At a time when small and medium-sized enterprises (SMEs) in Sri Lanka are struggling to access finance, a funding issue exacerbated by the impact of COVID-19 on the country’s economy, CDC Group, the UK’s development finance institution, has announced it will provide a US$50 million loan to the Commercial Bank (ComBank) of Ceylon, the largest private commercial bank in Sri Lanka, to strengthen SME operations in the country.
This financial support is intended to benefit those local SMEs most in need of funding, enabling them to access the working capital necessary to maintain employment and grow their businesses. Furthermore, the investment is expected to help to increase social and financial inclusion across communities which will, in turn, drive economic activities in the country as well as supporting climate projects.
Talking to DevelopmentAid, Srini Nagarajan, Managing Director and Head of Asia at the CDC Group, commented that although SMEs serve households and drive the growth of the entire economy, COVID-19 has created a dearth of financial support which is hindering growth.
“This marks our first climate investment in Sri Lanka and it is indicative of our dedication to help bring about a cleaner and more sustainable future in the country,” Nagarajan added.
Sivakrishnarajah Renganathan, the Managing Director of the ComBank, stated he was delighted to partner with the UK government-funded CDC in its quest to support SMEs.
“The challenges brought about by the pandemic have been particularly hard on this segment and we have been working tirelessly to support these businesses to survive and grow in these difficult times. This facility will greatly enhance our capacity to provide solutions tailor-made for deserving SMEs,” he remarked.
Describing the announcement as a step towards financial empowerment for small businesses and communities in Sri Lanka, Bruce Bucknell, the British Acting Deputy High Commissioner to Sri Lanka, said:
“This partnership offers a blueprint for investments that could transform Sri Lanka’s economic future.” This investment demonstrates the UK’s continued commitment to supporting Sri Lanka’s socio-economic development and the shared ambitions for a sustainable future through clean energy transition, he added.
This partnership between CDC and ComBank is expected to foster inclusion and support innovative climate solutions thereby contributing to the United Nation’s Sustainable Development Goals (SDGs) on affordable and clean energy (SDG 7), decent work and economic growth (SDG 8), and climate action (SDG 13).
SMEs generate 80% of businesses and provide approximately 35% of jobs in Sri Lanka. Sri Lanka is facing growing energy demands and has set a national ambition to become energy self-sufficient by 2030 as well as aiming to achieve 100% renewable energy generation by 2050. This latest commitment marks CDC’s first climate investment in Sri Lanka and its first direct investment in the country since 2012.
