CMA Sri Lanka holds COVID-19 SME Development Conference

• Identifies need for equity capital, SME credit guarantee institution, export houses to support SME exports, cash flow and working capital management, employment and skills development

The CMA Sri Lanka COVID-19 SME Development Conference ‘Supporting Small Businesses through COVID-19 Crises,’ to celebrate United Nations – Micro, Small and Medium-Sized Enterprises Day, was held on Sunday 27 June online via Zoom with the support of commercial banks, chambers of commerce, professional bodies and industry experts supported by the United Nations with around 1,000 registered participants.

As per the UN Small businesses, including those run by women and young entrepreneurs, are being hit hardest by the economic fall-out of the pandemic. Unprecedented lockdown measures enacted to contain the spread of the coronavirus have resulted in supply chain disruptions and a massive drop in demand in most sectors.

According to the data provided by the International Council for Small Business (ICSB), formal and informal Micro-, Small and Medium-sized Enterprises (MSMEs) make up over 90% of all firms and account, on average, for 70% of total employment and 50% of GDP.

In Sri Lanka the SME sector forms the backbone of the economy and is found in all sectors of the economy and accounts for 52% of the GDP and 45 percent of the total employment, whilst making up more than 75% of the total number of enterprises in the country.

At the inaugural session CMA Sri Lanka President and CMA Sri Lanka COVID-19 SME Development Committee Coordinator Prof. Lakshman R. Watawala stated that they were happy to organise the conference on the UN MSME day to support the SMEs and recognise the important role they are playing in the economy. He stated that the initiative taken by their committee to set up the SME Credit Guarantee Institution with the backing of Ministry of Industries has been rewarded and the Cabinet has granted approval to meet a major need of the SME sector.

Guest of Honour UNDP Sri Lanka Officer-In-Charge Faiza Effendi addressed the conference on the Significance of United Nations – Micro, Small and Medium-Sized Enterprises (MSME) Day.

She stated that the UN General Assembly declared 27 June Micro-, Small and Medium-sized Enterprises Day, to raise public awareness of their contribution to sustainable development and the global economy.

The keynote address was delivered by State Minister of Money, Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal on ‘Need for Equity Capital for Sustainability of the SME Sector’.

He stated that due to the COVID-19 pandemic the Government has provided a lot of assistance through the commercial banks but it was essential to provide equity capital to support the SME sector. He also stated the Government decision to set up the SME Credit Guarantee Institution will greatly assist the SME sector and entrepreneurs who are unable to provide collateral to the banks to obtain loan facilities.

Ministry of Finance Treasury Deputy Secretary Ratnayake addressed on the topic ‘Setting up of the Sri Lankan MSME Credit Guarantee Institution and its operation’ and stated that the project has been approved by the Cabinet of Ministers and the Development Finance Department of the Ministry of Finance was discussing with the Asian Development Bank regarding the setting up of the institution and also getting selected commercial banks and finance companies to take equity capital amounting to 20% with the Government initially taking 80%.

The initial capital will be Rs. 25 b and the Government will contribute 20 b and private sector Rs. 5 b. This will enable the credit guarantee institution to grant guarantees up to Rs. 125 b. A public company will be floated with a professional board of directors selected from the public and private sector to manage the affairs of the company.  Also that they are planning to have the Credit Guarantee Institution operational in early 2022.

Thereafter a panel discussion on the Credit Guarantee Institution was moderated by Sascon Holdings Ltd. Group Chief Executive Officer Adrian Perera and The Thinnai Group and an eminent panel comprising People’s Bank Chairman Sujeewa Rajapaksa, Deputy General Manager (Sales and Channel Management) Priyal Silva, The Ceylon Chamber of Commerce Senior Assistant Secretary General Chandrarathna D. Vithanage, Department of Development Finance Deputy Director Kuloja Peiris and Central Bank of Sri Lanka Assistant Governor J.P.R. Karunaratna was held. 

The commercial banks and chambers of commerce supported the setting up of the Credit Guarantee Institution. The Department of Development Finance was confident that the work connected with the setting up and commencement of operations could be expedited as the ADB loan facilities have all been finalised. The Central Bank too agreed to provide all support for the project.   

