WE Finance Code will champion economic democracy in Sri Lanka: Prime Minister

Prime Minister Dr. Harini Amarasuriya addressing the event yesterday

• Speaking at National Adoption of Women Entrepreneurs Finance Code launch says Code will address specific needs of WSMEs in particular, ensuring targeted financial and non-financial support
• Opines this strategic move encourages economic growth that is inclusive to all
• Outlines finance gap in SL is estimated to amount to around $ 17 b
• Notes financial gap more prevalent in WSMEs hindering growth potential
• Cites $ 5-6 t in economic value can be unlocked globally by elevating WSMEs
• Claims expansion of WSMEs will enhance local female labour force participation and entrepreneurship countrywide
• Reveals 32% of working-age women are economically active, compared to 71% of men in SL
• Lists inadequate financing options, gender norms and lack of safety as barriers

By Janani Kandaramage

Prime Minister Dr. Harini Amarasuriya yesterday said the Women Entrepreneurs Finance Code (WE Finance Code) is aimed at catalysing inclusive economic growth and development in Sri Lanka via the economic empowerment of women.

She commended the initiative’s commitment to using a multi-stakeholder data-driven approach to identifying the specific needs of women-led micro, small, and medium enterprises (WSMEs) in the country, and boosting tailored financial and non-financial support to these enterprises accordingly.

The WE Finance Code is a global commitment by Financial Service Providers (FPS), regulators, development banks, and other financial ecosystem players to work together to increase funding provided to women-led micro, small and medium enterprises (WMSMEs) around the world, so that they can expand, create jobs and add value to the economy. Sri Lanka is among the 24 countries selected to pilot the WE Finance Code and the first in South Asia to do so.

The Prime Minister noted that the International Financial Corporation MSME Finance Gap Report in 2017 estimates that the global finance gap for MSMEs in developing countries amounts to $ 5.2 trillion in formal SMEs and $ 2.9 trillion in informal SMEs. In Sri Lanka, this finance gap is around $ 17 billion, representing approximately 21% of the country’s GDP.

WSMEs are further undermined by this financial gap which not only hinders their growth potential but also slows socioeconomic development. According to global estimates, addressing this disparity could unlock an additional $ 5 to $ 6 trillion in economic value. 

“The WE Finance Code is not only crucial for advancing the cause of gender equality, but also promoting the economic growth that the nation desperately needs in order to be positioned as an emerging economy,” she said at the National Adoption of Women Entrepreneurs Finance Code launch, organised by the Asian Development Bank (ADB) in partnership with the Department of Development Finance and Ministry of Finance, Planning and Economic Development.

She also described the inevitable rise in the local female labour force participation due to this move, adding that, “Women entrepreneurs are more likely to increasingly employ more females in their enterprises. In addition, digital banking options mean finance is accessible to women across the country, fuelling the ground for female entrepreneurship.”

Empowering women, particularly in rural areas, is a key step to boosting labour productivity by ensuring enhanced economic participation that is crucial to inclusive growth. “Increases in overall labour productivity is key to accelerating economic growth as empowerment leads to greater subsequent GDP growth more quickly, and in an equitable manner that ensures economic democracy,” she opined.

Outlining global gender disparities, Dr. Amarasuriya pointed out that 47% of the world’s women participate in the labour force compared to 72% of men, according to the ILO. In addition, she underscored that the World Economic Forum estimates a gender parity score of 60.5% in terms of economic participation and opportunities for women globally.

She highlights that the gender disparity in Sri Lanka reflects this global trend. Despite women representing over half of the population, their participation in the formal economy remains strikingly low. Current statistics reveal that only 32% of working-age women are economically active, compared to 71% of men. Data from the 2013-2014 Economic Census, conducted by the Department of Census and Statistics, highlights this gap further: Women lead just 25% of businesses and 26% of micro-enterprises in non-agricultural economic activities.

Speaking about the conventional challenges perpetuating the underrepresentation of women in the economy, the Prime Minister alluded to systemic barriers to entrepreneurship as the key cause. 

“Limited access to finance, coupled with inadequate access to skills training and technology prevent them from kick-starting or up scaling their businesses.

She added: “Women are also subject to lack of safe and reliable public transport and the workplace. As well as archaic cultural norms that place the full domestic burden on their shoulders- eliminating any time, energy or resources they will need to engage in economic activity,” she added.

As part of the push for WSME empowerment and sustainable economic advancement, the Prime Minister assured that financial barriers to SMEs and MSMEs including the lack of collaterals, financial literacy, and the absence of formal business structures are anticipated to be alleviated.

Dr. Amarasuriya remains confident that the initiative undertaken by national banks in the country will aid the Government’s vision of socioeconomic development by 2030.