New LOLC venture to penetrate SME sector

Lanka Orix Leasing Company Plc (LOLC) last week launched its micro financing arm as a separate venture - LOLC Micro Finance Company Ltd aimed at deep penetration into the SME sector.

The new venture is a collaboration with the Netherlands Development Finance Company (FMO), the international development bank of the Netherlands. LOLC said that this is the first private sector local micro finance entity in Sri Lanka with foreign equity.

LOLC chairman Rohini Nanayakara said that the LOLC has grown over the last 28 years as a group of companies providing a range of financial services. LOLC pioneered in introducing leasing and factoring solutions to the financial service sector in Sri Lanka which has contributed significantly towards uplifting the SME sector of the country. "In 2003 we ventured into micro financing and today the business has grown to a leading agricultural and micro finance solutions provider, Nanayakara said.

The company started operations by providing solar home systems to rural households and then expanded its services into agricultural related financing, dairy farming, three wheeler, tractor and motor-cycle loans to cater to the increasing demand in the sector.

The launch of this entity will mark the dawn of a new era for the micro finance industry of Sri Lanka and we are confident that this partnership will greatly benefit the rural community, she said.

Arno De Vette of the FMO said that micro financing is not a soft business. It provides money to small enterprises and in the sector risk, interest rates and overhead costs are high.

The FMO invests in micro financing in emerging markets.Earlier, the Dutch government owned 51% of the FMO and after the financial crisis the government share increased to 75%. FMO has invested in risk capital in companies and financial institutions in developing countries.

FMO's bilateral investment portfolio is about Euro 3.4 billion and is one of the largest bilateral development banks worldwide.

GW