IFC, a member of the World Bank Group, has partnered with the Sri Lanka Institute of Directors (SLID) to promote improved corporate and ethical business practices for small businesses in Eastern Sri Lanka. The initiative is part of the European Union Support to District Development Programme (EU-SDDP), funded by the EU and implemented by 5 UN agencies and IFC.
As part of this initiative, a seminar was held recently for 50 small and medium sized businesses in Batticaloa, a district in the East, focusing on how small businesses could conduct business better and more responsibly to spur their growth.
The seminar, organized by SLID and the Batticaloa District Chamber of Commerce, Industry and Agriculture, included presentations on the formation of a company, legal procedures of registering a company, and finance, accounting and tax issues faced by small businesses.
“Comprehensive, custom-made training programs like these help entrepreneurs and small business owners improve their corporate governance to operate more efficiently, obtain access to capital, and mitigate risk with safeguards against mismanagement” said Lilani Perera, Chief Executive Officer of SLID.
Small businesses in emerging markets generally rely heavily on a few talented people—most often the founders, who dominate the decision-making process. The command-control system is common, strategic and operational decisions occur informally, and there are very few written policies. If such companies are well governed, with sound corporate governance principles in place, they will usually outperform other companies and will be able to access different forms of financing easier to help further growth.
Participants at the seminar were also introduced to the IFC Corporate Governance Assessment Tool, a customized tool to help small businesses assess their existing corporate governance practices, based on the universally accepted OECD principles.
“In addition to increasing access to capital for small businesses, improved corporate governance practices contribute to economic development,” said Adam Sack, IFC Country Manager for Sri Lanka and Maldives. “Increased access to capital encourages new investments, boosts economic growth, and provides employment opportunities.”
Such projects form an integral part of the financial and development assistance that is provided through the EU-SDDP with a grand total of EUR 60 million to support the Government of Sri Lanka’s thrust for economic and social development in 7 conflict-affected districts covering half a million people. The actions undertaken through this initiative are linked to three focus areas, including support to poverty reduction and provision of basic infrastructure and services for vulnerable populations, support to local economic development, and strengthening of local governance.