Sri Lanka (Commonwealth Union)_ The Asian Development Bank (ADB) has sanctioned a $100 million loan to support small and medium-sized enterprises (SMEs) in Sri Lanka, aimed at enhancing their access to finance and fortifying their resilience against external pressures, such as economic downturns and climate impacts. According to Manohari Gunawardhena, ADB’s Senior Financial Sector Specialist, SMEs are pivotal to Sri Lanka’s economy, which accounts for 52% of the country’s gross domestic product and employs 45% of its populace.
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Recognizing this significance, Gunawardhena emphasized the necessity of supporting SMEs, especially those run by women, to encourage and amplify their contributions to the economy. According to her, this initiative intends to furnish SMEs with working capital, enhance their financial access, and facilitate their expansion to adapt to evolving market dynamics. She stated, “It is therefore important to provide SMEs, particularly women-led enterprises, with the necessary support to sustain and grow the sector’s contribution to the economy,” adding that this project will also help them expand operations and prepare for the changing environment.
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Through collaborating financial institutions, ADB will disburse a $50 million line of credit targeting underserved SMEs across sectors such as export, tourism, technology, agriculture, and manufacturing. Additionally, a $500,000 special fund will be established to subsidize guarantees for women-led SMEs, alongside a gender disparity assessment aimed at improving financial access for women entrepreneurs.
Furthermore, this project will also complement the government’s efforts, particularly through the National Credit Guarantee Institution Limited (NCGI), which provides partial credit guarantees for SME loans. ADB’s role will involve assisting NCGI in refining its operational procedures to effectively support SMEs, encompassing guarantee underwriting, risk management, risk-based pricing, and guarantee recovery initiatives.
Additionally, the project will integrate green finance principles, incorporating climate adaptation and mitigation strategies tailored to SMEs. With a vision of fostering prosperity, inclusivity, resilience, and sustainability across Asia and the Pacific region, ADB remains steadfast in its commitment to combating extreme poverty. Established in 1966, ADB comprises 68 member nations, 49 of which are from the region, aligning its endeavors with the broader developmental objectives of its constituents.
