Access to finance is key to the creation, growth and productivity of small and medium enterprises (SMEs), Central Bank Governor Dr. Indrajit Coomaraswamy said.

“Access to finance plays an integral role in SME development and the Central Bank of Sri Lanka is primarily trusted with the responsibility of facilitating supporting and strengthening the mechanism, for easy and affordable access to finance for SMEs,” Dr. Coomaraswamy said while addressing 32nd Annual Conference of Asian Credit Supplementation Institutions Confederation (ACSIC), hosted by the Central Bank Monday (28).

In any economy, it is the small and medium enterprises sector that natures inclusive economic growth and social inclusion. In addition, the SME sector generates employment, reduces inequality and poverty and promotes entrepreneurship and innovation.  Further, SMEs contribute significantly to balance regional development as well.

According to the Ministry of Industry and Commerce in Sri Lanka, the SME sector accounts for more than 75% of the total number of enterprises in the country, provides 45% of the employment and constitutes 52% of GDP.

The SME sector includes Micro, Small and Medium-scale industries and consists of around one million establishments providing employment to around 2.25 million people in the country.

Speaking further, Governor also reiterated the importance of recognizing the SME sector and added that various initiatives have been introduced by successful Sri Lankan government and non- government organizations to strengthen this sector.

However, there are several constraints faced by SMEs with regard to access to finance, Dr. Coomaraswamy said.

“These include high-interest rate and the emphasis on collateral by lending institutions. These are the most frequent decided constraints affecting MSME development,” he added.

Dr. Coomaraswamy pointed out that in order to address them the Central Bank had continued to coordinate, facilitate and implement various refinance, insurance and credit guarantee schemes.

“These are funded by the Central Bank, the government, international donor agencies and Commercial Banks,” he said.

"Currently, nine refinance schemes and two interest subsidy schemes are overseen by the Central Bank," the governor added.