Small & micro enterprise sector seeks Rs.500k, 3-year interest-free loan to navigate COVID-19

The confederation representing micro, small and medium enterprises have called for a Rs. 500, 000 interest-free loan, repayable in three years to resurrect micro and small scale entrepreneurs engaged in agriculture-based industries and manufacturing.     

While commending the wide scale measures so far taken by the government together with the Central Bank to assist all businesses and individuals affected by the pandemic, Confederation of Micro, Small and Medium Industries (COSMI) Founder President, Nawaz Rajabdeen made this call to resurrect the sector, which has become the biggest casualty of the prolonged social distancing guidelines. 

SMEs account for over 60 percent of enterprises and 40 percent of employment in Sri Lanka, while there are another significant number of self-employed persons in the micro sector, which largely forms the informal sector. 

“The government has addressed the current situation very effectively. The Central Bank circular on March 27 was very clear on the financial concessions offered to all MSMEs. Some of these may not reach the far away regions effectively. Therefore, we are going to have a seminar in each region once the curfew is lifted to make them aware of these concessions and to tell them to make advantage of them,” Rajabdeen said. 

Under instruction of the government, the Central Bank made available a Rs.50 billion refinancing facility for a period of 6-months to support businesses, the self-employed and the other individuals affected by the economic fallout coming from the virus. 

This includes the suspension of the recovery of loans for a period of six months for SMEs. 

Besides, the package also includes the granting of a working capital loan at 4 percent for eligible customers with a moratorium on interest for six months. 

“We also strongly suggest the government to allocate Rs.500,000 a piece, an interest-free loan for three years for the self-employed, women entrepreneurs, small industries, manufacturing industries and other sectors with a particular emphasis on the agriculture sector as it is the need of the hour,” Rajabdeen said. 

He recalled a similar programme launched in 2014 where his chamber got the government to give Rs.250, 000 for five years for each woman entrepreneur, which became a tremendous success with the majority of such business women rising to become job creators for few hundreds. 

He said the recovery of such loans was relatively easy because the chamber closely monitored the progress of those entrepreneurs and how they made use of the funds.  

Hence, he called all affected micro, small and medium enterprises to register with COSMI as they ensure some form of assistance to the affected small businesses.