Making SME Finance Profitable

SME Symposium on Making SME Finance Profitable – Agenda, Page 1

Hosted by the:

International Finance

Corporation

and the

Government of The Netherlands

Symposium on

Making SME Finance Profitable January 23 – 24, 2004 Colombo Hilton Hotel Colombo, Sri Lanka

07:30 – 08:30 am

08:30 – 08:45 am

08:45 – 09:05 am

09:05 – 09:20 am

09:20 – 09:40 am

09:40 – 10:10 am

Agenda – Day One Friday, January 23, 2004 Registration Lamp Lighting Ceremony Welcome Remarks Dimitris Tsitsiragos Director South Asia Regional Department International Finance Corporation H.E. Mrs. Susan Th. Blankhart Ambassador Embassy of the Government of The Netherlands in Sri Lanka IFC Address Assaad Jabre Vice President, Operations Keynote Address A. S. Jayawardena Governor Central Bank of Sri Lanka “Setting the Stage”: SME Finance - Challenges & Opportunities What are the contributions of SMEs to growth and economic development? Are SMEs valuable to banks as a market segment? Should banks target SMEs? Why? This presentation will explore the current and potential value that the SME segment holds for banks in developing countries. It will assess the opportunity for profitable and sustainable business in SME finance Speaker: Hany Assaad, IFC


10:10 – 10:40 am

10:40 – 10:55 am

10:55 – 11:25 am

11:25 – 11:55 am

11:55 – 12:25 pm

12:25 – 12:55 pm

13:00 – 14:30 pm

Discussion Panelists: Moderator: Geert van de Guchte, Netherlands Development Finance Co. (FMO) Thomas Davenport, Manager, SME Department, IFC Sanjiva Senanayake, Resident Representative, IFC Tea/Coffee Break Developing a Successful SME Finance Strategy – a Bottom Up Approach This work will present the key lessons that financial institutions have learned about using financial, communication and information technologies to foster SME finance. Based on the IFC’s experience with assisting clients in developing countries through the Financial Technologies Global Initiative, this work will lay out the strategic options financial institutions have in developing countries to profitably extend financial services to SMEs. Speaker: Peer Stein, IFC Discussion Panelists: Moderator: Chandra Jayaratne, Managing Director, Eagle Insurance Kapila Jayawardena, Chief Executive Officer, CITIBANK Zia Ahmed, Program Manager, SEDF (Bangladesh) Services to Support Successful SME Finance: The Roles of Credit Bureaus and IT What are the different types of credit information systems and how would a Credit Bureau help improve access to SME finance? What kind of information would typically be and what factors determine the availability of reliable external credit information? How can IT and the value-added services provided by a Credit Bureau help improve the credit approval process? What can be done in the absence of a fully functioning Credit Bureau? Speaker: Tony Lythgoe, Insfin Discussion Panelists: Moderator: Eran Wickramaratne, Chief Executive Officer, NDB Bank N.P.H. Amarasena, General Manager, Credit Information Bureau Sriyani Hulugalle, Industrial Economist, World Bank Lunch (at Hilton’s Wok Restaurant. Food from the Spices Restaurant’s buffet)


