Need for SMEs to access more funds stressed

By Lalin Fernandopulle

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Only 40 per cent of the SMEs have access to banking and other financial institutions. Our intention is to create an environment for more SMEs to gain access to the formal funding sources, Financial Markets Specialist International Finance Corporation (IFC), Deva De Silva said. He said the objective of the SME development program is to make financing more freely available to SMEs through financial institutions.

IFC which held three SME Road Shows since last year plans to hold the next Road Shows in Ratnapura and Kurunegala this year with more sessions for the relevant SME sectors.

The SME Road Show was launched last year by the IFC, the private sector arm of the World Bank Group under the South Asia Enterprise Development Facility (SEDF) to enable SMEs to interact with financial institutions and gain access to funds. SEDF, a multi-donor facility of the IFC was launched in 2002 with the aim of alleviating poverty in the region through SME development.

SEDF facilitates SME financing under a three-prong strategy of working with financial institutions, value addition to enterprises and creating a business enabling environment. A key donor in the SME development program of the IFC is the Royal Norwegian Government which has provided a specific funding line for an advisory program in the southern region.

Though the recently concluded southern Road Show did not attract the number of participants as expected the program was successful in creating an environment for SMEs to gain knowledge and access to funding sources.

There will be more enterprises in the South as the number of persons who attended the Road Show with projects and ideas to set up enterprises were higher than in previous shows.

“The first IFC Road Show was held in Colombo last year with a focus on reaching the right type of market.

Our aim is to increase the number of SMEs having access to financial institutions and create an environment for interaction”, he said.

Six private banks are partners of the program which has been a key event of the IFC in developing the SME sector. Though not immediately the IFC will be looking at launching programs to help SMEs in the East. “The IFC will be looking at penetrating into local markets to cater to the low income segments including the micro finance sector”, he said.