MICROCAPITAL BRIEF: PROPARCO, the Private Sector Arm of the Agence Francaise de Developpement (AFD), to Loan $12.5m to Lanka Orix Leasing Company (LOLC) for Small and Medium-sized Enterprises in Sri Lanka

Promotion et Participation pour La Cooperation Economique (PROPARCO), the private sector arm of the Agence Francaise de Developpement (AFD) – a bilateral development finance institution working on the behalf of the French government – will loan EUR 10 million (USD 12.5 million) to Lanka Orix Leasing Company (LOLC), a public company based in Rajagiriya that provides leasing finance to entrepreneurs and commercial entities, in order to improve access to credit for small and medium-sized enterprises (SMEs) in the North and East of Sri Lanka. According to PROPARCO’s press release, “Leasing and asset-finance is well suited for the financing of commercial and agricultural vehicles for Small and Medium Enterprises (SMEs) that have a limited access to credit…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 SMEs.”

As of March 2010, LOLC reported LKR 75.8 billion (USD 670 million) in total assets, LKR 68 billion (USD 601 million) in total liabilities and LKR 7.78 billion (USD 68.8 million) in total equity. LOLC is an overseas operation of ORIX, a financial leasing company established in 1964 based in Tokyo, Japan. In 2009, ORIX reported JPY 8.37 trillion (USD 95.6 billion) in total assets, return on equity (ROE) for 1.80 percent and return on assets (ROA) of 0.25 percent.

By Conner Brannen, Research Assistant

About Lanka Orix Leasing Company (LOLC):

Incorporated in March 1980, Lanka Orix Leasing Company (LOLC) is an unquoted public company that provides leasing finance to entrepreneurs and commercial institutions, enabling them to acquire the necessary machinery and equipment. LOLC is based in Rajagiriya, Sri Lanka. As of March 2010, LOLC reported LKR 75.8 billion (USD 670 million) in total assets, LKR 68 billion (USD 601 million) in total liabilities and LKR 7.78 billion (USD 68.8 million) in total equity.

LOLC has several subsidiaries including Lanka Orik Finance Company (LOFIN), Lanka Orix Insurance Brokers (LOIB), LOIB Financial Services (LFSL), Lanka Orix Information Technology Limited, Agrisil Holdings Limited, Lanka Orix Project Development Limited (LOPD), Sundaya Lanka Limited and LOLC Micro Credit Limited (LOMC).

LOLC Micro Credit Ltd. (LOMC) provides individual and group loans for microentrepreneurs in Sri Lanka’s agricultural districts. Founded in 2009, LOMC is the microfinancing arm of Lanka ORIX Leasing Company (LOLC), a Sri Lankan financial services provider incorporated in 1980 that started offering microfinancial services in 2003. As of 2008, LOLC has total assets worth LKR 34 billion (the equivalent of USD 295 million). As of 2008, LOMC has approximately 22,000 clients and a gross loan portfolio of USD 20 million.

LOLC is an overseas operation of ORIX, a financial leasing company established in 1964 based in Tokyo, Japan. In 2009, ORIX reported JPY 8.37 trillion (USD 95.6 billion) in total assets, return on equity (ROE) for 1.80 percent and return on assets (ROA) of 0.25 percent.

About PROPARCO:

Established in 1977, Promotion et Participation pour La Cooperation Economique (PROPARCO ? the Investment and Promotions Company for Economic Cooperation) is a development finance institution based in Paris, France, that is jointly held by the Agence Francaise de Developpement (AFD), a bi-lateral development finance institution working on the behalf of the French government, and private shareholders. PROPARCO’s mission is “to be a catalyst for private investment in developing countries which targets growth, sustainable development and reaching the Millennium Development Goals (MDGs).” In 2009, PROPARCO granted EUR 1.1 billion (USD 1.4 billion) for 80 projects in thirty countries.

About Agence Francaise de Developpement (AFD):

Established in 1941, AFD is a bilateral development finance institution working on the behalf of the French Government. Its public mandate is to finance development according to France’s overseas development assistance policies. In 2007, AFD committed EUR 3.5 billion (USD 4.42 billion) to 60 developing countries.

Sources and Additional Resources:

The Sunday Times: “LOLC to expand micro finance in North-East,” July 4, 2010: http://www.sundaytimes.lk/100704/BusinessTimes/bt39.html

MICROCAPITAL EVENT: The 2010 Asia Microfinance Forum in Colombo, Sri Lanka, from October 12 ? October 15, 2010: https://www.microcapital.org/microcapital-event-the-2010-asia-microfinance-forum-in-colombo-sri-lanka-from-october-12-?-october-15-2010/

MICROCAPITAL BRIEF: Bank of Ceylon, State-Owned Commercial Bank in Sri Lanka, to Soon Open 31 Branches Focusing on Small and Medium-Sized Enterprises, March 29, 2010: https://www.microcapital.org/microcapital-brief-bank-of-ceylon-state-owned-commercial-bank-in-sri-lanka-to-soon-open-31-branches-focusing-on-small-and-medium-sized-enterprises/

MicroCapital Universe Profile: Agence Francaise de Developpement (AFD): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Agence+Francaise+de+Developpement+%28AFD%29

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