Expanding its exposure in the region’s microfinance and financial services space, the International Finance Corporation (IFC), a member of the World Bank Group, has proposed to extend up to $20 million local currency equivalent loan facility to Sri Lanka-based Central Finance Company.
“The financing will help support the expansion of the SME portfolio in the agriculture sector, mainly to finance climate-smart agriculture solutions and women-owned enterprises,” according to a filing by IFC.
The project aims to help 10,000 MSMEs in the agriculture value chain to get financed over the next five years.
The Colombo Stock Exchange-listed Central Finance was established in 1957 by late Chandra Wijenaike.
The Wijenaike family and the employee welfare share trust hold 35.6 per cent in the company and the Employees Provident Fund holds 10.7 per cent.
The agri-finance projects in Sri Lanka are currently under-served by mainstream banks and are largely neglected.
The loan finance from IFC will demonstrate other Sri Lankan financial institutions that such “commercial lending to agri MSMEs is profitable and a sustainable business proposition,” the filing further noted.
The financing will be made through IFC’s Sri Lanka Agriculture Finance Program which is aimed to finance the holistic agriculture financing gap of $2 billion.
Only last month, IFC said, it proposed to extend a loan facility of $50 million to Sri Lanka’s Nations Trust Bank. The World Bank member is also considering investing a debt round of up to $10 million in Alliance Finance Company.