Measures needed to curb USD 17 Bn financing gap for women owned SMEs -ADB
There is a surprising USD 17 billion financing gap for women owned SMEs in Sri Lanka and the gender gap in employment and entrepreneurship in Sri Lanka continue to affect women’s economic empowerment opportunities and the resilience to economic shocks, Takafumi Kadono, Country Director, Sri Lanka Resident Mission, Asian Development Bank (ADB) told the Awareness Session on Women Entrepreneurs Finance Code Project (WE Finance Code) launch held in Colombo on Friday
“As many of you know, women’s entrepreneurs are a vital segment of Sri Lanka’s economy and today it is estimated that 20% of SMEs in Sri Lanka are women’s businesses. They provide products and services across key segments of the economy in the country. And while they represent such a significant portion, financing and policies have tended not to take into account the specific needs and different challenges they face in starting and growing their businesses.”
He said to address this since 2016, ADB has implemented programs aiming to strengthen the overall SME business environment through its small and medium enterprise line of credit project, dedicated COVID-19 support program during the pandemic and a new program approved this March for $100 million, focusing on providing working capital to SMEs and to provide equity to the national Credit Guarantee Institute.
The Labour Force Survey in 2021 revealed that female labour force participation was nearly 32%, substantially lower than 71% of men. Improving policies and financing opportunities for women owned businesses is urgent with evidence from other markets indicating that the return on investments can be significant. “For example, our recent research shows that if there were gender parity accessing finance globally, an estimated USD 5 to 6 trillion in net value addition could be generated.”
The National Credit Guarantee Institute (NCGI) has a pivotal role in empowerment of WSMEs because women entrepreneurs lack collateral since female land and asset ownership is generally low and therefore, they cannot access formal financing. So, it’s expected that the NCGI will support the women entrepreneurs to access finance by giving confidence to the commercial lenders and by bridging this collateral issue. The implementation of the Woman Entrepreneurs Finance initiative or WEFI in Sri Lanka has enabled an even stronger focus on addressing the key bottlenecks, particularly to women entrepreneurship.
Kadono said the WE Finance Code is a global multi stakeholder effort that aims to eliminate constraints and financing gaps for women entrepreneurs by working closely with policymakers and financial institutions to collect sector disaggregated data in an incentivized ecosystem approach. The code represents the strategic opportunity in Sri Lanka to unlock the potential of women entrepreneurship.
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