USAID, LOLC agreement to benefit Eastern farmers

The US Mission to Sri Lanka, through USAID/Sri Lanka, signed a portable guarantee agreement of $ 5 million with Lanka Orix Leasing Company (LOLC), which will serve as a catalyst for LOLC to introduce new financial products in conflict zones as well as leverage additional private financing.

"USAID believes that this agreement will help LOLC to expand its agriculture and microfinance lending while benefiting eastern businesses, which would be able to access micro loans or leasing at a reasonable interest," USAID Mission Director Rebecca Cohn said at the signing ceremony. Group Managing Director of LOLC Kapila Jayawardana said, "The guarantee would mitigate the risks for LOLC and increase the access to finance for borrowers in Eastern and neighbouring districts."

LOLC plans to use at least $4 million to on-lend to entrepreneurs in conflict-affected areas in the Eastern Province.

The remaining proceeds will be on-lent in the bordering districts of Polonnaruwa, Moneragala and Badulla.

USAID's public-private partnership with LOLC will expand lending in the underserved eastern region, and also enable businesses to access loans or leases at a competitive interest rate.

The USAID guarantee will be effective for three years from October 1, 2008, to September 30, 2011.