Supporting small and medium-sized enterprises

Programme description

Title: Developing Sri Lanka’s SME sector
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Sri Lanka
Lead executing agency: Ministry of Finance and Mass Media
Overall term: 2017 to 2019

Context

For the Sri Lankan Government, the promotion of small and medium-sized enterprises (SMEs) is an important pillar of the country's socio-economic development. Until now, SMEs have often been insufficiently integrated into national and international economic cycles, especially in the north and east of the island. Support and public services for companies are usually only available in the Western Province. This has a negative impact on the competitiveness and environmental sustainability of the few companies in the north and east of the country. The number of start-ups is therefore low and there is little incentive for innovation.

Objective

Sri Lanka's SMEs have better access to local and international markets. This will increase competitiveness, the inclusion of disadvantaged groups and the environmental sustainability of SMEs in the north, north-west and east of Sri Lanka and in other growth centres.

Approach

The project team focuses on five areas of action:

  1. Improving the legislative framework: Restructuring national support for SMEs will enable activities to be coordinated more effectively among actors and approaches for strengthening social inclusion to be taken into account.
  2. Technology transfer: Improved technology transfer and better market access are designed to increase the economic performance of SMEs and enhance their environmental sustainability.
  3. Access to finance: The aim is to give SMEs easier and faster access to finance.
  4. Innovation and entrepreneurship: The national innovation system is to be strengthened. The project develops measures to encourage the population to establish businesses, which is hoped to have a positive effect on social integration.
  5. Wilpattu National Park business development: Together with the projects Vocational Training in the North and East of Sri Lanka and Support for National Park and Buffer Zone Management in Wilpattu in Sri Lanka, the project creates the basis for the economic development of the national park and its areas of influence, which will ultimately contribute to improving the economic situation in the region and alleviating poverty among the population.

Results

In cooperation with the project, the Ministry for Industry adopted a plan of action for implementing the SME development concept. The national ministries are now coordinating support for these companies among themselves. Since March 2017, GIZ has been implementing two areas of the plan of action: the establishment of a new SME authority (Enterprise Sri Lanka) and the piloting of the framework policy in every region of the country.

The programme initiated a partnership between Sri Lanka and Viet Nam (south-south dialogue). Viet Nam has already successfully implemented a similar reform. The dialogue supports knowledge sharing between the countries and promotes bilateral economic cooperation.

GIZ and its partners identified products with particularly high marketing potential in international markets that will therefore have a secure customer base. An example of this is a collaboration about to start with Api Jamu GmbH, a German import company for processed organic products such as jackfruit (public-private partnership). In the first phase of the project, 50 Sri Lankan companies will receive EU organic certification, which will give them market access to the European Union. In addition to SMEs, micro-enterprises are also to be certified.

A collaboration with the Yarl IT Hub (YIT), which was established through the programme, ensures the sustainable integration of services (investor networks, etc.) into the local start-up community. YIT is a local initiative of Jaffna IT entrepreneurs that supports young companies in the Northern Province.