PROPARCO, the private sector arm of the French Development Agency, AFD Group, will sign a 10 million Euro loan on Tuesday in Colombo with Lanka Orix Leasing Company (LOLC) to support the development of the latter’s operations in the North and East of the country. PROPARCO is a financial institution partly held by AFD and private shareholders from European and emerging countries, which is providing long-term resources to the private sector in emerging countries. A statement from the French Embassy said both AFD and PROPARCO have started working in Sri Lanka in the aftermath of the tsunami.
LOLC said it has benefited from the support of various international financial institutions for the development of its activities, and PROPARCO has already extended a US$5 million financing to LOLC in 2005 in the framework of the post-tsunami reconstruction programme. PROPARCO’s financing will enable LOLC to accelerate its roll-out in the North and the East.
Leasing and asset-finance is well suited for the financing of commercial and agricultural vehicles for Small and Medium Enterprises (SME’s) that have a limited access to credit, the press release stated. By providing support to LOLC, the financing will contribute to the development of the North and the East Provinces by facilitating access to finance for SME’s.
The main focus of PROPARCO in Sri Lanka is clean energy, agro-industries and microfinance. This is the first financing in Sri Lanka for PROPARCO under this new strategy whose mission is to be a catalyst for private investment in emerging and developing countries for sustainable growth and achieving the Millennium Development Goals. PROPARCO has a wide range of financial instruments to meet the specific needs of private investors such as loans, equity, guarantees and financial engineering.