IFC Partners with Li & Fung to Enhance Supply-Chain Finance in Asia

The collaboration between IFC, Li & Fung, and Air8 represents a significant stride toward enhancing financial accessibility and sustainability in the Asian supply-chain landscape.

In a bid to bolster supply-chain finance accessibility for small and medium-sized enterprises (SMEs) across Asia, the International Finance Corporation (IFC) has announced a significant partnership with Li & Fung and its supply-chain fintech affiliate, Air8. This collaboration aims to integrate digitalization and improve financial inclusivity within the apparel and general merchandise sectors.

Financial Facilitation and Scope of Investment

IFC's Financial Commitment: IFC is extending a US$75 million senior credit facility to Li & Fung, primarily directed towards enhancing the working capital capabilities of the company and its affiliate, Air8. This funding will empower them to expand their supply-chain solutions and financing services, particularly targeting SMEs within their network.

Focus on SMEs: SMEs often face challenges in securing working capital, which is crucial for their operational sustainability and growth. Supply-chain finance provided through this partnership will enable these enterprises to manage cash flow effectively and reduce financing costs by facilitating early payment of invoices.

Geographical Impact: The initiative is set to benefit SMEs in several Asian countries, including Bangladesh, Cambodia, China, Indonesia, Sri Lanka, and Vietnam. These economies heavily rely on the apparel and merchandise sectors, which collectively employ millions of workers but face vulnerabilities to economic shocks.

Sustainable Development Goals

Environmental and Social Focus: The loan extended by IFC includes provisions aimed at promoting environmental and social (E&S) best practices among suppliers in Li & Fung’s network. This initiative underscores a commitment to fostering sustainability across the global supply chain, ensuring positive impacts on both business operations and communities.

Strategic Guidance: In addition to financial support, IFC will provide strategic guidance to enhance E&S practices within Li & Fung’s supply chain. This collaborative approach aims to elevate standards and performance across the industry, reinforcing the importance of sustainable business practices.

Industry and Economic Implications

Sectoral Importance: The apparel and footwear sector is pivotal to many Asian economies, providing livelihoods for approximately 60 million workers. Strengthening supply-chain finance capabilities not only supports economic stability but also contributes to job creation and sustainable growth in the region.

Long-Term Goals: By bridging the finance gap for SMEs, the partnership seeks to foster a resilient and inclusive supply-chain ecosystem. This approach aligns with broader economic development goals, promoting trade, employment, and overall economic resilience in developing Asian countries.

Leadership Perspectives

Victor Fung's Vision: Dr. Victor Fung, Honorary Chairman of Li & Fung and Chairman of Fung Investments, emphasizes the transformative impact of IFC's support on expanding access to capital for SMEs. He highlights the critical role of these enterprises in shaping Asia's evolving supply chains and contributing to sustainable economic growth.

IFC's Commitment: Riccardo Puliti, IFC's Vice President for Asia and the Pacific, underscores the institution’s dedication to fostering sustainable economic growth and empowerment across Asia. This investment not only advances financial inclusion but also strengthens the governance and environmental stewardship within supply chains.

 

The collaboration between IFC, Li & Fung, and Air8 represents a significant stride toward enhancing financial accessibility and sustainability in the Asian supply-chain landscape. By leveraging digital solutions and promoting E&S best practices, the initiative aims to create a resilient and inclusive business environment that benefits suppliers, employees, and economies alike. This strategic partnership underscores a commitment to driving positive social impact while fostering economic prosperity across the region.