Sri Lanka moves to support new businesses, local communities, and youth and women

Companies categorised as small and medium-sized enterprises (SMEs) constitute around 75% of all businesses in Sri Lanka, making them a crucial component of the economy. Boosting this vital area, both in term of raw size and contribution to value added, is thus a vital part of policy, with recent times seeing major initiatives launched with this goal in mind. June 2018 saw the launch of Enterprise Sri Lanka (ESL), an ambitious countrywide scheme designed to increase entrepreneurship in areas such as farming, ecotourism and IT start-ups, while moving the country away from import dependency to export-led growth. At the same time, the government started Gamperaliya, a major rural development project, which dovetails with the existing Grama Shakhti local business development project. Gamperaliya aims to give a major boost to rural infrastructure through efforts such as establishing Wi-Fi in villages and restoring schools, temples and rural roads. The two schemes aim to create 100,000 new entrepreneurs between them by 2020, while also further empowering the nation’s youth and women.

Financial Backing

According to ESL, the number of business owners or employers in Sri Lanka is around 230,000, making up only around 2.8% of the working population – comparatively, Vietnam and Thailand see levels of 19.6% and 27.5%, respectively.

ESL stems from the Vision 2025 strategy to attain upper-middle-income status, thus aiming to raise the country’s entrepreneurs to a similar level. The scheme also seeks to stimulate private sector growth and focus SME development in particular areas, notably goods and services that can help Sri Lanka’s evolution as an export centre. The initiative digs deep into the population as a whole, aiming to connect the village to the global marketplace, while bringing in sections of the population that have traditionally been more excluded from commercial activity: women and youth.

The Ministry of Finance and Mass Media has been the key body responsible for funding, making available through ESL 16 different concessionary loan schemes. These include programmes such as the Jaya Isura project, which makes loans of up to LKR100m ($630,000) available to small enterprises and LKR400m ($2.5m) to medium-sized businesses engaging in exports, and an Asian Development Bank programme which provides up to LKR7.5m ($47,200) to entrepreneurs developing rooftop solar power generation projects.

Moreover, in January 2019 the government announced an expansion of the ESL scheme, with LKR10m ($63,000) in concessionary housing loans for migrant workers and a provision for three-wheel taxi drivers to upgrade to small cabs. It was reported in early 2019 that 34,500 applicants had received a total of LKR36bn ($226.7m) in loans under ESL, with LKR65bn ($409.4m) applied for by self-employed, female entrepreneurs and other SME owners. Qualifying entrepreneurs can apply for the concessionary loans with the help of a dedicated relationship manager, provided by the state banks, and a hotline has also been launched to support applicants during the application process.

UP Country

Meanwhile, Gamperaliya was allocated LKR80bn ($503.8m) in mid-2018 to fast-track rural development. The programme kicked off with renovation of the Madatta tank, a reservoir in Nikaweratiya in July of that year. The work is being done by local firms and employees, with the aim of directly supporting village communities and businesses. In January 2019 the government also announced it was allocating LKR300m ($1.9m) to each electoral district under the scheme, with divisional and district secretaries responsible for implementation, and final approval for disbursement coming from the government agency.

ESL and Gamperaliya are also running a series of roadshows around the country aimed at raising awareness of the schemes and the benefits that are available among those in local communities. It is hoped this will peak enough interest for budding entrepreneurs to come forward, helping their local economies to flourish.