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The Sundaytimes Sri Lanka

Commercial banks get aligned for World Bank and tourism project

By Sunimalee Dias
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The World Bank-funded project with Sri Lanka Tourism is expected to engage local commercial banks to support SMEs in the tourism industry, a project that hit a snag for two years. The project titled “Sustainable Tourism Development Project” was mooted by the government and gained the bank’s acceptance as it was interested in enhancing the tourism potential in Sri Lanka.

Under the World Bank project on a credit of US$18 million, local commercial banks would be used to channel grants for small and medium enterprises (SMEs) in this sector, the bank’s Finance and Private Sector Development Senior Financial Sector Specialist Henry Bagazonzya said in an interview with the Business Times on Thursday.

In this respect, the government would establish a facilitating committee that would work directly with the banks in administering the matching grants provided through this project.Through this effort, the World Bank is “also trying to get commercial banks to look at this sector of the SMEs,” he said.

The facilitating committee would comprise officials from the Economic Development Ministry, the Sri Lanka Tourism Development Authority (SLTDA) and the World Bank.The SLTDA would be engaged as a technical advisor “and will play a big role,” he said.
The project would be continuously monitored by World Bank officials who would visit the country twice a year.

Currently the ministry is working on the amended structured paper yet to gain approval from the bank. The latter is expected to take only a week to finalise once it is received.Ministry and bank officials met last Wednesday to discuss the drafting of the paper, he said. Under the original plan the project was expected to provide training opportunities for 500 and grants for 200 SMEs but this figure is expected to increase in the new structured paper, the official said.

The new document being drafted would clearly focus on specific SMEs involved in the tourism industry to be tapped for matching grants that was changed just several weeks back.Commenting on the recent progress that saw the project gaining priority by government officials, Mr. Bagazonzya observed, “After some time people realize that benefits to the community are much higher than individual concerns.”

The delay in the implementation of the project was a result of the frequent changes in the project director post and other staff.
The World Bank believes this “created a snag” in the project’s progress and pointed out that governments need to appoint people “who are passionate about helping the community.”

In this regard, the changes between ministry and authority, their staff and the focus of national tourism itself caused a delay in the project implementation though its Financial Agreement was already signed in May 2010.Terming the delay as “unfortunate” the bank official pointed out this needs to be avoided as the community needs to get the benefit.

The project under the International Development Assistance (IDA) credit facility was provided with a 10 year grace period and a 20 year payment period, according to the bank’s website. The average rate per year is 0.75% that would also involve a commitment fee of 0.5%, Mr. Bagazonzya said.

Though it was earlier expected to span a period of three years, this is likely to be shortened under the new  programme, the official said.

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