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Last Updated : 2024-05-18 04:00:00
- ADB says loan extended to provide SMEs improved access to finance and build their resilience to external shocks
- Will open a US $ 50mn line of credit for underserviced SMEs in export, tourism, technology, agriculture and manufacturing sectors
- Will establish a US $ 500,000 special facility to cover guarantee subsidies for women-led SMEs
Sri Lanka’s small and medium enterprises (SMEs) are set to receive a significant boost, as the Asian Development Bank (ADB) prepares to offer a US $ 100 million loan.
This financial support will provide the much-needed breathing room for these struggling businesses, allowing them to concentrate on revitalisation efforts.
The ADB yesterday announced that the loan is extended with the aim of providing the island nation’s SMEs improved access to finance and build their resilience to the external shocks such as the economic crisis and climate change.
The SMEs play a critical role in Sri Lanka’s economy, contributing 52 percent to the country’s gross domestic product and employing 45 percent of the population.
“It is important to provide the SMEs, particularly the women-led enterprises, with the necessary support to sustain and grow the sector’s contribution to the economy. This project will provide working capital and improve the SMEs’ access to finance, helping them expand operations and prepare for the changing environment,” said ADB Senior Financial Sector Specialist Manohari Gunawardhena, in a statement to the media.
The ADB, through the participating financial institutions, will open a US $ 50 million line of credit for the underserviced SMEs in the export, tourism, technology, agriculture and
manufacturing sectors.
It will establish a US $ 500,000 special facility to cover guarantee subsidies for women-led SMEs. A gender gap assessment will be conducted, with a view to improving women’s access to finance.
The project will build on the government’s equity contribution through National Credit Guarantee Institution Limited (NCGI), which provides partial credit guarantees on loans to SMEs.
The ADB will help NCGI adopt procedures to effectively support the SMEs, including underwriting guarantees, risk management and risk-based pricing and guarantee recovery operations. The project will incorporate green finance elements through climate adaptation and mitigation measures for SMEs.
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