The Asian Development Bank (ADB) is currently providing USD 20.5 million financing to Sri Lankan SMEs and has supported the country’s SME sector over a long period of time with many lending products and capacity building assistance.
ADB’s lending products, the Small and Medium-Sized Enterprise Line of Credit project (SMELoC) which has been operating since 2016 and the Regional Development Bank Project (SRDB project) have supported the sector through increased access to finance. The SMELoC project with three tranches which was designed to provide US$ 340 million of assistance to the SME sector commenced in 2016. The first and second disbursements of US$ 100 million and US$ 75 million through additional financing have already been utilized, boosting many startups in the country.
During C-19, additional financing was provided including working capital loans to support the sector. Women Entrepreneurs Finance Initiative (We-Fi) grant of US $9.5 million is being utilized by the PFIs to provide blended finance to the women SMEs together with the ADB loan and to develop the ecosystem for WSMEs. In October 2022, due to the economic crisis the SME loan funds were repurposed for working capital to support the SME sector. In addition, ADB supported developing and launching the SME platform. The USD 50 million loans were provided to Regional Development Bank in 2019.
The success of ADB funding was showcased in a recently held field visit organized by ADB for journalists.
Lankan SME sector can play critical role to solve economic crisis and support recovery course -Chen Chen
The Sri Lankan SME sector which comprises more than 75% of enterprise accounting to more than 52% of the GDP, 45% of employment and 30% of exports can play a very strategic and critical role to solve the economic crisis and support the country in the recovery course, ADB’s Country Director to Sri Lanka Chen Chen said.
“We have been a long-time partner of the SME sector and the first assistance we provided to Sri Lankan SMEs was in 2016, since then ADB has provided a series of assistance.”
He said the SME sector needs to play a role in the overall economic recovery and for that needs to demonstrate good competitiveness in the region. Chen said the skill gap needed to be closed and the country needed to provide good human capital to support the future SME development and also by providing the required technology such as its financial auditing and artificial intelligence will bring new business opportunities for the SME sector.
The country must also bring in more women to the sector. Chen said the ADB is currently preparing a five-year country strategy partnership (CSP) for Sri Lanka and will continue to support the SME sector in the future as well.
Marakanda Tea Factory gets facelift from ADBs Rs. 10 Mn WCF
The Marakanda Tea Factory which was defunct was acquired by the Evergreen Group in 2020 and relaunched with a Rs 10 million working capital facility offered by the ADB, Minul De Silva Director Evergreen Group said.
“The Marakanda name has gone down within our brokers, that is what we are trying to bring up. Once we get the name back we can get the prices,” he said.
The Evergreen Group comprises 13 factories holding 4% of market share. De Silva said Marakanda had its struggles particularly in leaf procurement and the new management after acquiring the facility were rectifying the issues. He said over 4,000 smallholders supply tea leaves to the factory. De Silva said they hope breakeven within the next six months and the Emergency Response facility offered by the ADB helped them salvage the factory which faced closure.
Nature Healing Ayur showing SMEs path to overseas corridos with Rs. 5 Mn loan & grant from ADB
An Ayurveda SME with a humble beginning now exports its products overseas. The main pillar of this success story was the SMELoC and WeFi Grant Investment Facility of Rs 5 million provided by the ADB.
Supuni Karunaratne in 2016 started her Ayurvedic manufacturing business with a very humble Rs 3,000 in her ancestral house at Habaraduwa in Galle with a single helper and her husband after all their business in Colombo came a flop. Supuni achieved many milestones in a career becoming the best entrepreneur in the Southern Province in 2017 and also won two more awards in the same event conducted by the Ruhuna University. In 2018 she became the best export oriented woman in Sri Lanka at a ceremony conducted by the EDB . But her business really picked up after she applied for the ADB SMELoC loan and WeFi Grant Investment Facility of Rs 4 million and Rs1 million respectively in 2018 through the BOC.
