Supporting small and medium-sized enterprises
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
Overall term: 2017 to 2019
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 flows of income, 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.
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.
The project team focuses on five areas of action:
- Improving the legislative framework for SMEs. Restructuring national support for SMEs will enable stakeholders to be coordinated more effectively and approaches for strengthening social inclusion to be taken into account.
- Improved technology transfer and better market access are designed to increase the economic performance of SMEs and enhance their environmental sustainability.
- SMEs are to receive easier access to finance. For example, access to agricultural insurance should be available in digital form. This will allow insurance premiums for farmers to be processed faster and more cost efficiently.
- Sri Lanka’s national innovation system and entrepreneurship in the country are to be strengthened. The project develops measures to encourage the population to establish businesses, which it is hoped will have a positive effect on social integration.
- Together with the projects ‘Vocational Training in the North and East of Sri Lanka’ and ‘Management of Wilpattu National Park and its Influence Zones’, 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.
In cooperation with the project, the Ministry of Industry and Commerce adopted an action plan 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 action plan. A new SME authority (Enterprise Sri Lanka) has been established. The framework policy has been introduced 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.
The project 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 with Api Jamu GmbH, a German import company for processed organic products such as jackfruit (a tropical fruit). Another example is the work with Meris GmbH, a German-Swiss organic spice trader. As part of these public-private partnerships, 100 Sri Lankan companies will receive EU organic certification, allowing them to improve their competitiveness and resource management. These measures allow Sri Lankan SMEs and micro enterprises market access to the European Union.
As part of the intense collaboration established through the programme with the Sri Lankan company Hatch Works, which has set itself the goal of redefining the future of work, the Hatch Kalam was founded together with the Yarl IT Hub (YIT), which was also supported through the programme. This co-working space is a place for young entrepreneurs to work and network.