World Bank helps promote access to finance SMEs
The World Bank has approved a US$ 57.4 million credit for the Small
and Medium Enterprise Development Facility Project for strengthening
access to finance for Sri Lankan Small and Medium Enterprises (SMEs).
The project supports the Sri Lanka Government's efforts to improve
access to finance for SMEs affected by the global financial crisis.
While the Sri Lankan banking sector has proven resilient to the
effects of the global credit crisis, SMEs - which represent 91 percent
of firms - have felt the impact.
"The World Bank is uniquely positioned to help Sri Lankan banks to
gain better access to medium and long-term funds, for on lending to SMEs,"
said World Bank Acting Country Director for Sri Lanka and the Maldives,
Daniel J. Boyce. "We hope the development of SMEs will lead to higher
incomes and increasing employment opportunities for a larger segment of
the population in the country."
Funded under the Pilot Crisis Response Facility, the project consists
of two components.
The first is the Financing and Risk Sharing Facility component.
It includes a Line of Credit to participating state and private
commercial banks to refinance SME loans and a risk sharing facility
providing partial credit guarantees to reduce the banks' risk of lending
to SME borrowers.
The project's second component focuses on policy and capacity
enhancement for SME banking.
Technical assistance to support banks in developing their SME banking
capabilities will be provided.
The project will also provide complementary technical assistance at
the SME level to help SMEs strengthen their operations and improve their
access to finance.
Finally, the project includes support to identify measures to create
a more enabling environment for SME banking.
"The project aims to provide incentives to banks to provide credit to
SMEs while building their SME lending capability over time," says ,
Economist, World Bank and Task Team Leader, Cecile Niang. "The banks can
independently access the line of credit or risk sharing facility, but
the success of the facilities will depend on the application of modern
SME lending technologies and risk management procedures."
|