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Swiss based Enabling Qapital makes its maiden investment in Sri Lanka with Alliance Finance Co. PLC

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To support MSME entrepreneurs across the country

Sri Lanka’s oldest finance company, Alliance Finance Company PLC (AFC), has secured a USD 5 Mn medium term financing facility from impact investing fund, EMF Microfinance Fund AGmvK, Liechtenstein advised by Swiss based Enabling Qapital S.A. The financing facility will be used to support Covid impacted Micro SME entrepreneurs across the country in line with AFC’s strong mandate to uplift the livelihood of marginalized communities and developing micro-SME entrepreneurs.

ENABLING QAPITAL (EQ) is an Impact Investment Advisory Company with strong ties, expertise and a proven track record in Impact Investing. EQ has built a state-of-the-art approach when it comes to Microfinance and Impact Investments. EQ is the exclusive advisor to the Enabling Microfinance Fund (EMF). EQ has a global footprint with teams based in Switzerland, Liechtenstein, Africa, Central Asia, East Asia and Latin America. Investments of EQ have reached over 6.2 Mn micro-finance customers around the world and out of whom,51% are females.

Mr. Romani de Silva, Deputy Chairman & Managing Director of AFC elaborates: “This is a significant milestone for AFC and the funding provided by EQ will further strengthen our mandate for sustainable finance. Furthermore, I am very grateful to EQ for identifying AFC as the preferred channel for its maiden investment into the MSME sector in Sri Lanka. It is also a reflection of the trust placed in our sustainable business model and the confidence placed in the MSME sector of Sri Lanka. In the year 2017, AFC became the first financial institution in Sri Lanka’s NBFI sector to commit to the UN Sustainable Development Goals (SDG) and the Paris Agreement on Climate Change, when they signed the ‘Karlsruhe Resolution’. In recent years, AFC has been investing 3% – 4% of its profit annually on social and environmental sustainability initiatives despite the extremely challenging external environment.

AFC has demonstrated strong improvements in all of its performance indicators such as growth, profitability and portfolio quality in recent times, especially after the successful restructuring program implemented with the technical assistance of IFC.

Incorporated in 1956, Alliance Finance Company PLC (AFC) is Sri Lanka’s oldest Non-Banking Finance Institution (NBFI), or the oldest ‘Finance Company’ in the country. It has served four generations of Sri Lankans for over 65 years, and as Sri Lanka’s pioneering finance entity, operates on the principle of Eternal Friendship. An enterprise that has been built on trust, integrity and a shared vision with its customers, Alliance Finance aims to make the world a better place through sustainable financing. AFC has garnered many prestigious awards and mentions on sustainability including the first Value Driven Financial Institution in South Asia to be Certified at Level 4 for Environmental and Social Sustainability in Banking and Finance. Becoming an ISO 22301 certified NBFI in 2012, Alliance Finance serves a diverse portfolio of clients with its Savings, Fixed Deposits, Leasing, Speed Cash, Development Finance, Gold Loans, and Personal Loans.



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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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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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