Keynote Speech made by Dr Indrajit Coomaraswamy,
Governor, Central Bank of Sri Lanka at the International Conference on
Social Enterprise & Social Finance
Monday, 28th January 2019 at Waters Edge
A Social Enterprise is recognized as an important business model that
applies new commercial strategies to maximize improvements in
financial, social and environmental well-being. In fact, it is a tool for
creating positive social impact;
promoting social change;
and achieving environmental sustainability. Social enterprises contribute
in multiple ways to enhance social inclusion while nurturing women and
youth with economic empowerment.
Sri Lanka's efforts to increase Social Enterprise & Social Finance
date back to the late 20th century. The early efforts took the form of loans
that were granted to overcome the major barriers SMEs faced in raising
capital through traditional methods. Thereafter, various measures have
been taken to promote and support social enterprises by providing
educational, technical and business support services in addition to
finance:
❖
Numerous schemes over the years to promote SMEs. They have
had a very mixed track record.
❖ Plethora of institutions. Highly fragmented institutional
infrastructure with weak coordination
❖
Need holistic approach focusing on training, inputs, finance and
markets
❖
Marketing most intractable problem. MSMEs need to be linked to
supply chains to address the marketing challenge.
To achieve balanced and inclusive growth, it is necessary to have all
stakeholders connected to markets: goods and service markets as well as
factor markets. Interconnected markets enable the economic ecosystem
to foster synergy and enhance productivity for all stakeholders. They also
provide income generating opportunities to all segments of the society
leading to reduction of poverty on sustainable basis.
The task of transforming our economy into a social enterprise economy
continues to be challenging. Though there have been advances, several
bottlenecks still persist thereby inhibiting the expected outcomes. The
contribution of social enterprises to environmental sustainability,
therefore, remains below potential. The role of social enterprises in
social inclusion, livelihood development and poverty reduction has room
for improvement.
Although, the social enterprise sector in Sri Lanka is gathering
momentum, a range of different needs have to be fulfilled to uplift its
contribution to the economy. These include business modelling,
planning, product design, sales and marketing. In this connection,
impact investment has been recognized as key to scale up the social
enterprise sector rapidly. Further, its social, environmental and economic
impact needs to be assessed and reported according to global standards.
In this connection, greater use needs to be made of triple bottom line
accounting. In addition, social entrepreneurs need to be recognized and
rewarded for their achievements at the national level.
Emphasis upon knowledge sharing and awareness building on the nexus
between social enterprise and social impact can make a significant
contribution towards promoting a more effective and efficient process to
encourage social enterprises across Sri Lanka. Today, you are gathered
here to deliberate on current trends, challenges and opportunities in
building a social enterprise ecosystem and to help social enterprises and
SMEs to scale up and create social impact, under the timely theme of
"Think Social -Produce Social - Buy Social". I believe this conference
would be an effective pathway, particularly for emerging and prospective
entrepreneurs to explore new markets for social goods and services and
also an opportunity to share knowledge on successful social ventures at
both local and global levels.
You are all aware that maintaining a stable macroeconomic environment
through economic and price stability and financial system stability are the
core objectives of the Central Bank. Promoting regional development is
one of the agency functions of the Central Bank. Promoting social
enterprises is therefore, associated with the broader objectives of the
Central Bank.
In that context, the Central Bank, on behalf of the Government, has a
mandate for targeted lending to the microfinance, SME and agriculture
sectors, as well as youth and women. In implementing this mandate, the
Central Bank has been facilitating and implementing refinance schemes,
interest subsidy schemes and credit guarantee schemes targeting the
MSMEs.
In addition, the Central Bank has embarked upon developing a National
Financial Inclusion Strategy (NFIS), to introduce an evidence-based,
prioritized, better resourced, and more comprehensive approach to
expanding access to financial services. This would be an essential policy
tool that will coordinate and implement cross-cutting actions and reforms,
to increase financial inclusion in the country. With this national level
strategy, it is expected to bring-in under-served segments of the society to
the formal financial sector. Further, the Central Bank has been conducting
awareness programs on financial literacy and financial management as
well as capacity building programs covering entrepreneurship and skills
development for the needy segments of the population, with special
focus on youth and grass root level entrepreneurs.
Furthermore, the Central Bank is attaching priority to improving payments
and settlement systems and encouraging the use of electronic and mobile
payment systems, with the objective of increasing financial inclusion
through reducing transaction costs with the advance of technology. In
addition, through the SME National Policy Framework, the Government
has also set out the policy direction, the challenges to be addressed and
the intervention strategies to be pursued to achieve regional balance and
resource efficiency in developing SMEs.
These initiatives have yielded encouraging outcomes. Yet, I believe, Sri
Lanka still has a great deal of untapped potential in developing social
enterprises. There is much scope to increase the use of financial services,
technology and business support services in order to promote social
enterprises. To achieve this, a more dynamic approach, which entails the
combined effort of all stakeholders, including state and private entities
following a cohesive policy framework, is required to match available
resources with the needs of the sector.
Despite the numerous challenges, it is encouraging to observe the
emergence of organizations, which are seeking to operate their
commercial ventures to achieve the twin objectives of a social mission
and profit generation. Their prospects are being enhanced by the trend in
consumer choice towards healthier, Eco-friendly and "social goods".
"Social buyers" who are keen to buy goods and services from social
enterprises are emerging as a new force.
In conclusion, a concerted effort is needed to establish policies and
systems to support the growth of the emerging social enterprise sector in
Sri Lanka. I hope today's deliberations will deliver outcomes which will
assist social entrepreneurs to lead social change by stimulating economic
growth, innovation and the development of social capital. Social
enterprises have an important role to play in Sri Lanka meeting the SDGs.
Thank you.