The International Finance Corporation (IFC), the private lending arm of the World Bank Group, is considering a senior loan investment of up to $15 million to Senkadagala Finance PLC (SFCL), a licensed finance company in Sri Lanka and IFC client since 2014.
In a disclosure, IFC said the five-year $15-million senior loan will support SFCL’s lending to women micro, small, and medium-sized (MSME) entrepreneurs and the expansion of the financing firm’s branch network in tier II cities in Sri Lanka.
SFCL, listed on the Colombo Stock Exchange, is headquartered in Colombo with 90 branches and service centers spread across Sri Lanka. The new branches will be established mainly in rural regions, where access to finance for MSMEs are a challenge.
“The project will create better access to finance for around 20,000 women MSME customers at an affordable rate,” the IFC said, adding that the loan will be secured by future receivables and would be funded in Sri Lankan Rupees.
The credit gap for women entrepreneurs in Sri Lanka is estimated at $350 million. This project is likely to incentivize banks and other non-banking financial institutions to launch funding programs targeted at women, the IFC added.
“The availability of credit would enable women MSMEs to compete and be a part of local/global value chains and grow their businesses by accessing domestic and foreign markets, which are not currently accessible,” it added.
As a result of the loan project, the combined economic activity would result in an increase in tax revenue to the state at a time where the fiscal position is under stress due to high debt servicing cost.