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| Sunday, 24 November 2002 |
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Loan scheme to relieve SMEs Sahanya, the loan scheme to assist small and medium-scale enterprises, was launched by the Ministry of Enterprise Development, Industrial Policy and Investment Promotion and the Asian Development Bank (ADB) last week. Barbara Erickson, the ADB representative said: "The SME sector and its growth is very important to the ADB as Sri Lanka is an important country for us. Therefore, we want to see its growth which will help reduce poverty in the country. Under the scheme, ADB will provide Rs 5800 million as assistance". This program is supported by the ADB as three projects - Policy and Enabling Environment US$ 20 million, Facilitating Business Development Services US$ 6 million, Technical Assistance US$ 1.25 million and in financing SMEs, the credit component is US$ 60 million while the partial Credit Guarantee is US$ 90 million. Under this program, SMEs can obtain loans upto Rs 35 million at an interest rate of 14 per cent. The payback period is 10 years while there is a two-year grace period. Sahanya will finance economically and financially viable enterprises in a broad range of sectors while special emphasis will be given to sub-loans for women entrepreneurs and to provinces with relatively high levels of poverty, said Minister of Enterprise Development, Industrial Policy and Investment Promotion Professor G.L. Peiris. The objectives of the program are enhancing the capabilities and competitiveness of the sector and creating jobs, thereby reducing poverty. He said: "Developing SMEs is the path to economic development, but the biggest obstacle is the high rate of interest. The loan scheme will be a blessing in disguise for SMEs to establish and grow. We have selected five banks - the development banks DFCC Bank and National Development Bank, and the commercial banks Hatton National Bank, Sampath Bank and Commercial Bank - to execute the program. Each bank will take the lead in one province. HNB will handle the North and East, NDB the South, Sampath Bank the Central Province, Commercial Bank the North Western Province while the Western Province will be serviced by DFCC. This does not mean that other banks cannot give loans to customers of a particular area. The Ministry has also taken steps to establish a fund to assist the SMEs to obtain expertise in areas such as accounts and management. SMEs have been identified as an important sector for promoting growth and social development in Sri Lanka. Identifying the absence of a clear and comprehensive policy for the development of this sector, a task force was appointed comprising representatives from trade chambers, banks, government institutions and other prominent individuals including the academia, to formulate a strategy for the SME sector to be competitive in the challenging market. A SME Policy Unit will be established at the Ministry. It will coordinate the activities of the sector with the Government and act as a focal point for SME issues. A deregulation committee has already been appointed to support the objectives for improving the investor climate for both foreign and domestic investments and most of the work assigned to this committee has now been completed. |
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