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Media »$1.9 Million Investment to Transform Lending to MSMEs Unveiled

November 13, 2018

 

Yangon, Myanmar: Thura Swiss, Seedstars and the DaNa Facility, a UK Government Department for International Development (DFID) funded programme, today announced an investment of over $1.9 million in an innovative new project, named Shwe Lan that plans to transform lending to Micro, Small and Medium Size Enterprises (MSMEs) in Myanmar. The project seeks to address a lack of financing for MSMEs within Myanmar, with banks typically only lending against real estate as collateral and MSMEs virtually excluded from the credit market. This lack of finance suppresses the growth of enterprises that support a large part of Myanmar’s population, including the poor, women and other disadvantaged groups.

 

Shwe Lan will focus on providing supply chain financing to MSMEs in Myanmar with two main areas of business. First it seeks to provide MSMEs with access to finance by introducing a ‘merchant financing’ product. This part of the project will target MSMEs that act as distributors of some of the largest companies operating in Myanmar. Second, it will seek to provide an ‘invoice discounting’  product where MSMEs are able to use confirmed orders as collateral for loans. Particular attention will be given to female-owned MSMEs.

 

The ultimate goal of the project is to develop a supply chain financing market as an open e-platform for relevant companies in Myanmar. Supply chain financing directly alleviates the strain on the cash flow of a business, allowing companies to accept larger sales volumes and drive stronger growth.

 

The Head of DFID, Dr Gail Marzetti, speaking at the launch event in Yangon today said:

“Small businesses are the backbone of the economy and over 90% of people are employed by MSMEs in Myanmar. By increasing the availability of credit to these businesses DFID are looking to transform their financing and in doing so unlock their potential to grow and thrive. This support will mean more and better paid jobs and increased economic opportunities across the Myanmar economy and more prosperous and secure future for poor people.”

 

Speaking about the launch U Aung Thura, Founder and CEO of Thura Swiss stated:

“Thura Swiss has always been acting as a bridge between the local economy and investors bringing value to the country. While lack of access to finance is an often cited obstacle for growth of Myanmar MSMEs, we aim to bring an easy, innovative and scalable solution to the market. Thura Swiss’ strong local market knowledge will help to shorten the setup period.”

 

Eleonora Castaldo, CEO of Shwe Lan also commented:

“We are excited to provide an innovative solution for MSMEs in Myanmar. Our technology and value chain approach allows us to help previously underserved Myanmar MSMEs by offering fast and easy loan disbursement, with minimal documentation and collateral. Our business will change the way the market operates for Myanmar MSMEs. Our vision is to ensure that small businesses have the capital they need to serve their customers and grow their business, bringing prosperity to the country.”

 

Shwe Lan aims to initially provide access to working capital for 300 MSMEs employing poor people and women, enabling these enterprises to grow and employ further people. The aim is that at least 30% of the enterprises served will be women-owned.

 

The introduction of ‘merchant financing’ and ‘invoicing factoring’ will also enable MSMEs to access credit for the first time, thus bringing innovative practices in the market that can benefit the financial sector as a whole. Once the benefits of these products are demonstrated, Myanmar financial institutions are expected to use it to disburse their own capital and greatly increase the availability of funding sources overall.

 

Over the medium to long term the project expects to promote equitable development and reduce the inequalities between MSMEs and larger companies and in doing so increase the availability and quality of jobs for poor and disadvantaged people.

 

ENDS

Notes to editors:

For more information please contact the DaNa Facility communications team at: +95 997 925 3516 or through email: danapress@danafacility.com

 

The DaNa Facility: The DaNa Facility is a UK Department for International Development (DFID) funded programme, established in May 2016 as one of three components of DFID’s wider ‘Business for Shared Prosperity’ (BSP) programme. The DaNa Facility, implemented by DAI Europe and KPMG, supports inclusive economic growth and private sector development in Myanmar through responsible and sustainable business growth, investment and trade.

 

Thura Swiss  is a Myanmar-based firm specialized in market research, consulting and services supporting investments. The aim of Thura Swiss is to equip both local and foreign businesses with accurate and sophisticated information in order to allow them to make strategic data-driven decisions with regards to their market entry or expansion in Myanmar.

 

Seedstars is a is a Swiss-based group with the mission to impact people’s lives in emerging markets through technology and entrepreneurship, with a particular focus on the Sustainable Development Goals of the UN. Seedstars connects stakeholders, builds companies from scratch with public and private partners and invests in high-growth startups within these ecosystems. Seedstars aims at fostering impact investing and impact entrepreneurship over the world. Through different activities, that range from startup scouting, events organization to company building and acceleration programs, Seedstars has built the world’s biggest community of changemakers in emerging markets.

 

ShweLan is the new venture created by Seedstars and Thura Swiss in Myanmar to manage their MSME Supply Chain financing project, financed by the DaNa Facility.

 

You can find a Myanmar language version of this press release here.