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Alliance Finance Company PLC secures USD 10 mn Netherlands’ FMO in long term financing

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Sri Lanka’s oldest finance company, Alliance Finance Company PLC (AFC), has received the second tranche of USD 5 Mn from the Dutch Entrepreneurial Development Bank (FMO) as part of a long-term financing facility of USD 10M to expand its growing portfolio of MSME business.

AFC secured this USD 10 Million facility from the Dutch entrepreneurial development bank FMO in mid-2021 and received the first tranche of USD 5 Mn in 01.07.2021 With an investment portfolio of EUR 6.3 billion, FMO is one of the largest European bilateral private sector development banks with investments in 85 countries. This financing series is also a significant development for the country’s MSME sector, which is considered as the backbone of the economy.

Romani de Silva, Deputy Chairman & Managing Director of AFC stated: “This is an important milestone for AFC’s MSME focused business strategy and we are encouraged and excited by FMO’s partnership in our MSME plans. AFC-FMO partnership to develop the MSME sector in the country confirms AFC’s growing international credibility. Last year AFC became the first certified financial institution in South Asia for holistic sustainability in the Banking and Finance sector, governed under the EOSD International Council of Sustainability Standards for Value-Driven Financial Institutions (ICSSVDFI). FMO is no stranger to AFC since it assisted AFC with a similar facility in 2018. The facility is for 5 years with a fixed interest rate, thereby helping AFC to manage its asset and liability mismatch in the balance sheet. AFC readily receiving such global high tier financing is proof of international accreditation of our proven focus on sustainable financing which in turn is part of our larger commitment to the triple bottom line of People, Planet and Profit.”

In 2017, AFC became the first financial institution in Sri Lanka’s NBFI sector to commit to the UN’s Sustainable Development Goals (SDG) and Paris Agreement on Climate Change when it signed the ‘Karlsruhe resolution’. In recent years, AFC has been investing 3%-4% of its profits annually on social and environmental sustainability initiatives despite the extremely challenging external environment. In its initiatives beneficial to the environment and society, AFC has pledged LKR 18 Mn for sustainability initiatives during 2020/21 financial year.



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Business

Seven factors of concern at upcoming Monetary Policy Review

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by Sanath Nanayakkare

The Central Bank of Sri Lanka (CBSL) is scheduled to announce its latest monetary policy review on 20th January 2022, with all eyes on dwindling foreign reserves and foreign currency exchange in the country.

In this context, First Capital Research has named 7 factors of concern that could be taken into account at the upcoming monetary policy review. They are as follows.

* Foreign Reserves USD 3.1 billion – Dec 2021

* Inflation CCPI 12.1% – Dec 2021

* GDP Growth -1.5% – 3Q2021

* Private Credit LKR 60.5 billion – Nov 2021

* 03M T-Bill rate 8.38% as at 12.01.22

Liquidity and CBSL Holdings LKR -364.0 billion and LKR 1.42 trillion

Balance of Trade (BOT) and Balance of Payment (BOP) USD -6.5 billion and USD -3.3 billion for Jan-Oct 21

First Capital Research’s Policy Rate Forecast – Jan 2022-Apr 2022 notes that they believe the CBSL may highly consider tightening the monetary policy rates in this policy review but given the concerns over economic growth, there is a probability of 40% for CBSL to maintain its policy stance at current levels.

“With high frequent indicators improving in line with expectations, we have eliminated any probability of a rate cut. We expect a continued increase in probability for a rate hike in order to prevent overheating of the economy amidst the given fiscal and monetary stimulus,” they said.

As per First Capital’s view, CBSL either can choose to hike policy rates by 50bps or 100bps or hold policy rates steady, while a rate cut is off the table due to the high debt repayment and the high domestic borrowing requirement.

First Capital believes that there is a 60% probability for a rate hike due to the remedial actions required in achieving external stability.

However, there is also a 40% probability to maintain the policy rates at its current level in order to further improve the high frequency indicators.30%, they noted.

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Sri Lanka’s dash brand enters international markets

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Multichemi International Ltd, which manufactures and distributes a wide range of products under dash, one of Sri Lanka’s leading detergent and household care brands, has begun exporting its products to several international markets in Asia and Oceania, with plans also to enter Africa. The dash brand includes a wide range of products in car care, household care, home fragrances and laundry care sectors. Multichemi International Ltd, which has been awarded ISO 9001:2015 certification, is a Sri Lankan pioneer in environment-friendly cleaning products, having launched the country’s first biodegradable, safe cleaning products over 28 years ago.

Amila Wijesinghe, General Manager of the Company said,”Having conquered the domestic market, we are now ready to capture the international market. We are confident that our products which are of high quality will receive a good demand overseas as well. The feedback we have received so far from our overseas customers is extremely encouraging. We are dedicated to taking our products to the international market, to bring in foreign currency to the country and help uplift the economy”,

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Business

Janaka Abeysinghe appointed SLT CEO

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Sri Lanka Telecom PLC has announced the appointment of Janaka Abeysinghe as its Chief Executive Officer (CEO) with effect from February 1, 2022.

The incumbent CEO Kiththi Perera will be overseas on leave for a period of two years to pursue higher studies, according to a stock market filing by the company.

Abeysinghe joined SLT in 1991. In his present role, he leads the enterprise and wholesale business of SLT that provides integrated voice and data solutions to enterprises, government institutions, domestic telco operators and global wholesale carriers.

In his career at SLT spanning 29 years, he has held a number of senior positions, including general manager Enterprise and International Sales and has extensive experience in the areas of Enterprise Digital Services, Enterprise Communications Solutions, Data Communications, Business Development, Domestic and International Switching Operations and Global Wholesale Voice & Data Business.

He holds a Master’s Degree in Electrical and Computer Engineering from the University of Kansas, USA and a BSc degree in Electronics and Telecommunications Engineering with a First Class Honours from the University of Moratuwa.

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