Unlocking Vietnam’s Potential: IFC and Switzerland’s Strategic Alliance for Supply Chain Finance

Backed by a substantial 5 million Swiss Franc grant from the State Secretariat for Economic Affairs (SECO), this initiative will make a significant impact until 2029. With a focus on supporting Vietnamese SMEs, the project aims to help over 500,000 small and medium-sized enterprises access much-needed financing, totaling up to an impressive 35 billion USD.

Vietnam’s economy relies heavily on exports, and cash flow management is a common challenge for local businesses due to extended payment cycles. A recent World Bank survey highlights this issue, revealing that less than 20% of local firms were linked to global value chains in 2023.

This is where supply chain finance (SCF) solutions step in, offering a transformative approach. By converting sales receivables into cash, SCF eases cash flow constraints, empowering SMEs to take on larger orders and expand their operations with increased financial flexibility.

Swiss Ambassador to Vietnam, Thomas Gass, and IFC Country Manager, Thomas Jacobs, seal the deal with a handshake – Photo courtesy of IFC

“The program has already made a notable difference,” asserted Thomas Gass, Swiss Ambassador to Vietnam. “We estimate that the initial phase unlocked over 30 billion USD in capital for approximately half of Vietnamese SMEs, which is a substantial contribution to their growth and the broader economy.”

The impact of this initiative extends beyond just financial support. By aiding these businesses, the program fosters a more inclusive and sustainable marketplace, benefiting the entire country. It’s a testament to the power of international collaboration for economic development.

Since its inception in 2018, the IFC-SECO SCF program has been a driving force for positive change. It has successfully improved regulations, enhanced institutional readiness, and stimulated market demand and awareness. Over the past five years, the program facilitated an impressive 33 billion USD in financing for 500,000 SMEs. Now, as we enter the next phase, the focus shifts to strengthening regulations further, improving lender capacity, and ensuring that more businesses are aware of and can utilize SCF solutions.

Deputy Governor Nguyen Ngoc Canh emphasized the continued collaboration between the State Bank of Vietnam, IFC, and SECO, stating their joint commitment to fostering an even more favorable environment for SCF. This includes refining rules for e-financing platform lending and encouraging financial institutions to diversify their offerings to improve credit access for SMEs, ensuring a brighter future for Vietnam’s economic landscape.

Thomas Jacobs, IFC Country Manager for Vietnam, Cambodia, and Laos, shared his enthusiasm for the project: “IFC is thrilled to be working with SECO and our bank partners to stimulate the market for supply chain finance. We strongly believe in the potential of SCF and better trade finance solutions to become a critical part of the financial ecosystem for SMEs in Vietnam. Together, we can make a lasting impact.”