Central Fin Agri

completed

The proposed project is a secured, 5-year, local currency, senior loan of up to US$20mn equivalent to Central Finance Company PLC (CF), a licensed finance company (LFC) in Sri Lanka (the Project). The funding will support the expansion of CF’s MSME portfolio in the agriculture sector, with an emphasis on financing climate-smart agriculture solutions and women-owned enterprises.The Project will be supported by the IFC-Canada Climate Blended Finance Program and the WEOF facilities, with a focus on promoting Climate Smart Agri (CSA) practices and Women owned SME financing in agribusiness space. Out of the up to $20 million financing for this project, upto $4 million will be carved out for CSA and funded by the IFC-Canada Climate Blended Finance Program. The WEOF will provide pricing incentives based on targets reached by the project.The Sri Lankan agriculture sector employs 26% of its work force, represents 24% of exports and accounted for a third of poverty reduction over the past 15 years. However, its contribution to GDP fell from 20.5% to 6.9% in the same period. Further, inclement weather conditions have led to a 1% reduction in GDP growth in recent years. Furthermore, lack of investments in technology, value additions, efficient and climate smart practices are obstacles in realising its true potential. This has made the sector less competitive in the global market severing it from global agri-value chains.The proposed project is part of IFC’s ‘Sri Lanka Agriculture Finance Program’, which aims to provide a holistic solution to bridge an estimated agriculture financing gap of US$ 2bn. The Program would consist of the following components:Capacity development of Participating Financial Institutions (PFIs): on agri value chain financing and development of related productsAwareness creation: modern, efficient practices to enhance quality and productivity among agri-value chain playersRisk mitigation: Introduce agri insurance products and climate smart agricultural practices.Improve Enabling Environment: Work on policy measures to improve the enabling environment in line with government’s Vision 2025Funding: Provide funding to chosen PFIs to lend to agri value chain playersTo achieve this IFC will work closely with the World Bank, government stake holders and private sector partners.