- Facility to target funding directly at underserved SMEs, boost jobs and promote economic and social inclusion across Sri Lanka.
- Investment to support development of clean energy efficiency initiatives, supporting Sri Lanka’s commitment to the Paris Agreement.
- Commitment marks CDC’s first climate investment in Sri Lanka and its first direct investments in the country since 2012.
CDC Group (“CDC”), the UK’s development finance institution and impact investor, has provided a US $50 million loan to Commercial Bank of Ceylon (“ComBank”), the largest private commercial bank in Sri Lanka. The loan will facilitate lending to small and medium-sized enterprises (SMEs) and support climate projects in Sri Lanka.
SMEs generate 80 per cent of businesses and provide about 35 per cent of jobs in Sri Lanka. Yet, these businesses struggle to access medium and long-term finance, a funding issue which is further exacerbated by the impact of Covid-19 on the country’s economy. With CDC’s investment ComBank will be able to target financial support directly at local SMEs most in need of funding, enabling them to access necessary working capital to strengthen their operations, maintain employment, and grow their business. By focusing lending toward eligible businesses and customers, the investment will help increase social and financial inclusion across communities which will in turn drive economic activities throughout the country.
CDC’s investment will equally provide capital that will allow ComBank to extend credit toward renewable and climate-supportive projects. Sri Lanka is facing growing energy demands and has set a national ambition to become energy self-sufficient by 2030 and reach 100 per cent renewable energy generation by 2050. Through this loan facility from CDC, ComBank can support the development of clean energy resources and energy efficiency initiatives, helping Sri Lanka to achieve national climate goals and bolstering the country’s efforts to help reduce greenhouse gas emissions.
The partnership between CDC and ComBank, Sri Lanka’s first wholly carbon neutral bank, is strengthened by a joint commitment to advancing climate initiatives and making investments that help to promote climate mitigation, adaptation and resilience. The landmark investment marks CDC’s re-entry into Sri Lanka market and demonstrates the DFI’s three-pillared Climate Change Strategy through this first climate commitment in the country. Similarly, the investment will strengthen ComBank’s very own Green Financing strategy, supporting Sri Lanka’s commitments under the Paris agreement.
Srini Nagarajan, Managing Director, Head of Asia, at CDC Group, commented: “SMEs are the cornerstone businesses that serve households, local communities and greatly drive the growth of the entire economy. However, the pandemic has created a scarcity of financial support which is hampering growth of SMEs and impeding economic development.
CDC is excited to be returning to Sri Lanka’s market alongside a partner whose ambitions align with our investment priorities of supporting businesses and backing climate action. Our flexible, long-term capital will be aimed toward helping to transform livelihoods, businesses and support post-pandemic resilience. We are pleased by this commitment, which marks our first climate investment in Sri Lanka, as it is indicative of our dedication to help bring about a cleaner and more sustainable future in the country and across our markets.”
Renganathan, Managing Director, Commercial Bank of Ceylon, said: “Commercial Bank has a historic link with the UK, as the successor to the Eastern Bank which opened a branch in Colombo in 1920 and provided the start to our 100 plus year journey. We are delighted to partner with the UK government funded CDC in its quest to support SMEs, which are the backbone of the economy of our country. The challenges brought about by the pandemic have been particularly hard on this segment and we have been working tirelessly to support these businesses survive and grow in these difficult times. This facility will greatly enhance our capacity to provide solutions tailor-made for deserving SMEs and will allow Commercial Bank, already one of the top lenders to SMEs and Green projects in the country, to make a significant difference.”
Bruce Bucknell, British Acting Deputy High Commissioner to Sri Lanka, said: “We welcome today’s announcement as a step towards financial empowerment for small businesses and communities throughout Sri Lanka. CDC and Commercial Bank of Ceylon’s partnership offers a blueprint for investments that could transform Sri Lanka’s economic future. This investment demonstrates the UK’s continued commitment to supporting Sri Lanka socio-economic development and our shared ambitions for a sustainable future through clean energy transition.”
The new relationship between CDC and ComBank will foster inclusion and support innovative climate solutions, contributing to United Nations Sustainable Development Goals (SDGs) on affordable and clean energy (SDG 7), decent work and economic growth (SDG 8), and climate action (SDG 13).
Commercial Bank of Ceylon: Irosha Weththasingha | [email protected] | www.combank.lk