Northern SMEs to the fore

Monday, 12 May 2014 00:00 - - {{hitsCtrl.values.hits}}

Central Bank Governor applauds province’s leadership role in creating growth By Marianne David The north of Sri Lanka is no longer a lagging province and is taking the leadership role in creating growth in the SME sector and in many areas, asserted Central Bank of Sri Lanka Governor Ajith Nivard Cabraal.

“It is very satisfying to see the marked transformation of the north over the last five years. Massive development has taken place. A lot has been achieved but there is a lot more to be done to realise the potential of the north,” he said, delivering the keynote address as Chief Guest at the ‘Promoting SMEs for the Development of the Northern Province’ program. Organised by the Central Bank’s Northern Provincial Office at the HNB Auditorium in Jaffna on 9 May, the program explored the potential for innovation and value addition from SMEs and also looked at managing banking relationships and the Central Bank’s credit schemes. Banks have to change their attitudes Asserting that the SME sector is the backbone of the economy in any country and that it is no different in Sri Lanka, Cabraal emphasised that banks, including the Central Bank, have a great role to play in supporting people’s innovative ideas so that they can continue to find ways and means of economic activity. “The banks have to change their attitudes if SMEs are to succeed. Banks must not think that the SME sector is only about agriculture. They must support agriculture, but at the same time they must support new industries, new enterprises and new skills that are needed by society. Banks also must find the ways and means of providing the capital as well as loans to enable people to do their business,” he said. Outlining Central Bank steps to promote the SME sector, he said the bank had changed its attitude and adopted a regional development focus. “Every day we are searching for new ways in which we can provide the necessary capital for businesses to run effectively. The Government has supported the SME sector and wishes to ensure that the SME sector in all parts of the country is supported very significantly,” he affirmed. Pointing out that the bank has made a lot of investments in many areas to make it easier for people to do business, Cabraal said restoration of electricity, doing up of roads, ensuring there are banks and finance companies, and ensuring schools and other Government services are developed were part and parcel of improving infrastructure.

“We have invested $ 3.5 billion to ensure the infrastructure is of a certain standard to support SME development. That benefit can only be enjoyed if the SME sector grows rapidly in the next few years. We invite SMEs to make use of these facilities and capital opportunities in order to do their businesses at a much wider level than before.” Concluding his address, Cabraal asserted: “A lot has been achieved; several new businesses have started. But we must all realise there is a lot more to be done.”

Skills development Central Bank Assistant Governor Janaki Mampitiya, who also participated in the program, told the Daily FT that the Central Bank’s north and east offices, while uplifting the community’s financial literacy, were also placing a lot of emphasis on skills development. “The Central Bank offices conduct programs to uplift skills of the SME sector so that they will be in a position to identify industries or enterprises where they could invest money and start SMEs. This is very essential. We have many programs on financial literacy and we feel we have uplifted the knowledge of most potential SME entrepreneurs to a certain standard. We are now also concentrating on developing skills in modern agriculture, dairy farming and other areas through these skills development programs for SMEs,” she added. Blessed with biodiversity University of Jaffna Department of Agricultural Biology Head Prof. G. Mikunthan making a presentation titled ‘Potentials for Innovations and Value Additions from SMEs in Northern Province,’ said that the Northern Province had many resources, ranging from land (crop and livestock)

and water (inland and sea) to biodiversity (flora and fauna), forest cover and energy (solar, wind, bio). Asserting that the north was blessed with biodiversity, he listed the dominantly-grown palmyrah, cultivable land, water bodies for inland fishing and being surrounded on three sides by the sea for sea fishing. Prof. Mikunthan also highlighted the potential for extraction of ground water and the proposed forest, wildlife, coastal and marine conservation areas, in addition to listing out the province’s mineral resources. The north’s human resources comprise school-leavers, diaspora (for investment technology and experience), women heading families, graduates seeking employment, ex-combatants and the physically challenged. Touching on micro enterprises that help improve livelihoods, he stated the Women’s Rural Development Society (WRDS) was a success story, with capital given to WRDS creating interest to obtain a loan and repay promptly. “The loan is used to develop a micro enterprise and prompt repayment encourages them to obtain a bigger amount as loans. This promotes expansion of the business and there is trust, confidence and team work.” Empowering women’s societies provides employment opportunities and financial control and results in evolving women leaders in the province. Citing an example, he said the Treasurer of Kilinochchi WRDS is an ex-combatant who is doing a great job. Innovation and value addition Prof. Mikunthan listed out and discussed the following aspects for innovation and value addition:

