Monday Dec 16, 2024
Monday, 16 August 2021 00:00 - - {{hitsCtrl.values.hits}}
The MoU being exchanged between COSMI President Nawaz Rajabdeen and LIRIDI Founder/CEO Kirill Maluka.
Also present (from left): COSMI Consultant Projects and Foreign Trade Samantha Abeywickrama, COSMI Vice President Indhra Kaushal Rajapaksa, COSMI Governing Council Chairman Deshabandu Macky Hashim, LIRIDI Lanka Country Manager Muditha Hettigama, and LIRIDI Lanka Business Development Executive Tenali Nanayakkara
A novel business model called ‘Buy Now, Pay Later’ has been launched by LIRIDI Lanka Ltd. in Sri Lanka to support micro and small businesses. This model will be especially beneficial to the small businesses that have been affected by the pandemic.
The project for expanding the model countrywide was initiated by the Confederation of Micro, Small and Medium Industries (COSMI), together with LIRIDI Lanka. The signing of a Memorandum of Understanding (MOU) between the two parties took place in Colombo recently. The aim of the partnership is to revive small-scale businesses under COSMI’s ‘Back-to-Business’ post-pandemic enterprise revival program.
This project, which was initiated by COSMI Secretary-General Nilu Rajapakse, will enable many micro and small-scale businesses to obtain the required working capital to buy the goods and services quickly whenever they need without collateral on a loan basis and pay back in instalments.
LIRIDI Lanka, a fully-owned subsidiary of a UK-based Fintech Company LIRIDI Ltd., is the local implementation company of the project. The company, which is linked to microfinance institutions under the BNPL concept, partnered with COSMI to launch this program in Sri Lanka.
According to the MoU, the benefits will be available to all entrepreneurs countrywide, with a special focus on members of chambers of commerce and business organisations affiliated with COSMI, which will enable micro, small and medium enterprises (MSMEs) to revive their businesses due to various reasons without any issues involved with normal banking loans.
The MoU was signed on behalf of COSMI by its Governing Council Chairman Macky Hashim and President Nawaz Rajabdeen, while LIRIDI Founder/CEO Kiril Maluka and LIRIDI Lanka Director/Country Manager Muditha Hettigama signed for LIRIDI. COSMI Vice President Kaushal Rajapaksa was also present at the ceremony.
This facility is available to micro and small business owners through suppliers of products and services who need to maintain their supply chain for their businesses without any collateral.
Any supplier could join the LIRIDI network at any time at zero connection cost and provide their products and services to small business owners. By joining, a supplier could accelerate their sales with their existing customers and a new untapped market. Further, it will reduce the operational cost considerably.
According to COSMI, the project is said to benefit about 1.5 million micro-enterprises (SMEs) who run micro/small-scale enterprises as their livelihoods. This category often includes businesses that have fewer than five employees.
Rajabdeen said this unique concession under the theme ‘Buy Now, Pay Later’ is a new experience for Sri Lankan entrepreneurs who make a living as small businesses. He said that the main problem facing small-scale entrepreneurs who are not benefiting from the local banking system or other facilities at the moment is the re-entry into their business in the face of their collapsed economic backgrounds. That obstacle will be tackled by this initiative.
“At the moment, the economy of not only the country but the whole world has been challenged at an unprecedented level. In such a situation, the biggest hit is to the micro/small-scale entrepreneurs who make their own industry as their daily livelihood. About 70% of such small businesses in Sri Lanka are currently sick or dead. It is difficult for a government to provide relief and facilities for them alone.
On the other hand, the Government provided Rs. 60 billion in relief to entrepreneurs whose businesses were paralysed due to the COVID pandemic last year, but most of this relief came through the banking system.
“Although the benefit was a relief to entrepreneurs in the most catastrophic sectors, such as tourism, hotels, etc., with securities and other collaterals, this concession was not a successful solution in practice for small-scale businesses without such assets. But it is a relief to the Government and the country to find a solution to a fundamental problem that exists at the moment and to bring them back to the level where they can contribute to the economic process. That is why we partnered in implementing this program. I believe we can provide relief to a large number of people with this program at an early stage, and they can revive their businesses,” he said.
Maluka also commented that BNPL, the concept of doing business now, paying later, is a tried-and-tested model in other parts of the world, although it is novel to Sri Lanka. LIRIDI is working with a network of suppliers and microfinance institutions to offer this facility to local entrepreneurs.
“The aim is to improve the quality of life of entrepreneurs, especially small and micro enterprises, by running their businesses in a sustainable manner.” He says it was a great opportunity for him to join hands with COSMI to launch this new initiative in Sri Lanka as the founder of LIRIDI, which is working towards such a goal. Maluka says that his company is ready to provide opportunities to hundreds of thousands of small-scale entrepreneurs in the country in the next four to five years.
Hashim said it is a great opportunity for small-scale entrepreneurs who are helpless to start a business without cash in hand. They can easily pay it with the designated LIRIDI app via online within the specified time up to six weeks, once they earn money out of selling the produce.
Rajapaksa said: “Joining hands with this innovation will give small-scale entrepreneurs in Sri Lanka an unprecedented opportunity to start their own business directly.”
COSMI Adviser Samantha Abeywickrema, COSMI Secretary-General Nilu Rajapakse, LIRIDI Lanka Country Manager Muditha Hettigama, and Business Development Executive Tenali Nanayakkara were also present at the signing ceremony.