AFC gets $ 10 m funding from FMO to boost sustainable development in Sri Lanka

Alliance Finance Co. PLC (AFC) has renewed its partnership with FMO; the Dutch Entrepreneurial Development Bank, by receiving a fresh funding line of $ 10 million in June 2021 to financially empower and facilitate the development of the Micro, Small and Medium enterprise sector in Sri Lanka. 

The AFC-FMO partnership began in 2018 and AFC was successful in obtaining $ 10 million, which enabled AFC to finance over 15,000 MSME entrepreneurs in building up their livelihoods. In addition to FMO, AFC also has partnerships with reputed institutions such as Triodos, Symbiotics, DWM and IFC and has successfully raised over $ 40 million to date. AFC’s sustainable business philosophy focused on sustainable development was the key to attracting these development finance institutions and impact investors. 

Commenting on this important milestone, AFC Deputy Chairman and Managing Director Romani De Silva stated, “This is a reflection of the confidence that FMO has in the business philosophy of our company and our commitment to sustainable development. It is also an indication of FMO’s commitment to supporting rural communities in Sri Lanka during these tough and challenging times amidst the COVID-19 pandemic. We are very grateful to FMO for coming forward to assist our MSME customers who need our support now more than ever.” 

The MSME sector is a significant contributor that can fuel the anticipated economic development of the country. However, the challenges and constraints hindering their ability to reach their true potential has remained more or less unchanged throughout. Finance, being one of the key inputs for development has always been insufficient for this sector given that 48% of borrowers in Sri Lanka yet borrow from family, friends and unregulated sources. Thus, the need to close the funding gap in this sector remains a key development priority in the country and a key focus area of the providers of financial services.

AFC, from its inception in 1956, has successfully dedicated its business to serve the small and medium level enterprises in Sri Lanka by providing financial solutions to facilitate their development. Thus, at this juncture where the attention is refocusing on the MSME and SME sector, AFC is equipped with a well-aligned business philosophy and years of experience to effectively cater to this need in collaboration with other providers of financial services thus helping to close the existing funding gap in the MSME sector. 

AFC’s commitment to sustainability is holistic and goes beyond economic empowerment with an equal emphasis placed upon social and environmental sustainability as well. AFC embraced the triple bottom line approach in 2012, followed by numerous other actions to become the sustainable financial institution it is today. 

In 2020 AFC became the first financial institution in South Asia to be certified for holistic sustainability under the pioneering Sustainability Standards and Certification Initiative (SSCI). SSCI is governed under the International Council of Sustainability Standards for Value-Driven Financial Institutions, Germany. This has resulted in an even greater focus on this unwavering commitment of the Company and better measurements of the impact created. 

AFC is also among the highest contributors of net profits towards sustainability initiatives in the industry. The Company has dedicated an annual allocation of 3% of profits to conduct sustainability and CSR initiatives. The company has many initiatives including the ‘1 mn trees for Unity’ flagship project, that aims to plant one million trees by 2024 whilst meeting social and environmental objectives. 

To-date the company has contributed over 300,000 plants to the nation. In addition, conserving biodiversity, empowering social entrepreneurs, promoting sustainable products and undertaking CSR practices that ensure social and environmental wellbeing are some of the other key priorities of the mandate that continue despite the challenges brought upon by the COVID-19 pandemic.

AFC will also continue to support the global and local sustainable development movements, with its high impact goals in place to ensure focused value creation in line with the UN SDG’s and National Development Agenda. AFC believes that synergistic partnerships with organisations such as FMO and other impact investors will add further value to its approach and facilitate value distribution to a wider range of stakeholders in the country. AFC is eager to uphold these partnerships and collaborations that facilitate sustainable development in Sri Lanka and have confidence that they will undoubtedly accelerate its journey of ‘making the world a better place through sustainable finance’.