Access to finance as a structural constraint to entrepreneurship in post-crisis Sri Lanka

AS an economy attempting to rise after experiencing consecutive economic shocks over the past half-decade, it is currently surviving mainly due to a series of economy-favourable policy decisions implemented by our administrators.

- By E.A.D.K.O. Edirisinghe

Although recent macroeconomic indicators suggest some sort of stabilisation, assuming that the country has fully escaped the financial crisis would be a serious misjudgement. The economy remains in a vulnerable position, where even a minor disturbance could have significant adverse consequences. In such a fragile context, long-term economic resilience cannot be achieved through short-term recovery measures alone; it requires sustainable structural strengthening.One of the most practical and effective methods of strengthening an economy is fostering entrepreneurship through the creation of new businesses and scaling up of existing enterprises. Entrepreneurship contributes not only to economic growth indicators such as employment generation and gross domestic production but also enhances the overall quality of life of the citizens. However, the emergence of sustainable and scalable businesses depends heavily on the existence of a supportive entrepreneurial ecosystem, within which access to finance plays a vital role. Although multiple factors such as poor market access, managerial weaknesses, and policy inconsistencies contribute to this outcome, restricted access to formal finance stands out as a significant determinant.