Government disburses over Rs. 1 t in SME support funds
The government is focused on revitalising and supporting Small and Medium Enterprises (SMEs) through financial assistance in the form of loans amounting to over Rs. 1 trillion, business development services, and measures to improve the operating environment, the Finance Ministry revealed.
Over Rs. 1 trillion has already been disbursed to Small and Medium Enterprises via, 16 state and private banks issuing 163,279 loans to the SME sector in 2024.
Out of the total loan amount granted, around 51 per cent was disbursed to the industries and around 13 per cent to agriculture and services sectors, finance ministry data shows.
The NPP administration and international organisations are supporting their development through programmes like the EU’s regional initiative ‘Accelerating Climate Smart and Inclusive Infrastructure in South Asia (ACSIIS)’ as part of the EU Global Gateway Strategy.
The Sri Lanka Export Excellence Initiative (SLEII) is a strategic initiative to enhance the export capabilities of Sri Lankan SMEs.
It is committed to providing access to funds for SMEs, particularly those struggling with immediate investment and working capital needs. This includes a Rs. 5,000 million fund channelled through banks, a high official of the ministry said.
The Ministry of Industry and Entrepreneurship Development is working to improve and consolidate financial assistance, including low-cost credit options through the Industrial Development Board (IDB).
A new Development Bank will be set up to provide funding to SMEs and new entrepreneurs, potentially bypassing the need for collateral-based lending from commercial banks.
The government encourages the use of Business Development Services (BDS) to help SMEs grow and develop. District-level Technical Service Centres are planned to provide SMEs with technical expertise and support.
A Technology Development Fund is being established to support business enterprises in engaging in R&D work. Voucher Schemes are being introduced to help SMEs access BDS and engage in R&D.
The Industries Ministry has established an Advisory Committee to support economic crisis and Covid-19 hit SMEs.
It is also considering setting up an Authority to streamline processes and provide a single focused emphasis on SME development.
The SME sector of Sri Lanka is a key driver, with 52 per cent GDP contribution and over 4.5 million workers. In the face of adversity like access to technology and finance, SMEs are also leveraging emerging sectors like green sectors, ICT, and Agri-tech for development and resilience.
In 2022, Sri Lanka had over 1.3 million MSMEs (Micro, Small, and Medium Enterprises), out of which 79.8 per cent were operational, 4.5 per cent were temporarily closed down, and 15.7per cent were closed down permanently at that time.
In addition to the support extended to implement the Government’s financial and non-financial schemes, the majority of funding requirements of the SMEs were financed through the loan schemes implemented by the commercial and specialised banks utilising their funds.
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