14:30 – 15:00 pm

15:00 – 15:30 pm

15:30 – 16:00 pm

16:00 – 16:30 pm

16:30 – 17:00 pm

Banks’ Approaches to the Challenge of Successful SME Lending How do Sri Lankan banks meet this challenge? Drawing from the results of the recent quick diagnostic and skills gap analysis of selected banks in Sri Lanka, this presentation will highlight how the banks approach the challenge of SME lending and how they compare against international and regional benchmarks and best practices. The presentation will also identify gaps, if any, and recommended remedial actions. Speaker: R. R. Rao, ICRA India Discussion Panelists: Moderator: Ranel Wijesinha, Chairman, National Wealth Corporation L. G. Perera, Executive Vice President, DFCC Bank A. L. Somaratne, Asst. General Manager, National Development Bank Credit Scoring for SME Finance What is credit scoring and how does it relate to traditional credit analysis? What data and systems are needed to maintain effective internal credit information system? What are the organizational challenges to introducing credit scoring? How does it affect credit policies and at which stages of the client relationship does it apply? What types of credit scoring models are suited for SMEs? What are examples of introducing scoring systems in emerging markets? Speaker: Tony Lythgoe, Insfin Discussion Panelists: Moderator: Sarath Piyaratna, Deputy Chief Executive Officer, HSBC Ravi Dias, Deputy General Manager, Commercial Bank of Ceylon Zia Ahmed, Program Manager, SEDF(Bangladesh) IFC’s Experience with Facilitating SME Finance Aside from providing financing to SMEs through intermediaries, one of IFC’s key tools in SME development is the family of SME Facilities that it manages on behalf of wide range of donors. These Facilities offer a variety of services and play a useful role both in creating local capacity to give SMEs the financing and support they need, and in working with the World Bank and other agencies to improve difficult local business climate. This presentation provides background information on the operations of these Facilities and, in particular, the SouthAsia Enterprise Development Facility’s (SEDF) successes in facilitating and improving access to finance for SMEs and how these can be adopted/replicated in Sri Lanka. Speaker: Anil Sinha, SEDF


17:00 – 17:30 pm

19:30 pm

Discussion Panelists: Chair/Moderator: Muhammad A. Ali, Deputy Governor, Central Bank of Bangladesh Ehsanul Haque, Managing Director, BRAC Bank (Bangladesh) Anis Khan, CEO and Managing Director, Industrial Development Leasing Company (IDLC) Bangladesh) Neil Gregory, Manager, South Asia Regional Department, IFC End of Session Gala Dinner hosted by IFC (36th floor, World Trade Center- just beside Hilton Hotel) Guest Speaker: Sandeep Ghosh CITIBANK - India Theme: CITIBANK’s experience in SME financing and its widely acclaimed successes in channel financing and large-small business linkage program


09:00 – 09:30 am

09:30 – 10:00 am

10:00 – 10:30 am

10:30 – 11:00 am

11:00 – 11:15 am

11:15 –12:15 am

Agenda – Day Two Saturday, January 24, 2004 The “Larger SMEs” in Sri Lanka While much is known and various studies have been conducted on the SME sector in Sri Lanka, they are concentrated on the “lower SMEs” as currently defined by the Government. Not much is known on the “larger SMEs” - the high value, export oriented and high employment generating SMEs. This presentation will summarize the key findings and recommendations on the results of the recent review of the “larger SMEs”, the constraints and challenges they faced in the areas of access to finance, business services and information and policies and business regulations. Speaker: Ajith Nivard Cabraal, SLBDC Discussion Panelists: Moderator: Nihal Welikala, Chief Executive Officer, National Development Bank Dr. Sunil Chandrasiri, Senior Lecturer, Department of Economics, University of Colombo Sri Lanka Government’s Perspective Speaker: Ranjit Fernando, Secretary, Ministry of Enterprise Development Industrial Policy, Investment Promotion and Constitutional Affairs Discussion Panelists: Moderator: Peter Harrold, Country Director, World Bank Devasiri Rodrigo, Vice Chairman, Ceylon Chamber of Commerce Barbara Ericsson, Principal Financial Sector Specialist, Asian Development Bank Tea/Coffee Break SME Finance: Lessons Learnt in Sri Lanka and Next Steps Open Discussion Moderator: Hany Assaad, IFC Panelists: Amitha Gooneratne, Managing Director, Commercial Bank of Ceylon Anil Amarasuriya, Managing Director/CEO, Sampath Bank S.N.P. Palihena, General Manager, Bank of Ceylon


12:15 – 12:30 pm

12:30 - 14:00 pm

Closing Address Anil Sinha General Manager SouthAsia Enterprise Development Facility International Finance Corporation Lunch (at Hilton’s Ballroom area)


Hany Assaad Program Manager IFC Environmental Finance Group Peer Stein Senior Investment Officer Banking Advisory Group IFC Global Financial Markets

