SEMA calls for entrepreneur stability

Hiran H. SENEWIRATNE

'The country needs to have a mechanism to help micro, small and medium size enterprises until it reaches stability in their cash flow of it', the Chief Operation Officer, Strategic Enterprise Management Agency (SEMA) Chris Dharmakirthi said.

He said that he made a call to all pension funds in the country to allocate 2 to 5 per cent from the entire portfolio to set up a fund to help the SME sector.

He said that all the pension funds and insurance funds are the largest pools of savings in the country but unfortunately even a negligent amount of money has not been allocated for a venture capital fund in the country.

It is said that pension funds like ETF, EPF and other insurance funds could fill the vacuum in the debt market.

Dharmakirthi is the former Co-Chairman of the National Council of Economic Development (NCED).

SME Cluster said that when new enterprises are set up at the beginning there is no income generated with the development of the products and the prototype. During that period, entrepreneurs have to face problems till the enterprises become cash flow positive and able to manage by them', he said.

At present only banks manage venture capital funds which are not considered as professional venture capital companies. "The normal banks don't have the capacity to play the venture capital fund managers' role because it needs a lot of mentoring for the entrepreneurs", he said.

Dharmakirthi said the Colombo Stock Exchange, would boost or quadruple the market capitalisation of Sri Lanka if venture capital fund is created to help the SME sector.

Once equity financing gap fulfills the country, the banks would be able to serve better manner at the debt financing market that will balance the balance of debt equity ratio in the country.

Future venture capital finance brings the Board controls to discipline country's enterprises that lacks business management skills.

SME Bank does not have a venture capital mind to help the SME sector as it is still practising the traditional banking practices that request collaterals security which does not fill the core objective of the Banks", he said.