Access to bank funds a drawback to SME growth

A major hurdle for the growth of the Small and Medium Enterprises (SME) sector is the inability to have access to funds through the banking sector. A link between the SMEs and the bankers is vital, said Country Manager IFC Sri Lanka Maldives, Gilles J. Galludec.

He was speaking at the launch of the 'SME Banking Road Show' organised by the SouthAsia Enterprise Development Facility (SEDF) of the International Finance Corporation (IFC) of the World Bank in partnership with six Sri Lankan banks.

Galludec said the SME which is considered the engine of job creation and the seed-bed for innovation plays a major role in the development of the economy. The SMEs can develop only if they have access to funds.

Over 50 percent of the Sri Lankan GDP comes from the SME sector and 70 percent of the workforce is employed in this sector. Nearly 50 percent of the enterprises in Japan are SMEs, Galludec said.

Most SMEs are in the rural sector and by developing them the rural poverty level could be reduced.

Since most of the SMEs use local raw materials developing this sector will create indirect benefits to other raw material suppliers providing employment, he said.

Program Advisor, IFC-SEDF Sri Lanka-Maldives, Lionel Somaratne said the inability to provide credible financial reports on the nature of the businesses and submit requests for funding in an acceptable manner are some of the problems the SMEs face today.

Though the SME market is large funds do not flow smoothly from the banking sector due to the lack of communication between banks and the SMEs, he said.

The investment for the project is US$ 10 billion.

The Commercial Bank, DFCC Bank, Hatton National Bank, Nations Trust Bank, NDB Bank and Sampath Bank are the partnering banks at the SME Road Show which will be held from May 18-19 at the Sri Lanka Exhibition and Convention Centre.

(LF)