IFC, a member of the World Bank Group, is providing a $50 million loan to Commercial Bank of Ceylon (ComBank), Sri Lanka’s largest private bank, to help small and medium businesses in the country deal with the adverse economic impacts of COVID-19.
The funding will be used to expand lending to small and medium-sized enterprises, with over a third dedicated to businesses owned by women.
The financing package is part of IFC’s US$8 billion global COVID-19 fast track financing facility, which aims to help companies stay in business and preserve jobs.
This investment comes under the Working Capital Solutions Program of the facility, which provides $2 billion in funding to emerging-market banks to extend credit to help businesses shore up their working capital so firms can pay their bills and workers.
The investment, which comes as IFC marks 50 years of work in Sri Lanka, will also help ComBank sustain its operations and support the economic recovery process.
“Over several decades, Commercial Bank has been a pioneer to provide financial solutions to support the small and the medium business sector of the country, the backbone of the economy of Sri Lanka. We are grateful to the support of IFC management and their team in Colombo and globally for responding positively to our request as they have always done,” said S. Renganathan, Managing Director, ComBank.
“The funding package was decided after a series of evaluations by IFC teams located in different geographical locations and after showcasing ComBank’s genuine efforts to support SMEs, especially to women entrepreneurs and to SME exporters.”
Small and medium sized enterprises make up a large part of Sri Lanka’s economy, accounting for 80 percent of all businesses. However, according to World Bank’s South Asia Economic Focus, growth in the country is estimated to have been 2.6 percent in 2019, an 18-year low. The COVID-19 pandemic is believed to have further weakened growth at the outset of 2020, with the loss of jobs and earnings in key economic growth areas in the country.
“As we face an unprecedented global crisis, it is imperative that the financing engines of the economy keep running. We are pleased to support our longstanding partner ComBank with liquidity at this time to do just that,” said Amena Arif, IFC Country Manager for Sri Lanka and the Maldives.
“IFC’s rapid support will contribute towards helping businesses get through this challenging time. As we mark our 50-year partnership in Sri Lanka this year, we hope that our continued support will help businesses and their employees and suppliers through the immediate aftermath of the pandemic and restore the economy to a sustainable growth path.”
Over the 50 years of IFC’s operations in Sri Lanka, ComBank has been one of IFC’s longstanding partners, dating back to 2003. IFC has supported ComBank through multiple investments as well as through advisory support and currently holds a 4.4 percent equity stake.
The IFC COVID-19 fast track facility is aimed at offering direct support to existing clients through direct lending to affected companies and to financial institutions so they can continue lending to businesses to help preserve jobs. The bulk of the US$8 billion global allocation by IFC will go to client banking institutions to enable them to continue to offer trade financing, working capital support and medium financing to private companies struggling with disruptions in supply chains.