ADB upbeat over MSME development lending success in Sri Lanka | Sunday Observer

ADB upbeat over MSME development lending success in Sri Lanka

The results of the Asian Development Bank (ADB) micro, small and medium enterprises (MSMEs) financial intermediation loan project introduced to strengthen MSMEs in Sri Lanka have been very positive in terms of development impact.

The ADB approved a $100 million MSME financial intermediation loan for Sri Lanka in 2016, followed by an additional finance loan of $ 75 million in early 2018 together with a $2 million technical assistance grant project supported by the Japan Fund for Poverty Reduction.

The original loan facility of $100 million approved in 2016 has been fully disbursed over 2.5 years to more than 1,700 small businesses with exceeding targets of first-time and women borrowers, Bruno Carrasco, Director Public Management, Finance Sector and Trade Division South Asia Department, ADB told a media round table on Thursday.

“ADB was happy with the performance of MSME development finance program carried out in Sri Lanka in the past few years which has shown good results,” he said.

Carrasco said access to finance in Sri Lanka remained a work in progress ranking on the lower end of the international spectrum. ADB thus has worked in close partnership with the Ministry of Finance and 10 banks in Sri Lanka to develop a model project that improves MSMEs’ access to finance with targets of first time borrowers and women enterprises in financially underserved areas of the country. ADB’s financial intermediation loan was to provide long term financing which was not easily available in Lankan market, for underserved MSMEs to develop their business. This leads to enhancing economic activities, increasing income and generating more employment through private sector development, he said.

Carrasco said ADB was able to secure a $12.5 million grant funding from a multi-lateral trust fund’s ‘Women Entrepreneurship Financing Initiative’ for Sri Lanka to further promote gender empowerment by financially supporting women borrowers from the ongoing ADB’s facility.