Sri Lanka’s immediate objective is to achieve economic stabilisation and lasting recovery. At the same time, Sri Lanka needs to sustain the reform momentum to promote long-term inclusive and stable growth.
The Global CEO Magazine recently had the opportunity to engage in an insightful discussion with ADB Country Director, Mr Takafumi Kadono. During the conversation, he provided thoughtful and proactive responses, highlighting the ADB’s dedication to supporting Sri Lanka’s economic stabilisation and long-term recovery efforts.
Q. Sri Lanka faces a critical shortage of skilled personnel in both public and private sectors. Do you think that Public-Private partnerships (PPP) can contribute to improving the Technical and Vocational Education and Training (TVET) in Sri Lanka?
The private sector has significant potential to play an important role as industry-skill requirements rapidly evolve. The private sector can contribute by taking part in designing the curriculum; private sector TVET may provide up-to-date skills training aligned with the needs of the industries; private sector or industry associations can help finance targeted training programmes; and the private sector can provide internship opportunities.
ADB supported the first Results-Based Lending programme for the TVET sector from 2014 to 2021, engaging the private sector through the Employment-Linked Training Provider initiative.
Q. Remittances play a crucial role in Sri Lanka’s economy. How can Sri Lanka maximises the positive impact of remittances on long-term economic development?
In 2023, remittances through formal channels totalled $5.8 billion, equivalent to 7.1% of GDP. Remittances have improved further in 2024. The long-term impact of remittances depends on how households use the remittances. Measures to improve the financial literacy of migrants and recipients in the country, as well as offering attractive financial products for investments can direct remittances for productive use and simultaneously encourage diaspora engagement.
Q. Do you think that enough financial support comes from the local banks to support the manufacturing and service sectors in the country?
The support that comes from local banks to manufacturing and service sectors could improve. Small and Medium-sized Enterprises (SMEs) that are engaged in manufacturing and services have inadequate collateral, lack of credit history, and low capacity to engage with banks. Both banks and SMEs require enhanced capacity and resources to increase support to SMEs. Further, financing mechanisms which are better suited to innovation in manufacturing and services like private equity and venture capital are not available in adequate numbers and not in all sectors.
Q. What is new about ADB’s Small and Medium-Sized Enterprises Line of Credit Project?
ADB has two main lines of credit, SME Line of Credit 1 (SMELOC1) and 2 (SMELOC2) in the recent past (2016 through 2024). SMELOC2 promotes climate financing and financing of women entrepreneurs. In addition, SMELOC2 supported the country’s first-ever national credit guarantee institution (NCGI). Once operationalised, SMEs without adequate collateral will be able to borrow from banks with the support of partial credit guarantees from NCGI. The participating financial institutions of NCGI can develop credit skills in lending to SMEs to whom they did not lend before and thereby increase their customer base.
Q. ADB has been helping its developing member countries (DMCs) in the energy sector for many years, especially in Renewable Energy (RE) generation. What is going to be ADB’s work in Sri Lanka in this sector?
ADB has supported several sizeable RE projects like the 103.5 MW Mannar Wind Farm, a financial intermediary loan for approximately 70 MW of rooftop solar installations, and the ongoing 30.5 MW Moragolla Hydro. Going forward, RE investments should be made by the private sector. Our support for the power sector reform is expected to, among others, spur private investment in RE through a transparent and competitive process. Our other focus is to help augment the grid infrastructure to facilitate RE integration. For this, ADB just approved a $200 million project including the first grid-scale battery storage. ADB has also been supporting the piloting of new technologies such as microgrids and agrivoltaics systems which would enable further RE deployment.
Q. Has Sri Lanka sought ADB’s assistance to enhance the operational efficiencies of its transport sector or any technical assistance for the purpose?
All ADB-financed transport projects in Sri Lanka include capacity building for relevant road agencies. ADB also provides Technical Assistance (TA), particularly to the Road Development Authority, to enhance operational efficiency. Additionally, we have projects and TA to improve the financial sustainability and operational efficiency of expressways, logistics, and railways.
