Rebuilding for resilience: Can impact investing \ work in Sri Lanka?

SRI Lanka is once again at an inflection point, but this time, the stakes are unmistakably higher.

- By Vasanthen Sivakajan

As the country cautiously navigates economic recovery, the devastation caused by the November 2025 cyclone has laid bare a deeper and more uncomfortable reality. Rebuilding Sri Lanka is no longer just about restoring what was lost. It is about deciding how the country rebuilds, and whether it continues to invest in systems that remain vulnerable to the next shock.

The cyclone’s impact was widespread. Loss of lives, flooding, landslides, damaged infrastructure, disrupted livelihoods, and displaced communities affected large parts of the island, underscoring Sri Lanka’s growing exposure to climate-related risks. Transport networks, homes, energy systems, agricultural supply chains, and small businesses, already fragile after years of economic strain, were pushed further to the edge. What was once framed as a future climate risk is now an immediate development challenge.

In this context, the question of financing becomes critical. Public resources are stretched thin. Traditional lending remains cautious. Grant funding, while essential for relief and recovery, cannot by itself deliver the scale or durability required for long-term resilience. Sri Lanka does not just need capital, it needs capital that supports sustainable rebuilding, strengthens resilience, and delivers measurable outcomes alongside financial returns.

This is where impact investing increasingly enters the conversation.

Proponents argue that impact investing can mobilise private capital toward climate resilience, inclusive growth, and essential services, precisely the areas now under strain. Skeptics counter that Sri Lanka’s macroeconomic volatility, policy uncertainty, and limited capital-market depth make it an unattractive destination for such investment. Both perspectives have merit.