Transforming future of SL’s MSMEs

DIGITALISATION, GENDER-INCLUSIVE POLICY AND STRUCTURAL REFORM FOR SUSTAINABLE GROWTH

- Yolanthika Ellepola

The micro, small and medium enterprises (MSMEs) are the backbone of the Sri Lanka’s economy, contributing to approximately 52 percent to the nation’s GDP, while employing roughly 45 percent of the workforce.

This segment plays a pivotal role in enhancing economic growth, driving innovation, fostering entrepreneurship and facilitating regional development, providing employment away from the traditional sectors. This remains central as Sri Lanka targets for greater digitalisation, increased exports and sustainability by 2030.

The MSMEs face major obstacles including limited access to credit and banking and persistent shortages or high prices of raw materials, exacerbated by the recent economic crises. The women-owned MSMEs (WMSMEs), which account for about 25 percent of the sector, are additionally confronted by gender discrimination, cultural biases about women’s roles and household responsibilities that limit their mobility and participation in higher-value activities.

As a result, many remain small and informal at the lower end of the value chains, constrained by weak networks, limited information and training, scepticism from financial institutions, lack of collateral and exclusion from formal economic opportunities and decision-making, which slows their growth and transition to formal enterprises.

Nonetheless, Sri Lankan banks have expanded the WMSME entrepreneurs’ access to credit through targeted loan schemes and sector-wide policies, including products such as Commercial Bank’s Anagi Business Loans, Sampath Bank’s Sampath Saviya and BOC’s Mithuru and Ranliya loans. Donor-backed programmes and national policies further promote women’s entrepreneurship with collateral-free lending and blended grant loan products that reach even rural microenterprises.