(UTV|COLOMBO) – The ADB has completed the disbursement of $ 25 million which is the first tranche of the additional $75 million micro, small and medium enterprises (MSMEs) financial intermediation loan project introduced to strengthen MSMEs in Sri Lanka.ADB had targeted 5 percent of the lending to women-led MSMEs initially, which was extended to 20 percent later. However 27.6 percent of the funding had gone to women-led MSMEs by October 2018 which was well above the expectation and the most recent data shows that this number has further risen to 41 percent with the disbursement of the $ 25 million tranche, ADB Financial Sector Specialist, Public Management Finance Sector, and Trade Division, South Asia Department, Takuya Hoshino told a round table press gathering in Colombo on Thursday.
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 2018 together with a $2 million technical assistance grant project supported by the Japan Fund for Poverty Reduction. The $2 million technical assistance grant project supported by the Japan Fund for Poverty Reduction was provided for training of women entrepreneurs engaged in food and agriculture sector and promoting international branding for ICT sector.
The original loan facility of $100 million approved in 2016 by the ADB has been fully disbursed over 2.5 years, and the ADB had just completed the disbursement of $ 25 million, which is the first tranche of the additional $75 million MSME loan. Hoshino said the ADB had set targets with the participating banks for the now fully disbursed $ 100 million loan and they had been able to exceed those targets which were very exciting.
The target of 10 percent set for first time borrowers had reached a 26 percent level and the target for agribusiness which was 70 percent to the main target group had reached 91.4 percent. He said more than 1,750 small businesses have obtained the loan.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 Bruno Carrasco, Director Public Management, Finance Sector and Trade Division South Asia Department, ADB said. Carrasco was on a two day visit to Colombo.
“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.
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