Address:
LOLC PLC, No. 100/1, Sri Jayewardenepura Mawatha, Rajagiriya, Sri Lanka.
Telephone:
+94 11 588 0880
Email:
clientservices@lankaorix.com
Web:
https://www.lolc.com/
Q: What is on your wish list for the financial services industry?
A: Hopefully, we’ll have consistent policies to revive the economy, and market driven exchange and interest rates. More importantly, we shouldn’t see the interference of political forces in the microfinance sector, which adversely impacted borrowers and lenders in 2018.
Q: How would you describe the state of business at this time?
A: Sri Lanka has experienced a turbulent economic and political climate in recent months with GDP growth expected to fall to a more than 10 year low of 2.7 percent.
The result is that the focus of financial services institutions was on recovery rather than business growth. I’m pleased to note however, that the trend is reversing, and we can expect 2020 to provide relative political stability and economic growth.
Q: And your assessment of the world economy is…?
A: The global economic outlook is rather depressed with most developed nations forecasting lower growth – China’s growth is under pressure, which may add to the global impact. I foresee much slower economic growth in global markets for the next couple of quarters.
Q: So how is LOLC Holdings faring under existing macroeconomic conditions?
A: LOLC surpassed US$ 1 billion in equity in the first quarter of financial year 2019/20 to become one of the first corporates in the country to achieve a billion dollar equity base. Notwithstanding the deteriorating macroeconomic conditions, LOLC has showcased uninterrupted financial stability.
The group was cushioned by global operations across Cambodia, Myanmar, Pakistan, Indonesia, the Philippines, Nigeria and Zambia. And three new markets will be added soon. Today, over 90 percent of its profitability is from international operations.
Locally, financial institutions have been under pressure. Meanwhile, tea and rubber prices declined so the plantation sector didn’t perform well.
The leisure sector was impacted by 4/21 although the emerging signs are promising with bookings growing for 2020.
In Sri Lanka, the LOLC group will change how it does business by leveraging fintech platforms. The LOLC Fintech Task Force is working on trailblazing initiatives that will be available to customers in 2020.
LOLC has established itself as a strong regional financial conglomerate, and is poised to become a global financial catalyst with a multi-currency and multi-geographic microfinance and SME platform in the future.
Q: How would you rate Sri Lanka’s external trade potential?
A: Sri Lanka needs to attract more investment, reduce the cost of doing business and be more competitive – this will be the nation’s recipe for success. Our exports are too expensive, which is why we’re losing market share. Graphite and cinnamon are only two key products in which we cannot be challenged.
Q: And how can Sri Lanka improve its global competitiveness?
A: Sri Lanka has to remove barriers to entry. Bangladesh is an example of a country that has removed entry barriers, improved productivity and adopted market driven exchange rates – factors that have led to export and GDP growth. Our nation must learn from these success stories.
Q: What steps must be taken to encourage more entities to list on the stock market?
A: If foreign investments in the stock exchange increase, more companies would list as they’d receive a proper valuation and market value for their shares. Currently, Sri Lanka’s price-earnings ratio is at record lows so there’s no incentive for companies to list.
Q: Should organisational performance and environmental sustainability go hand in hand?
A: Yes. Whilst providing livelihoods for hundreds of thousands of people over the past 38 years, LOLC has contributed to economic value creation, creating direct and indirect employment, and sustaining communities through microfinance. This win-win sustainable approach has fostered empathy and understanding of the needs of the larger community, spurring us to generate value with a triple bottom line focus.
The LOLC Green initiative implemented its islandwide school tree planting programme to inculcate the habit of planting trees and raise awareness on deforestation among schoolchildren. Our programme differs from others because of a monitoring process that ensures that trees are nurtured to fulfil the goal of environmental sustainability.