Sri Lankan SMEs to be supported by ADB-Deutsche Bank supply chain finance deal
A deal between the Asian Development Bank (ADB) and Deutsche Bank AG will reportedly pave the way for Sri Lankan small and medium-sized enterprises (SMEs) to gain access to supply chain finance among several developing Asian countries.
According to reports, the ADB and Deutsche Bank have announced an agreement to enter into a supply chain finance (SCF) transaction under ADB’s Supply Chain Finance Programme (SCFP).
An official statement has said the SCF will provide over US$ 200 million in annual financing to SMEs across developing Asia.
The programme is to support SME suppliers to United Arab Emirates-headquartered Landmark Group, a major retailer in the Middle East.
Reports state that most of the suppliers who benefit from the arrangement are located in Bangladesh, the People’s Republic of China, India, Sri Lanka, and Viet Nam.
ADB and Deutsche Bank’s partnership will enable SME suppliers to gain better access to working capital and should therefore contribute to SME growth, enhancing their ability to create jobs in their home markets.
“We appreciate Deutsche Bank and Landmark’s partnership and look forward to replicating the arrangement in more supply chains,” Steven Beck, Head of Trade and Supply Chain Finance at ADB has said.
While the SCFP provides guarantees in supply chain finance structures, its scope also covers funded supply chain financing as well.
“This unique financing structure, the first of its kind, will help global retailers like the Landmark Group to utilize this approach to impact the cash flows of suppliers across emerging markets in a positive way,” Harold Leenen, Head of Global Transaction Banking, Middle East and Africa at Deutsche Bank has said.
“This will enhance our relationships with Asian SME suppliers and pave the way for other such programs. In addition, we would reap the benefits backed by the AAA rating of ADB and efficient solution delivery by Deutsche Bank.” Rajesh Garg, Group Chief Financial Officer, Landmark Group has said.
Landmark Retail Ltd Group’s objective through this program is to build reliable and sustainable relationships with its suppliers in developing Asia.
Since the supply chain finance programme shares risk with partner banks and improves liquidity within supply chains, mostly for SMEs will result in the SMEs in developing Asia contributing to growth and job creation. This opportunity could be used by interested investors to engage with the local SME sector for manufacture products to be consumed locally and internationally.
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