Wednesday Nov 13, 2024
Wednesday Nov 13, 2024
Wednesday, 11 August 2021 02:00 - - {{hitsCtrl.values.hits}}
From left: Britain Acting Deputy High Commissioner to Sri Lanka Bruce Bucknell, CDC Group Managing Director and Head of Asia Srini Nagarajan and Commercial Bank Managing Director S. Renganathan
The Commercial Bank of Ceylon said yesterday it had secured a $ 50 million (about Rs. 10 billion at current exchange rates) loan from the CDC Group, the UK’s development finance institution and impact investor, to facilitate lending to Small and Medium-sized Enterprises (SMEs) and support climate projects in Sri Lanka.
CDC’s investment will enable Commercial Bank to further strengthen financial support to local SMEs most in need of funding, enabling them to access necessary working capital to strengthen their operations, maintain employment, and grow their business, the bank said.
By focusing lending toward eligible businesses and customers, the investment will help increase social and financial inclusion across communities which will in turn drive economic activities throughout the country.
SMEs represent 80% of businesses and provide about 35% of jobs in Sri Lanka. Yet, these businesses struggle to access medium and long-term finance, a funding issue which is further exacerbated by the impact of COVID-19 on the country’s economy.
CDC’s investment will equally provide capital that will allow Commercial Bank to extend credit toward renewable and climate-supportive projects. Sri Lanka is facing growing energy demands and has set a national ambition to become energy self-sufficient by 2030 and reach 100% renewable energy generation by 2050.
Through this loan facility from CDC, the bank can increase support for the development of clean energy resources and energy efficiency initiatives, helping Sri Lanka to achieve national climate goals and bolstering the country’s efforts to help reduce greenhouse gas emissions.
The partnership between CDC and ComBank, Sri Lanka’s first wholly carbon neutral bank, is strengthened by a joint commitment to advancing climate initiatives and making investments that help to promote climate mitigation, adaptation and resilience.
The landmark investment marks CDC’s re-entry into Sri Lanka market and demonstrates the DFI’s three-pillared Climate Change Strategy through this first climate commitment in the country. Similarly, the investment will strengthen Commercial Bank’s own Green Financing strategy, supporting Sri Lanka’s commitments under the Paris agreement.
British Acting Deputy High Commissioner to Sri Lanka Bruce Bucknell said: “We welcome today’s announcement as a step towards financial empowerment for small businesses and communities throughout Sri Lanka. CDC and Commercial Bank of Ceylon’s partnership offers a blueprint for investments that could transform Sri Lanka’s economic future. This investment demonstrates the UK’s continued commitment to supporting Sri Lanka socioeconomic development and our shared ambitions for a sustainable future through clean energy transition.”
The new relationship between CDC and ComBank will foster inclusion and support innovative climate solutions, contributing to United Nation’s Sustainable Development Goals (SDG) on affordable and clean energy (SDG 7), decent work and economic growth (SDG 8), and climate action (SDG 13).
CDC Group Managing Director and Head of Asia Srini Nagarajan commented: “SMEs are the cornerstone businesses that serve households, local communities and greatly drive the growth of the entire economy. However, the pandemic has created a scarcity of financial support which is hampering growth of SMEs and impeding economic development. CDC is excited to be returning to Sri Lanka’s market alongside a partner whose ambitions align with our investment priorities of supporting businesses and backing climate action.
“Our flexible, long-term capital will be aimed toward helping to transform livelihoods, businesses and support post-pandemic resilience. We are pleased by this commitment, which marks our first climate investment in Sri Lanka, as it is indicative of our dedication to help bring about a cleaner and more sustainable future in the country and across our markets.”
Commercial Bank of Ceylon Managing Director S. Renganathan said: “Commercial Bank has a historic link with the UK, as the successor to the Eastern Bank which opened a branch in Colombo in 1920 and provided the start to our 100-plus year journey. We are delighted to partner with the UK Government funded CDC in its quest to support SMEs, which are the backbone of the economy of our country.
“The challenges brought about by the pandemic have been particularly hard on this segment and we have been working tirelessly to support these businesses survive and grow in these difficult times. This facility will greatly enhance our capacity to provide solutions tailor-made for deserving SMEs and will allow Commercial Bank, already one of the top lenders to SMEs and green projects in the country, to make a significant difference.”
Established in 1948, CDC Group is a leading player in the fight against climate change and has committed more than $ 1 b of climate finance over the last four years alone. The company has investments in over 1,000 businesses in emerging economies and total assets of $ 9.3 b. In 2020, CDC committed over of $ 1.5 b to businesses in Africa and Asia, and aims to invest up to $ 1.75 b in 2021 – with a focus on driving inclusive growth, job creation and supporting economic recovery from COVID-19.
The first Sri Lankan bank to be listed among the Top 1000 Banks of the World and the only Sri Lankan bank to be so listed for 11 years consecutively, Commercial Bank operates a network of 268 branches and 931 automated machines in Sri Lanka. The bank’s overseas operations encompass Bangladesh, where the bank operates 19 outlets; Myanmar, where it has a microfinance company in Nay Pyi Taw; and the Maldives, where the bank has a fully-fledged Tier I bank with a majority stake.
