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Thursday, 9 February 2017 00:07 - - {{hitsCtrl.values.hits}}
By Charumini de Silva
The National Policies and Economic Affairs Ministry yesterday launched the Swashakthi loan scheme aimed at developing and generating employment at 25,000 micro, small and medium enterprises (MSMEs), which is essential for real economic growth.
The launch was held under the patronage of Premier Ranil Wickremesinghe, National Policies and Economic Affairs State Minister Niroshan Perera, Central Bank Governor Dr. Indrajit Coomaraswamy, Women and Child Affairs Minister Chandrani Bandara and Primary Industries Minister Daya Gamage at Temple Trees.
Outlining the features of the new credit facility, Central Bank Governor Dr. Coomaraswamy said the initial fund allocation of Rs. 1 billion had already been allocated by the Treasury and it would eventually grow to Rs. 4 billion.
“We are also anticipating that banks will leverage it to at least three times this amount so that this program in due course will mobilise a total of Rs. 12 billion for MSMEs around the country,” he added.
Noting that the Swashakthi loan scheme would contribute to the broader policy objectives of the Government, particularly in creating one million jobs, Dr. Coomaraswamy acknowledged that the Central Bank provided its expertise to design this scheme and would continue to disburse and refinance loans through the 17 participatory banks.
He said there had been growing demand from emerging entrepreneurs in villages for a new concessionary loan scheme that could support their new business ideas.
“The scheme fills the need for a Government-led support mechanism to address financial, technical, marketing and entrepreneurship needs, especially those of youth and youth graduates, women and differently abled people at the grassroots level has been identified as essential,” he explained.
Although the Central Bank has disbursed loans amounting to Rs. 79.5 billion amongst 917,200 MSMEs through various programs during the past five years, Dr. Coomaraswamy pointed out that the development of MSMEs was not proportionate with that amount.
Since Swashakthi is a MSME credit facility, the Governor said that the participatory banks were requested and encouraged to provide loans based on the viability and strength of the project proposals rather than depending on the exclusivity of the strength of the product.
Terming Swashakthi a credit plus loan scheme, he said each existing business was entitled to a maximum loan of Rs. 250,000 while each start-up business was entitled to a maximum loan of Rs. 200,000. In addition to the loan component, new entrants are eligible to a special grant to meet their initial expenses without any interest.
Furthermore, the loans are granted at a special interest rate of 5.5% per annum to make sure the prospective borrowers were not burdened with a high cost of capital. The beneficiaries are allowed to repay the loan within five years and the scheme is planned to go on for 20 years using the recovery proceeds.
The scheme is expected to identify existing skills and the talent of potential entrepreneurs and resources in villages to provide them with necessary training and technical support, where several Government departments have been mobilised to deliver the plus dimensions of the credit scheme.
Prime Minister Ranil Wickremesinghe yesterday stressed the importance of uplifting the middle class at the village level to drive real-time economic growth.
Noting that the Government was focused on creating one million jobs, he acknowledged that several projects were underway to develop export manufacturing plants, the tourism industry, shipping, aviation and IT companies in the country.
Considering the funds that the banks have in their possession, the Premier said the development which has taken place in the rural economy was inadequate. He urged the banks to play an active role in improving the middle class economy of the country.
He said the Government had initiated several programs aimed at developing the rural economy, insisting that the Swashakthi program would support small-scale businesses.
Wickremesinghe said the Government had formulated Swashakthi to improve the rural economy, adding that it had disbursed over Rs. 79 billion during the past five years, pointing out that these funds were not fairly distributed.
He assured that Swashakthi was formulated considering all matters after many discussions held with Central Bank officials to promote businesses through the support of commercial banks in the country.
Premier Wickremesinghe added that the Government was paying special attention to uplifting the middle class in the economy.
“We want to support existing businesses while helping with the creation of new enterprises,” he added.
However, the Premier added that the selection process for Swashakthi would be carried out by commercial banks.
He stated that the Government wanted to rapidly develop rural economies, adding that during the past two years Rs. 500,000-Rs. 1 million had been allocated for village development projects such as road development, infrastructure and agricultural industries.
Wickremesinghe acknowledged that the internal funds were inadequate to develop the economy and as a result the country needed foreign investment.
“We need foreign investments but that doesn’t mean we want to pass on the benefits to them only. Our intentions are to distribute the benefits to the general public,” he noted.
