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Building an Ecosystem for Women Entrepreneurship in Sri Lanka

  • Project Name: Small and Medium-sized Enterprise Line of Credit Project
  • Region/Country: South Asia/Sri Lanka
  • Sector and Themes: Finance
  • Year: 2016–Present
  • Project Leaders: Takuya Hoshino
Building an Ecosystem for Women Entrepreneurship in Sri Lanka
Women entrepreneurs from Galle were among those 744 entrepreneurs from small and medium-sized enterprises across the county trained under the Small and Medium-Sized Enterprises Line of Credit Project.

The We-Fi grant helps us to be more focused on lending to women entrepreneurs

—Thusitha Nakandala, deputy general manager, Branch Banking, Sampath Bank, Sri Lanka

Development challenge

Despite their significant role, small and medium-sized enterprises (SMEs) in Sri Lanka are constrained by limited access to bank finance. Women, who tend to run smaller businesses without collateral, are disproportionately impacted. Banks need an incentive to reach out to female SME owners and women need a more enabling environment to signal their competency and ability to repay loans.


In 2016, through 10 participating banks with 80% market share, ADB introduced a line of credit targeting lending to women-led SMEs. This credit line was complemented with TA from the Japan Fund for Poverty Reduction for training and networking opportunities to women entrepreneurs in the export-oriented sectors. This TA also designed an SME credit guarantee institution, which provides a solution for women-led SMEs lacking collateral by promoting cash-flow-based lending by banks. In 2018, the original project received an additional boost with a $12.6 million grant from the Group of 2020 Women Entrepreneurs Finance Initiative (We-Fi), which enhanced the project’s gender dimensions.

Knowledge products and services delivered

The project delivered business development training for women entrepreneurs, seminars on raising awareness of women entrepreneurship, and access to start-up finance. It fosters increased knowledge through an online platform for learning and mentoring. The project also organized ICT and business process management-related career events specifically for women. In addition to carrying out a policy study on establishing an SME credit guarantee institution, the project conducted gender gap assessments for three government organizations to develop a new institutional framework for the capacity development of women.

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Nelum Devi, owner of Nelum Plant Nursery.

Impact and results

As of December 2020, a credit line of $175 million had been disbursed to 3,546 SMEs, out of which 1,338 were women-led. Because of the project’s success, the government requested a $165 million additional loan, which was approved by ADB in November 2020. The project will continue to 2023. A total of $24.4 million in loans, cofinanced with $6.5 million from the We-Fi grant, was provided to 663 women-led SMEs. Out of 663 We-Fi beneficiaries, 231 were first-time borrowers and 139 were in economically lagging regions (Northern, Eastern, Sabaragamuwa, and Uva regions), and 39 trained women accessed We-Fi grants.

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Women designing saree from Indu Mala Saloon.

About 750 female entrepreneurs received training, which shifted to an online format in 2020 due to COVID-19. Most of the business plans the participants designed were rated viable by banks. Career events at Matugama and Galle in 2018 targeted at employing female students in the ICT sector attracted 1,641 students. Three government organizations and two civil society organizations are developing policies to mainstream gender-responsive banking practices. The success of the project with We-Fi grant support has resulted in similar programs being designed for Fiji, Papua New Guinea, and Viet Nam.

Lessons for Replication

Engaging a wide range of stakeholders, such as banks, government organizations, and chambers of commerce, is important. These relationships take years to build. Data collection at the micro level is critical to understand the lending practices of participating financial institutions and to provide credible policy advice. Government ownership is critical for the successful implementation, creation of knowledge, and application into practices for sustainable transformation. High-level strategic guidance within the government should be in place to identify key issues to be resolved with ADB’s knowledge support. A government officer should be appointed to provide constructive inputs in ADB’s knowledge products throughout the implementation.

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Ruchirani, owner of Negambo Farm.

I started this business with a small investment, Rs8,000 ($50). I have taken this to greater heights over the years. I have also created employment. This makes me proud. Any woman can start a venture of her own even in a small way and realize their goals.

—Indumala Rajapaksha, Sarees and Salon, Kandy and Colombo

The agricultural instructor advised me to attend a training program by ADB. ADB’s training program invited bank officials. I learned a lot about management there. After the training I went to several banks with my business proposal to borrow. I wasn’t afraid.

—Ruchirani Munasinghe, Guava Farming, Anuradhapura
#SriLanka #SME #SMECredit #SouthAsia #Gender #WomenEntrepreneur #CapacityBuilding
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