Drawbacks to SME growth highlighted

The inability to obtain funds through the formal banking sector is the main obstacle for the growth of the SME sector, said Financial Markets Specialist, International Finance Corporation (IFC), Deva de Silva.

He was speaking at a ceremony to launch the SME Banking Road Show in Matara organised by IFC under the South Asia Enterprise Development Facility funded by the Norwegian Government.

de Silva said the objective of the Road Show was to create an opportunity for SMEs to interact with banks and obtain information on facilities and services offered by banks. Lack of knowledge on the funding requirements and access to sources have crippled the growth of the sector.

SMEs play a significant role in the development of the economy. Over 50 per cent of the enterprises in Japan are SMEs. SMEs account for over 90 per cent of the business units in the country.

Country Manager IFC, Gilles Gulludec said the Road Show will help SMEs to become a bankable proposition for Sri Lankan financial institutions and have access to finance.

SMEs are the seedbed for innovation and entrepreneurship. Most of the large scale enterprises in the world started as SMEs.

The SME sector is the entry point for entrepreneurs into business.

IFC over the past 2-3 years has increased its presence in the region and its investments last year exceeded US$ 3 billion.

The Corporation which is the private sector arm of the World Bank has been in Sri Lanka for over 30 years and for the financial year ending June 2008 its investment will be around US$ 210 million.

"Development in the region has been the focus of IFC which has extended its support through financial and technical assistance", Gulludec said.

The first SME Banking Road Show was held last year in Colombo and the second in Hambantota.

Sampath Bank, DFCC Bank, Commercial Bank, Hatton National Bank, Nations Trust Bank and NDB Bank will partner the program which will be held from June 6-7 at Lalitha Hotel in Matara.

LF