The Speakers Hany Assaad manages the IFC/Global Environment Facility SME Program, a US$20 million IFC-managed facility under the Environment and Social Development Department, funded by the Global Environment Facility, to finance and support intermediaries targeting SMEs whose activities contribute to the protection and the improvement of the global environment. Prior to his current assignment, he was the Head of the Micro, Rural and Small Business Financial Services and E-Finance in IFC’s Global Financial Markers Group, and leads the effort to provide strategic focus on scaling-up IFC’s investments in financial institutions serving micro, rural and small businesses. Mr. Assaad joined the World Bank in 1986, initially working on energy efficiency projects in the Middle East and Africa. He joined IFC in 1987 as an investment officer and over the next nine years held various investment positions covering a number of regions including Head, Environment Projects Unit, a newly created unit set up to develop innovative environment al projects in developing countries, and to assist the private sector in addressing environmental issues. In October 1996, he assumed responsibilities as Special Assistant to the President of the World Bank Group, a position he held until October 1997, after which he rejoined IFC as Manager for Financial Markets, South and Southeast Asia Department. Before joining the World Bank Group, Hany held a senior position at Environmental Quality International, a large private Egyptian consulting firm with particular focus on environmentally sustainable investments in the Middle East. Hany is IFC director on three IFC investee companies, the Industrial Promotion and Development Company of Bangladesh, and two private equity funds targeting microfinance institutions: AfriCap focusing on Africa and ProFund focusing on Latin America. He is an alternate member of the Investment Committee of the Consultative Group to Assist the Poor (CGAP), a consortium of 29 bilateral and multilateral donor agencies, which support microfinance. Mr. Stein oversees IFC’s advisory work and investments in credit bureaus and leads IFC’s financial technologies initiative for banks. In this role, he works with financial institutions and state-of-the-art technology providers to adapt financial, information and communication technologies to the business needs of banks and non-banks in emerging markets and transition economies. Mr. Stein joined IFC in 1996 to establish the Corporation’s Extended Reach Office in Mongolia. Subsequently, he moved to the Financial Markets Africa Department as an Investment Officer, focusing on financing urban and rural micro finance institutions, risk management facilities and credit lines for banks, and capital markets development. Prior to joining IFC, Mr. Stein worked in Germany as a management consultant in enterprise restructuring, and as a partner in a strategic market research firm covering Eastern Europe. He holds a Masters degree in Economics and Management Science from Witten.Herdecke University, Germany’s first private university.


Tony Lythgoe Director, Financial Services Insfin Insurance & Finance Group Pty Ltd Victoria, Australia R. R. Rao Joint Managing Director ICRA Limited, India Ajith Nivard Cabraal Sri Lanka Business Development Center (SLBDC)

Tony Lythgoe is the principal specialist for credit risk management, credit scoring and credit bureau technology at Insfin, a privately owned technology company specializing in e-business solutions for the financial services industry. As Director for Financial Services, he is responsible for the development of the product range within the sector and development of new markets with special emphasis on the developing markets of Asia and the Middle East. Mr. Lythgoe has done several consulting engagements for international agencies and commercial consulting group. For IFC, he has provided specialist advice on credit risk management (consumer, micro and SME lending) and credit bureau technology. Prior to Insfin, Tony Lythgoe held senior management positions in various international companies including Baycorp Advantage Group, Equifax PLC London, Standard Chartered Bank and Barclays Bank. Mr. Rao is the Head and Chief Consulting Officer of ICRA Advisory Services, the consulting arm of the ICRA Limited. ICRA Limited is a leading Credit Rating and Consulting company in India and an affiliate of Moody’s Investors’ Service, USA one of the world’s leading credit agencies. ICRA works extensively with banks and financial institutions and typically offers services in eight areas: (i) Formulating Business Strategies; (ii) Financial Restructuring; (iii) Business Valuations, Mergers and Acquisitions; (iv) Implementing Risk Management Systems; (v) Conducting Workshops in Risk Management/ Strategy: (vi) Designing Organisation Structure & HR planning; (vii) Credit Audit to profile quality of performing loans (viii) NPA study to improve recovery

Mr. Rao is one of the first members of ICRA's start-up team, and has contributed to developing and evolving methodologies in many areas of ICRA's business, including Credit Rating, Advisory Services, and Research. He has been a member of ICRA's Rating Committee since 1994, and has worked on several sectors, including metals, banking, financial services, structured finance, automobile, hydrocarbons, fertilizers, textiles, energy, infrastructure, and consumer goods. Mr. Rao has been the driving force in building the Advisory Services business in ICRA. He has wide exposure in consulting, including strategy formulation for banks, setting up risk management strategies for banks, formulating strategies for private / public sector organizations, valuation of businesses, privatization and disinvestment programs, assessment of large infrastructure projects, policy / regulatory studies in several sectors.

