, which is not readily available for many smaller businesses in Asia, including medium-sized enterprises now playing an increasingly important role as Asia’s supply chains shift and reconfigure in a fast-changing environment,

“Strengthening these businesses will help fuel growth and create jobs in the apparel and merchandising sectors, as well as create a more sustainable supply chain that benefits all parties involved,” said Dr. Victor Fung, Honorary Chairman of Li & Fung and Chairman of Fung Investments.

According to the statement, the apparel and footwear sector is a cornerstone of many economies in Asia, employing around 60 million workers.

However, the sector is vulnerable to economic shocks, with a significant SME finance gap being one of the primary barriers to its growth in the region.

Li & Fung, alongside Air8, is committed to mitigating the challenges associated with supply-chain financing.

Through these efforts, they aim to advance the environmental, social, and governance agenda and enhance sustainability across the global supply chain.

“IFC’s investment in Li & Fung underscores our commitment to fostering sustainable economic growth and empowering SMEs across Asia,

“By expanding supply-chain financing, we are helping to create a more resilient and inclusive supply-chain ecosystem that benefits suppliers and employees, and contributes to broader economic development in the region,” said Riccardo Puliti, IFC’s Vice President for Asia and the Pacific.

It is noted that IFC has a longstanding relationship with the Fung Group of companies, having invested with Fung Investments in idsMED to expand professional and affordable integrated medical solutions across Asia.

Li & Fung, the Hong Kong-headquartered multinational group, is a global supply chain solutions partner.

The firm specializes in responsibly managing supply chains of high-volume, time-sensitive goods for leading retailers and brands worldwide.

LFX, building on Li & Fung’s foundation, invests in and operates innovative businesses to transform global value chains.

Air8 is a supply-chain financing solution provider focused on sustainability under LFX.

The company connects SME suppliers with funders across borders, leveraging deep apparel and merchandise sector expertise.

IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets.

The organization works in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries.

In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises.

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