Proparco grants Euro 20 mn loan to DFCC Bank to promote alternate energy projects, SME sector

Reaffirming its credentials as a preferred partner for international credit lines, DFCC Bank has been granted a long term loan of €20 million by Proparco, a subsidiary of Agence Française de Développement (AFD).

This organisation is devoted to private sector financing, to finance renewable energy projects and improve access to credit for Small and Medium Enterprises (SMES) in Sri Lanka.

DFCC Bank has decades of experience in promoting development finance amongst the SME sector in the country, with an established record of a successful foray into the renewable energy sector.

Commenting on the new partnership, Grégory Clemente, CEO of Proparco said, “We are pleased to partner with DFCC Bank to strengthen the SME sector in Sri Lanka. SMES account for 70 percent of all businesses, employ 26 percent of the active population and contribute 52 percent of GDP, which makes them a critical growth engine in the island. We believe that strengthening this sector represents a key growth opportunity, in line with the vision of the Sri Lankan Government which recently stressed the major role of banks in SME finance. DFCC will be able to use this €20 million loan to boost the proportion of SMES in its portfolio – which already stands at nearly 50%. We are also pleased to support a Bank that is already active in financing renewable energy.”

DFCC CEO, Arjun Fernando further added, “DFCC Bank is pleased to be selected as the disbursement partner for Proparco, a reputed development finance body in the world. DFCC Bank is a pioneer in supporting renewable energy projects, having supported the first hydro project in 1996. Since then, we have supported many large scale renewable energy projects including wind and solar energy.

“As Sri Lanka’s pioneering development bank, DFCC has had extensive experience in financing renewable energy projects in the past and as a fully-fledged commercial bank today, we are well poised to empower more of such projects which will create greater energy security for the nation. We are proud of our past record in standing by SMES in their early and risky stages, enabling them to eventually to become big names in their respective sectors today.

“The bank also adds significant value by offering entrepreneurship training programmes and other technical and marketing support to SMES. Long-term finance of this magnitude is difficult to obtain in the domestic market, and we believe the credit line by Proparco will empower us to propel the SME sector to the next stage of development.”

DFCC Bank financed Sri Lanka’s first hydro power project back in 1996, the country’s first wind farm in 2010 and its first solar power plant in 2015. The bank is currently providing funding for 70 hydro power projects, 3 wind farms and 2 solar energy projects as well as a biomass project.