Retail sector has wide potential

By Lalin Fernandopulle

Sri Lanka's modernised retail business is around 16 percent which is low compared to China's 60 percent and Thailand's 40 percent, IFC (International Financial Corporation) Country Manager for Sri Lanka and the Maldives, Adam Sack told a ceremony to mark the partnership between IFC and Cargills Food Company (Pvt) Ltd, the retail subsidiary of Cargills (Ceylon) PLC last week.

However, Sack said that Sri Lanka's retail business sector has enormous potential to expand as a vibrant business sector contributing to economic growth.

The retail sector could encompass a wider spectrum of the economy in terms of livelihood development, skills enhancement of youth and rural economic growth.

Sri Lanka's modern trade sector is yet at its infancy, making only a minor contribution to the country's trade.

However, the sector has a substantial impact on streamlining supply chains, enhancing safety and quality of food, benchmarking farm gate prices for fresh produce and fronting rural township development.“IFC in Sri Lanka will seek to do more for economic development through youth training, job creation and small and medium scale business development.

IFC has committed around US$ 520 million to boost development in Sri Lanka and help the private sector to expand businesses,” Sack said.IFC invested Rs. 2,550 million for an eight percent stake in Cargills Food Company to help the company expand operations, enhance its backward integration and develop efficiency in its supply chains.IFC, a member of the World Bank Group, invests in private sector development across the world which is the stimulator of economic growth.

IFC has invested in around 130 countries supporting private sector operations. In the financial year 2014, the IFC provided over US$ 22 billion in financing to improve lives in developing countries and address the challenges of development.

“The retail sector is an engine of growth and is a tremendous employer. The IFC will provide support in creating quality and right type of jobs for the sector. The government thereby will benefit through tax revenue from the retail sector,” Sack said.

He said that Cargills should contribute to development outside the Western province where there is uneven distribution of wealth and development. Many more districts should benefit from development. Cargills has around 10,000 suppliers who could contribute to rural economic development.Carfgills Ceylon PLC, Deputy Chairman and Group Chief Executive Officer Ranjith Page said that the partnership will help the country's growth by focusing on rural economic development.

"My concern is corporate social responsibility through which society benefits first. Cargills contributes around four percent to the country's agriculture sector and around five percent to the paddy sector.

Around 80 percent of those employed in the Group are below 25," he said. Cargills Ceylon PLC supports farmers through its islandwide collection centres to eliminate the exploitation by middlemen.

The company provides a guaranteed price to farmers and SMEs. It has reduced post-harvest waste to around 8 percent through modern harvesting techniques, packaging and transportation. The national post-harvest waste is around 40 percent. Page said that the company has been bleeding for several years in developing its retail business. "It has not been an easy task from the early 1980s to the mid 1990s which was a challenging time.