Mr. Rao completed his education in India. He was a Fulbright Scholar at the Carnegie Mellon University, USA. Mr. Cabraal is a Chartered Accountant and Management Consultant to SLBDC. He specializes in corporate “turnaround”, restructuring and enterprise development activities. Mr. Cabraal is also an expert in Private Sector Development activities with particular focus on Corporate Governance, Planning and Implementation. He was the founding chairman of the Committee of Corporate Governance in Sri Lanka from 1996-1999, which was responsible for the issuance or the first Code of Best Practice in Corporate Governance in the country. Recently, he founded the Business Recovery and Insolvency Practitioners Association of Sri Lanka.


Anil Sinha General Manager SouthAsia Enterprise Development Facility (SEDF) Ranjit Fernando Secretary Ministry of Enterprise Development Industrial Policy, Investment Promotion and Constitutional Affairs Sandeep Ghosh Vice President Commercial Banking Sales Citibank, India

Mr. Cabraal has rendered various consultancy services to local and international institutions including the World Bank and World Tourism Organization. He is a regular speaker in local and international conferences and authored a book “Towards a Sri Lankan Renaissance” (2002) that is considered a practical work which defines a series of steps that Sri Lanka as a nation should take to survive and progress. Mr. Cabraal obtained his education in Sri Lanka and received his Eisenhower Fellowship in the USA in 2000. Anil Sinha is the General Manager of SEDF, an IFC SME Facility in South Asia covering Bangladesh, Bhutan, Nepal and North East India. Mr. Sinha joined IFC in March 1992 as an Investment Officer in the Africa Project Development Facility (APDF) and assisted SMEs in Southern African countries. In 1997, he moved to the newly formed Mekong Project Development Facility (MPDF) as Senior Investment Advisor to start the IFC advisory program in Hanoi, Vietnam. In 2000, Mr. Sinha took over a position as Regional Manager, MPDF, Ho Chi Minh City, Vietnam. This office is the activity center for MPDF and a good example of the evolution of an SME Facility into a multi-product market-oriented program integrating direct assistance, business development services and business enabling environment activities, including development of local financial institutions. Mr. Sinha’s previous work experience has been with the private sector and he came to IFC from Pan African Consultancy Services in Nigeria where he was the Managing Director and representative on the board of various SMEs. Mr. Fernando is a former Director and Chief Executive Officer of National Development Bank of Sri Lanka. Mr. Fernando was with NDB since 1979 and was its General Manager for 13 years. Under his leadership NDB has evolved from a government owned Development Finance Institution to a profitable privatized group of companies, providing a range of products and services. Mr. Fernando currently holds the post of Secretary in the Sri Lanka Ministry of Enterprise Development, Industrial Policy, Investment Promotion and Constitutional Affairs. Mr. Fernando is a Fellow of the Chartered Institute of Bankers, London, Fellow of the Chartered Institute of Management Accountants, a President of Sri Lanka Association of Investment Analysts and Member of a Board of Trustees of Women’s World Banking, New York.

As Vice President for Commercial Banking Sales, Mr. Ghosh leads a team of 60 managers and 40 contractual sales staff in 20 cities with revenue target of US$35 million in 2004. He manages the Business key metrics that track sales productivity, account profitability, yields and ROCE, and a Balance Sheet of US$600 million growing to US$1 billion in 2004. Mr. Ghosh is responsible for creating a strategic blueprint for success transfer of best practices in Sales, Marketing and Business Development across emerging markets. Prior to joining Citibank, Mr. Ghosh held senior positions with PepsiCo International – South Asia and Coats Viyella plc with responsibilities for Africa, Europe and Middle East operations. Mr. Ghosh completed his education in India including Masters in Business Administration from Indian Institute of Management.

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Making SME Finance Profitable