News

Access to microfinance for rural entrepreneurs in Sri Lanka

Colombo, Sri Lanka, October 28, 2008

On October 28, FMO signs a deal with LOLC Micro Finance Company Ltd (LOLC MF), a new microfinance company in Sri Lanka. The company was set up by LOLC (Lanka ORIX Leasing Company PLC), one of the largest asset financing companies in Sri Lanka which has been a client of FMO for more than ten years. They recently decided to formalize their microfinance business. In order to seal this agreement, an official signing ceremony takes place in Colombo, which will be attended by the governor of the Central Bank and several ambassadors among others.

FMO invests USD 2m in equity, a convertible loan of USD 1,5m and a senior loan of USD 6,5m. The Dutch development bank takes a 20% stake in LOLC MF, making this company the first MFI in Sri Lanka with foreign shareholding.

It is estimated that half of Sri Lankan households lacks access to credit. The unmet demand for microfinance in Sri Lanka is approximately USD 1,2 bn. As a result of this new microfinance activity, entrepreneurs in the rural areas will gain access to finance. Besides providing microloans, LOLC MF is also involved in a number of outreach initiatives, like internet access to rural areas, supporting women entrepreneurs and internal staff trainings. LOLC’s 23 microfinance branches and 14 service centers are located in fuel stations. To further expand its outreach, LOLC MF wishes to increase this number and to also offer its products via the postal network. LOLC MF currently has around 20.000 customers and expects to have approximately 100.000 by the year 2010.

The Netherlands Development Finance Company (FMO) is the international development bank of the Netherlands. FMO invests risk capital in companies and financial institutions in developing countries. With an investment portfolio of €3.4 billion, FMO is one of the largest bilateral development banks worldwide. Thanks in part to its relationship with the Dutch government, FMO is able to take risks which commercial financiers are not - or not yet - prepared to take. FMO's mission: to create flourishing enterprises, which can serve as engines of sustainable growth in their countries. 

Press contact:
Nicoline van Slingelandt
Communications Officer (PR)
T: +31 70 314 9790  
M: +31 622 563 047
E: n.van.slingelandt@fmo.nl