(COLOMBO, LANKAPUVATH) –The Asian Development Bank (ADB) said it has received $12.6 million of funding for 2018 to 2020 from the Women Entrepreneurs Finance Initiative (We-Fi) to generate more resources for Sri Lankan women-led businesses.
The grant – one of three awarded under the inaugural call for proposals – enhances ADB’s support for women-led small and medium-sized enterprises (SMEs), vital for economic growth and job creation in Sri Lanka.
“The We-Fi financing supports ADB’s SME Line of Credit Project to foster a better environment for female entrepreneurship, and strengthens women’s skills and capacities to run successful enterprises,” said Amanda Tan, an ADB Financial Sector Specialist. “ADB commits to support women’s entrepreneurship, through comprehensive approaches that address major barriers such as access to finance, policies, and business capacity development.”
In Sri Lanka, female participation in the labor force at 40% is significantly lower than for men (75%). Unemployment rates are also significantly higher for women. There is also a large gender gap in the share of women who are unpaid family workers which account for 20.4% of women compared to 3% of men.
SMEs contribute about 45% of Sri Lanka’s gross domestic product and provide about half of the country’s jobs. Yet, among SMEs, only 25% of entrepreneurs are women. Their lower capacity contributes to the $350 million gender credit gap. Capitalizing on entrepreneurship to economically empower women and generate inclusive growth in Sri Lanka will require reducing various bottlenecks, especially access to finance.
ADB’s Board of Directors approved a $100 million loan in 2016 for the SME Line of Credit Project, followed by additional loan financing of $75 million in January 2018 to further encourage local partner banks to grow their SME portfolios – particularly to enterprises that are outside Colombo or women-led.
Apart from providing wider access to finance to SMEs, the project also develops innovative SME financing schemes, while building SMEs’ capacity, particularly in information and communications technology, business process outsourcing, fruits and vegetables, as well as processed food and beverages.
The We-Fi funded program in Sri Lanka complements ADB’s 2016 project, which targets women and underserved populations. It expects to mobilize $25.3 million of financing to reduce barriers faced by women entrepreneurs, including private sector investments of up to $2.1 million.
The program will strengthen institutional capacity within financial institutions to be more women-friendly, remove policy and regulatory barriers, build female entrepreneurs’ skills sets, encourage female entrepreneurship through communications and awareness campaigns, and strengthen the evidence base to inform future policymaking. The grant directly supports more than 400 women-led SME borrowers and will train at least 250 women.
We-Fi is governed by 14 founding contributing countries and is managed by the World Bank. It aims to mobilize more than $1 billion in commercial and international financial institution finance to afford women entrepreneurs access to debt, equity, venture capital, insurance products, and other opportunities to link with domestic and global markets. The aim is to improve the business environment for women-owned or led SMEs. The ADB program is aligned with three objectives of We-Fi: reducing financial constraints faced by women-owned or led SMEs, mitigating other nonfinancial constraints, and increasing the capacity of women-owned or led SMEs to access markets.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region.