With this money she purchased a capsule processing machine spending Rs 2.5 million which was the turning point of their business. She said the machine can process 3,000 capsules in an hour which boosted her production range of Ayurveda food supplements and ayurvedic pharmaceuticals. She said covid created many opportunities for them because the demand for Ayurvedic medicine increased and the timely assistance received from the ADB was immensely beneficial to her business at that moment of time.
Supuni said she has 45 products under her belt and plans to introduce more products in the future.
Her export markets include Lithuania, Switzerland, the Middle East and Canada. Supuni opined that she would have never achieved these heights if not for the assistance, guidance and training provided by the ADB.
ADB assistance of Rs. 1.5 Mn gives Pradeep Cinnamon new lease of life
Pradeep Cinnamon’s owner 34 year Pradeep Premaratne a budding cinnamon processor who is in the cinnamon export value chain and provides cinnamon for export from Karandeniya, Galle is a successful entrepreneur who benefitted from a working capital facility of Rs 1.5 million offered by the ADB out of USD 13.5 million repurposed funds in 2020 and obtained it through the RDB bank. Premaratne and his wife worked as cinnamon peelers until ADB assistance turned them into entrepreneurs who employ 6 cinnamon peelers now.
Premaratne said before ADB assistance the couple processed 100 kgs of cinnamon trees daily but after the loan he managed to increase this to about 300-500 kgs and travel about 30 km to obtain cinnamon trees from plantations around. Premaratna said his business needs skill and the entire process has to be done manually to retain the pristine value of the cinnamon. With ADB assistance he managed to increase his output about three fold. The budding cinnamon processor said from 500 kg of raw material he can generate about 30 kg of C4 cinnamon.
Premaratna said the premium quality cinnamon Alba fetches Rs 6,200 per kilo and at the time he started the business in 2020 a kilo of Alba was sold at Rs 3,600-5,000 and he manages to sell about 150 kgs of Alba monthly and 800 kgs of C4 cinnamon to exporters.
He added that the ADB loan was a huge boost for his startup and now is making a considerable profit from cinnamon and is very thankful for the assistance received from the ADB.
Thalgampala Thunapaha grows with Rs. 3 Mn ADB WCF
Chandanie Samanthi, Director of Thalgampala Thunapaha (Pvt) Ltd which produces a full range of spices said the turning point of her business was the Rs 3 million working capital facility offered to her by the ADB in 2021 for a concessionary interest of 4.78%.
She said their spice business based in Thalgampala had a growth of 30 % in 2021 & 2022 and expected a growth of 40% this year after obtaining the ADB facility. Thalgampala Thunapaha consists of 29 branches in the Southern Province and plans to open branches in the Western Province soon. She said their concept was to provide products directly to the customer.
She said they plan to open a new factory with an investment of Rs 30 million next year. The factory processes 3,000 kilos of spices daily and raw material is sourced from the Southern, Central provinces and from India.
M C Enterprises taking coir products to greater heights with Rs. 10 Mn ADB assistance
“I received the ADB Emergency Response Facility – Working Capital loan of Rs 10 million during the peak of the covid period in 2020 through the Seylan Bank and it was a huge relief to me at that time because there was a huge increase in demand at that time for coco peat. This loan was very useful for me at that time to carry on the business and meet the increase of demand and had I not received it my business would have even come to a standstill,” M.C. de Zoysa, Managing Director M.C. Enterprises (Pvt) Ltd. From Ambalangoda said.
M C Enterprises exports 100% local value added coir based products, such as coir fibre bales for mattresses, coco peat for soil enrichment and geotextiles to prevent soil erosion. He exports 30-50 containers of coir-based products to South Korea, Middle East to China, U.S.A, Japan and Europe monthly. Now the company employees over 75 direct staff and with the opening of his second factory will provide indirect employment to over 3,000. He said over 95% of his employees are women and they source all the raw material from the Southern Province.
De Zoysa said when compared with 2020 he has achieved over 25% growth in his business in which the ADB loan mainly helped him in that endeavor. To expand his export base, De Zoysa is investing Rs 20 million on a new factory which is under construction and plans to invest Rs 4 million to install a new transformer.
De Zoysa said his company already possesses 2 factories and 5 packing centres where goods are directly sent for export.