Sri Lanka | Gender​

Access to Credit Empowers Sri Lankan Women

Women in Sri Lanka now find it easier to borrow capital from banks under ADB’s Sri Lanka: Small and Medium-Sized Enterprises Line of Credit Project that is supported by Women Entrepreneurs Finance Initiative grant and the Japan Fund for Poverty Reduction. The project opened opportunities for women to plan, expand, and jumpstart their businesses through access to finance, training, and mentorship opportunities.

Post-Image

Women Mean Business. These women entrepreneurs in Sri Lanka and many others like them can now obtain loans faster and easier from local banks to jumpstart their own small and medium enterprises (SMEs).

Project

Sri Lanka: Small and Medium-Sized Enterprises Line of Credit Project

Project Cost

$188.7 million

  • ADB $175 million
  • Financing Partners
    • Japan Fund for Poverty Reduction (JFPR) $2 million
    • Women Entrepreneurs Finance Initiative (We-Fi) $12.6 million

Approval Date

15 Feb 2016

Signing Date

06 July 2018

Completion

30 Sep 2020

Partnership Results

$100 million successfully disbursed in 2016-2018 through ten local banks to 1,755 SMEs, out of which 484 (27%) are owned or led by women
$75 million additional loan and $12.6 million additional grant from We-Fi, after the success of the original $100 million credit line
$71.9 million additional loan and $6.2 million We-Fi grant disbursed as of February 2019 to 1,739 SMEs, out of which 821 (47.2%) are women-led SMEs
637 women-led SMEs benefited from the blended finance of ADB credit line and We-Fi grant, so far
744 women trained on business development under the technical assistance funded by JFPR and We-Fi

Background

In Sri Lanka, women economic participation is well below potential despite its gender parity in access to education. They contribute only a little over 33% to the labor force. Even less are those who own or lead small to medium enterprises (SMEs). Disenfranchised, the women remain an untapped national resource. What a missed opportunity it is for the country that is transitioning to upper-middle-income status.

The International Finance Corporation estimates that 40%—or 65 million—of SMEs in the developing world have $5.2 trillion unmet financing needs. This shortfall is due to banks being more inclined to provide loans to bigger firms and businesses. SMEs, even though they make up 90% of businesses in the Asia-Pacific region, remain an unattractive prospect for capital lending.

The Sri Lankan government decided to address this gap by enlisting the ADB’s assistance in promoting women’s entrepreneurship, a central pillar of ADB’s Strategy 2030 in promoting gender equality.

Interventions

The Sri Lanka: Small and Medium-Sized Enterprises Line of Credit Project provides long-term financing through 10 local participating banks to targeted SMEs, with attention to women-led SMEs. It also supported the capacity enhancement of women entrepreneurs. A $100 million credit line and a $2 million technical assistance (TA) financed by Japan Fund for Poverty Reduction (JFPR) supported women-led SMEs gain better access to finance from banks. The technical assistance from JFPR supported business development training for women in export-oriented and agri-businesses sectors, along with awareness raising campaign for entrepreneurship in the information and communications technology sector.

Video Play

Women in Sri Lanka now find it easier to borrow from banks after an ADB SME credit line opened opportunities for women to plan and jumpstart their businesses. The project, supported by Women Entrepreneurs Finance Initiative (We-Fi) and the Japan Fund for Poverty Reduction (JFPR), paves the way for the Sri Lanka’s women to better participate in the economy.

With the successful disbursement and development impacts (see Results section), the government requested ADB for an additional $75 million credit line and a $12.6 million grant from the Women Entrepreneurs Finance Initiative (We-Fi) to expand the project’s gender elements. The We-Fi grant provides (i) blended finance facility with the ADB’s credit line to women-led SMEs that are constrained by limited capital, and (ii) capacity development support for a broader range of stakeholders including women entrepreneurs, banks, government organizations civil society organizations and other key stakeholders so that all of them change behaviors to more effectively address issues that women entrepreneurs face.

Results

The project opened opportunities for women to plan, expand and jumpstart their businesses and promoted women entrepreneurship by developing an ecosystem for women entrepreneurship by ensuring more women-owned or led SMEs have access to finance, training, and mentorship opportunities.

Financing. From 2016-2018, the original $100 million loan was disbursed to 1,755 SMEs, out of which 484 (27.6%) are women-led. As of February 2019, $71.9 million additional loan and $6.2 million We-Fi grant were disbursed to 1,739 SMEs, out of which 821 (47.2%) are women-led SMEs.

The participating banks keep the lending momentum to women-led SMEs going by strengthening their banking operations to attract women clients as a new and promising segment for their business growth.

Indumala Rajapaksha, a salon owner, gained capital to expand her bridal service salon business from the ADB credit line through the Commercial Bank of Ceylon. Using the money, she was able to invest in salon facilities in a new Colombo branch and add six new staff to the existing 37 employees, out of which 27 are women.

I am proud of serving new brides with traditional Sri Lankan attire to enhance their inner beauty. I am also glad to create new employment opportunities, especially for females, and promote local production of wedding dresses.

Indumala Rajapaksha

“I am proud of serving new brides with traditional Sri Lankan attire to enhance their inner beauty. I am also glad to create new employment opportunities, especially for females, and promote local production of wedding dresses,” project beneficiary and business owner Indumala said.

Training. As of February 2019, 744 women entrepreneurs from SMEs across the country were trained. Out of this, 557 completed the training funded by JFPR, and 187 completed the training funded by We-Fi.

One of these women is Ruchirani Munasinghe. Ruchi learned about finance, marketing, and other managerial subjects through this training. The newfound knowledge gave her the confidence to draft a business proposal and approach the bank and negotiate for a loan. She succeeded in borrowing capital from the Regional Development Bank. She infused this capital into expanding her land to cultivate guava, apply better farming practices, use new equipment, and set up an irrigation system.

“I’ve gotten more confident in communicating and negotiating with banks after the intensive training. The ADB’s financing facility also seem to have encouraged banks to process my loan application smoothly,” Ruchi recalled.

Related Story

Promoting Women’s Entrepreneurship in Sri Lanka (ADB Youtube)