Q. How long do you think Sri Lanka will take to eradicate extreme poverty?
Despite the ongoing recovery and stabilisation of the economy, reversing crisis-induced welfare losses will take time as poverty levels remain elevated. In time, broader macroeconomic adjustments will correct the significant imbalances, help regain access to international financial markets and build the foundation for sustainable growth which is crucial to eradicate extreme poverty. The ongoing social safety net reforms are expected to improve coverage and targeting, thereby supporting the poor and vulnerable populations.
Q. Can Sri Lanka expect to see a knowledge-sharing programme of the ADB on digital transformation and Artificial Intelligence?
ADB will engage the new government to explore support to Sri Lanka’s digital agenda. While ADB has already introduced digital technologies in many sectors, there needs to be a strategic and structured approach to develop digital public infrastructure. This will enhance the quality of public service delivery and strengthen governance and transparency.
Q. Where do you see the growth prospects coming for Sri Lanka, and do you think that the country is ready to embrace them?
Sri Lanka’s immediate objective is to achieve economic stabilisation and lasting recovery. At the same time, Sri Lanka needs to sustain the reform momentum to promote long-term inclusive and stable growth. These reforms include, among others, strengthening public finances and governance, promoting private sector development, bolstering social safety nets, enhancing climate action and disaster resilience, fostering gender equality and social inclusion, and promoting digitalisation. Tourism is an important sector, and women’s economic participation across all sectors can help the country grow.
Q. Is Sri Lanka qualified to receive ADB policy-based lending for general budget support?
Budget support is provided based on the achievement of agreed policy actions.
Q. Do you think that the new government in Sri Lanka is on the right track to addressing the sovereign debt vulnerabilities and fiscal consolidation?
At this stage of economic recovery, it is crucial to maintain the reform momentum. We are content that the early signs seen from the new government point to continuation. We also welcome the emphasis on strengthening governance, transparency, and efficiency.
Takafumi Kadono
A Seasoned Development Professional
During his tenure at ADB, Mr Kadono led initiatives across the power sector value chain, from generation and transmission to distribution. Notably, while stationed in Vietnam from 2012 to 2015, he championed renewable energy development in a fossil fuel-dominated landscape.
With a distinguished career spanning over 23 years in development, Takafumi Kadono brings a wealth of experience to his role as the Asian Development Bank’s (ADB) Country Director for Sri Lanka. A Japanese national, Mr. Kadono joined ADB in 2006 as a Young Professional in the East Asia Regional Department. Over the years, he has held key positions across various departments, including Central and West Asia, and Southeast Asia, specialising in energy sector development.
During his tenure at ADB, Mr. Kadono led initiatives across the power sector value chain, from generation and transmission to distribution. Notably, while stationed in Vietnam from 2012 to 2015, he championed renewable energy development in a fossil fuel-dominated landscape.
In 2015, Mr Kadono joined the World Bank as a Senior Energy Specialist for the East Asia and Pacific region. There, he contributed to key reforms, including the divestment of Vietnam’s State-owned power utility, the design of its wholesale electricity market, and the formulation of financial sustainability plans for the Lao People’s Democratic Republic’s power sector. He also advised on regional power trade, led hydropower and dam safety projects, and supported operations in South Asia, Eastern Europe, and Africa.
Returning to ADB in December 2020 as a Principal Planning and Policy Economist in the Strategy, Policy, and Partnerships Department, Mr. Kadono took on responsibilities in strategic planning and policy formulation. He was instrumental as the lead author of ADB’s 3-year work programme and budget framework, providing a strategic outlook for the bank.
Before joining ADB, Mr. Kadono worked as a consultant for seven years, managing energy, urban, water, and reconstruction projects across developing Asia and Latin America.
He holds a master’s and a bachelor’s degrees in civil engineering from the University of Tokyo. In addition to his professional contributions, Mr. Kadono has co-authored several publications on dam safety, power sector reforms, and the revitalisation of lakes and wetlands for ADB and the World Bank.
