Asian Development Bank continues programme to uplift Sri Lanka’s micro, small and medium enterprises
The Asian Development Bank (ADB) has reportedly stated that following the successful disbursement of US$ 100 million financial intermediation loan to uplift micro, small and medium enterprises (MSMEs) in Sri Lanka, its innovative approach in effectively implementing the project has achieved the intended objective with banks having overshot targets.
“At first, we set some targets because there was no previous data, and we later revised those targets. Results have been very positive in terms of development impact. The original loan facility of US$ 100 million approved in the latter part of 2016 was fully disbursed over two and half years to over 1,700 MSMEs with exceeding targets of its first time borrowers and women borrowers,” ADB Public Management, Financial Sector and Trade Division – South Asia Department Financial Sector Specialist Takuya Hoshino has told journalists in Colombo last week.
Considering the importance of economic growth and job creation in Sri Lanka, the ADB had approved an additional US$ 75 million financing for the MSME line of credit project to increase the available loans for 10 participating banks to US$ 175 million by 2020, from the original loan figure of US$ 100 million approved in February 2016.
According to reports, the programme has included a US$ 2 million technical assistance grant project supported by the Japan Fund for Poverty Reduction to train the MSMEs on good business practices.
“To encourage banks to reach out and understand MSMEs without creating market distortion, ADB’s projects were structured to be behaviourally-driven models that provide incentives and penalties to banks,” Hoshino has said.
According to him, the programme had targeted 5% of the lending to women-led MSMEs initially, which had expanded the target to 20% by October 2018 and funding had been disbursed to 27.6% to MSMEs led by women.
OSL take:
The Asian Development Bank’s commitment towards helping upliftment of MSMEs in Sri Lanka is an encouraging sign for foreign businesses/investors interested in forming joint ventures with local businesses. Sri Lanka’s economy is on a growth path and the government’s development agenda together have created many business/investment opportunities in the country.
| Article Code : | VBS/AT/11032019/Z_4 |