At a recently held meeting of the CEOs of the commercial banks operating in Sri Lanka, Central Bank Governor Dr Indrajit Coomaraswamy drew the attention of the banks’ CEOs to the difficulties faced by potential young entrepreneurs with vocational training, in obtaining loans from formal banking institutions to commence or improve their businesses, due to their inability to meet collateral requirement.
Dr. Coomaraswamy at the meeting said: “We understand the difficulty in releasing a loan without having a security against a loan. Although the CBSL provides 100% refinance facilities for some of the concessionary loan schemes targeting the MSME, the credit risk is with the PFIs. However, we have a collective responsibility to help these young entrepreneurs to commence or improve their businesses making them financially inclusive. They will be your future customers.”
He requested bank CEOs to find some way of granting small loans without collateral to those who have National Vocational Qualifications (NVQ) qualifications, so that they can purchase machinery and equipment and commence/improve their businesses.
The CBSL Governor’s request was made in the context of a case made out by the Policy Development Office (PDO) of the Prime Minister’s Office , on the basis of some recent applied research by the PDO and the Small Scale Enterprise Development Division of the Ministry of National Policy and Economic Affairs, as well as a Department of Census and Statistics report disclosing that a large number of young entrepreneurs with professional NVQ qualifications, who have started up businesses in the service sector in what is described as mainstream economists as the ‘gig economy’ – i.e., outsourced contractual services, a sector which has seen massive expansion even in developed economies, in Sri Lanka especially in hair dressing, beauty culture, bridal dressing, event organisation, catering and delivery of goods and services etc.
Dr. Coomaraswamy continued: “These young entrepreneurs have been brave and venturesome enough to start up enterprises, without any State handouts or tax concessions etc., on their own initiative, grit and gumption and been able to successfully survive the first crucial years, in which normally the mortality of this sort of small and micro enterprise is very high. They now need access to funds to expand and consolidate and to get to the next level of development of their businesses. These are Sri Lanka’s potential future tycoons, the Upali Wijewardenas, the Harry Jayawardenas, the Ken Balendras, the Dhammika Pereras, the Nawalokas, the Gnanams, the N.L. Mubaraks (No Limit), the Amaleans, the Omars, and the Captains, of tomorrow. They must be nurtured. They need to access funds now. Financial service providers must respond.”