Sri Lankan financial sector company Lanka Orix Leasing Company (LOLC) this week finalised a 10 million euros (Rs. 143 million) line of credit from PROPARCO, the overseas private sector funding arm of the French Development Agency.
This is after LOLC initiatially approached them a year ago for this facility. Slated for North and East operations, the money has already been earmarked by LOLC to go towards the opening of 10 new branches in the area over the next six months or so, according to LOLC Managing Director/Group Chief Executive, Kapila Jayawardena. Reports further indicate that the company currently has outlets in Jaffna, Vavuniya, Trincomalee, Akkaraipattu and Mannar.
Mr. Jayawardena said that LOLC was the largest non banking financial entity in the country with 77 locations island-wide as well as 80% of its business attributable to rural Sri Lanka, most of which was in the form of vehicles used in agriculture as well as other equipment. He further noted that when LOLC had first ventured into the North and East, after the end of the three decades long conflict a year and a half ago, the area was responsible for just 7% to 8% of the company's volume. However, today this percentage had risen to as much as 40% of business volume.
LOLC offers leasing and hire purchase instruments for agriculture, transportation and infrastructure. It has also been indicated that its North and East operations will focus on its core business of agricultural equipment with further indications of strong demand for small trucks as well as four- and two-wheel tractors, etc. LOLC had also previously received financing from PROPARCO for post-tsunami reconstruction in 2005 to the tune of US$ 5 million (Rs. 565 million).
Meanwhile, according to PROPARCO South Asia regional representative Jean-Pierre Barral, while the aid agency was currently in talks with a number of local companies to offer credit, no other agreements had been finalised as yet. He also suggested that, while his agency had the mandate to provide funding for microfinance, agro industries and clean energy, clean energy funding locally would be a "challenge" due to the exchange rate.
He suggested that innovative ways of hedging would be necessary if this area was ever entered into here. He revealed that his agency had similar resources as last year, when PROPARCO allocated $1 billion (Rs. 113 billion) over 50 projects in more than 30 countries, and that there was no specific budget allocated by the country, just on a case by case basis. |
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