The Asian Development Bank (ADB) has sanctioned a $100 million loan to bolster access to finance for small and medium-sized enterprises (SMEs) in Sri Lanka and fortify their resilience against external shocks, including economic downturns and climate-related challenges.
“SMEs play a pivotal role in Sri Lanka’s economy, constituting 52% of the country’s gross domestic product and employing 45% of the population,” remarked ADB Senior Financial Sector Specialist, Manohari Gunawardhena. “It is imperative to extend support to SMEs, particularly those led by women, to sustain and augment their contributions to the economy. This initiative aims to provide working capital and enhance SMEs’ access to finance, facilitating their expansion and adaptation to evolving circumstances.”
Through participating financial institutions, ADB will introduce a $50 million line of credit targeting underserved SMEs operating in export, tourism, technology, agriculture, and manufacturing sectors. Additionally, a $500,000 special facility will be established to subsidize guarantees for women-led SMEs. A gender gap assessment will be conducted to enhance women’s access to finance.
The project will complement the government’s equity contribution through the National Credit Guarantee Institution Limited (NCGI), which furnishes partial credit guarantees on SME loans. ADB will assist the NCGI in refining procedures to effectively support SMEs, encompassing guarantee underwriting, risk management, risk-based pricing, and guarantee recovery operations. Moreover, the project will integrate green finance elements by incorporating climate adaptation and mitigation measures for SMEs.
ADB remains steadfast in its pursuit of fostering a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while persisting in its endeavors to eliminate extreme poverty. Established in 1966, ADB is owned by 68 members, with 49 hailing from the region.
Source -ADB-