Flora:
Under-exploitation of palmyrah
Under-exploitation of medicinal plants
Potential for floriculture industry
Opportunity for healthy food industry
Potential for bio-fertiliser and bio-pesticides industries
Potential for underexploited plants
Fauna:
Under-exploitation of livestock
Potential for inland fishing
Under-exploitation of deep sea fishing
Potential for bee-keeping and other ventures
Potential for bio-control agents – predators and parasites

Other potential areas are eco-tourism, which will provide employment opportunities, efficient use of natural resources and promote the environment; new products of international standards; and waste management – vermiculture and vermitechnology. Education and technology In relation to education, Prof. Mikunthan said innovation and value additions were needed in terms of essential skills, hands-on experience, exposure to the industrial world and provision of follow-up training. He asserted the introduction of technology in the A/L stream was the right decision as it would result in school-leavers and graduates being technologically-tuned, receive exposure to industrial operations, give them confidence towards private jobs, encourage self-employment and create productive young entrepreneurs. Prof. Mikunthan also discussed pest emergence, climate change and plant protection; alternate food production – dairy products, apiculture, fruit production, crop-livestock integration, GM crops, GM foods, GM organism in terms of medicinal drugs and bio-safety; renewable energy – innovations awaited on low-cost solar panels for households; and post-harvest technology. In relation to post-harvest technology, there is a lack of low-cost technology development, limited development of cottage industries, limited technologies to process agriculture into new products, certification of standard for value-added products, improper methods for ripening fruits, inadequate dissemination of knowledge, limited availability of value addition techniques, and inadequate knowledge on handling post-harvest losses during collection, handling and transportation. Be inventors and innovators “Technology should evolve from this island and rise to the top of the world. The appropriate technology should be best-suited and user friendly, cost-effective, environmentally-friendly, less labour intensive and of national and international standards. We should be inventors and innovators rather than simply users,” Prof. Mikunthan asserted. Pointing out that potential innovations are necessary at this stage to uplift the economy of the Northern Province and to improve the livelihood of the people, he said the youth should be triggered with technology to invent new ideas, tools and machinery to support the industrial revolution. “Newer technologies should be taught and practiced by the youth to develop inventions and innovations.” Prof. Mikunthan noted that value additions would help increase Northern Province GDP and also increase exports to international markets. “Self-employment should be encouraged through supporting SMEs. The WRDS system of financial operation in terms of capital loan could be worked out in all areas for microfinance to encourage small-scale businesses.” The program also included a presentation on ‘Managing Banking Relationships’ by DFCC Bank Regional Manager S. Raveendra and a presentation on ‘CBSL Credit Schemes’ by Central Bank of Sri Lanka Regional Development Department Assistant Director M.M. Theseem.

Access to investment in NE has improved: Cabraal

Access to investment in the north and east has “certainly improved” over the years, Central Bank of Sri Lanka Governor Ajith Nivard Cabraal told the Daily FT, adding that the low interest rates encourage entrepreneurs. Cabraal noted that a key problem a few years ago was that the business plans presented to the banks were not viable. “Despite credit lines being available, the people needed to be educated about having proper business plans before getting loans from banks,” he said. In order to tackle this, he said at present the Central Bank and other banks have established centres providing information to entrepreneurs on how to do a business plan, how to run a business and so on and give them guidance. Commenting on the focus on deposit taking and pawning vs. lending, the Central Bank Governor said it has not diminished, but lending has certainly grown from five years ago. “I would say lending has grown by around 150%. There has been progress and I am happy about it but I am still not satisfied since there is more to be done,” he added.

SME success stories

Alpha Mixture Industries Alpha Mixture Industries, Manipay, Jaffna Number of employees: 30 Alpha Mixture Industries is the most prominent mixture producer in Jaffna. It supplies more than 75% of the Jaffna District market and exports to foreign consumers, mostly those who have migrated from Sri Lanka. Alpha Mixture Industries produces mixture, peanut pakoda, pakoda, fried peanut, garlic murukku, etc.

Kishani Metal & Aluminium Industries Kishani Metal & Aluminium Industries, Araly South, Jaffna Number of employees: 27 Kishani Metal & Aluminium Industries produces aluminium sheet and aluminium base products such as pans, pittu pans, idly pan sets, steamer sets, etc. to meet the demand for aluminium products in the Northern Province and also in other areas of the country.