Technical Session 2 was on the topic ‘Setting up of Export Houses to increase SME Exports from 5% to 25%’.

The Guest Speaker was Export Development Board Chairman Suresh de Mel and the panel discussion was moderated by Strategic Management Alliance Founder Managing Partner and Japan-Sri Lanka Technical and Cultural Association (JASTECA) Past President Athulla Edirisinghe.

The panellists included B Darsin de Silva & Sons Ltd. Chairman Sarada de Silva, Chairman Spice Council, Ramya Horticulture Director Thusari Weerakoon, Commercial Bank Manager SME Dilshan Fernando, Chamber of Young Lankan Entrepreneurs (COYLE) Chairman Saranga Goonewardena and FCCISL President Shirley Jayawardena.

EDB Chairman Suresh De Mel in his keynote address explained the benefits that will be accrued through export houses that will eventually increase the contribution by SMEs towards national exports from current 5% to 25.

The panellists supported the link up of SMEs with export houses to increase exports such as expansion into web based on-line marketing, horticulture business, and use of TIEP scheme. Also ways and means how export houses will support SMEs to achieve better product standards and quality, support when borrowing from banking sector, and integration of more SMEs into the supply chain. 

Technical Session 3 was on ‘Cash Flow and Working Capital Management for SMEs’ delivered by Corporate Directors Ltd. Founder/MD Dr. Chamara Bandara. 

The panel discussion was moderated by H C P Consulting Ltd. Chairman and The Human Capital Partner Founder/CEO Chaaminda Kumarasiri and the panellists were Sanasa Development Bank Chairman Lakshman Abeyesekera, National Chamber of Commerce Sri Lanka President Nandika Buddhipala, Sampath Bank PLC Chief Manager – Branch Banking Sumie Mithrapala, Hatton National Bank PLC Head of Refinance & Special Lending Products Bandara Rekogama, Taxperts Lanka Ltd. MD/Chief Compliance Officer and Sri Lanka Institute of Taxation Vice President Damith Gangodawilage and Seylan Bank PLC Manager Factoring Sajith Nandalal. 

The importance of cash flow management, maintenance of proper books of accounts, not to mix business cash and personal cash, not to be afraid of taxation as most SMEs were not liable for tax and to get assistance from consultants, support of the banks in assisting expansion and helping in restructuring with proper project reports were discussed.

Technical Session 4 was on ‘Supporting Employment & Skills Development in the SME Sector’. The address was given by Guest of Honour ILO Country Director Simrin Singh.

The panel discussion was moderated by Employers’ Federation former DG Kanishka Weerasinghe and the panellists were Ramya Holdings Chairman Ramya Weerakoon, DSI Samson Group Ltd. Emeritus Chairman Dr. Kulatunga Rajapaksa, Strategy Consultant, Entrepreneur and Board Director Dr. Nirmal de Silva, TVEC Deputy Director General Janaka Jayalath, Women’s Chamber of Industry and Commerce Chairperson Indrani Fernando and All Island Regional Chamber Presidents’ Forum Consultant/Founder President Amal Piyatilake. 

The importance of supporting women SMEs and entrepreneurs was supported by the Country Director ILO. The importance of improving skills and meeting the shortage of skilled workers was another matter of great importance. Providing assistance to SMEs hit by the COVID-19 pandemic and unable to make payment of salaries to workers required assistance from the Government and the Labour Ministry. 

Improving skills also meant that this would enable the SME sector to have a trained workforce to service the export sector especially in the industrial and horticultural products. The TVEC the Government Skills Development Authority should work closely with the private sector to bridge the gap in the skill requirements of the SME sector. Training was considered a very important segment that should be given to all employees in the SME sector.

With over 400 SMEs participating at the UN MSME conference it was decided that the SME sector, the backbone of the economy of the country, should be supported for the development of the economy of the country and that the CMA Sri Lanka COVID-19 SME Development Committee will follow up on the key findings and also submit a report and make representations to the Government and respective authorities to obtain their support to build the SME sector and contribute to the prosperity of the nation.