Sri Lanka’s SMEs: Lot of interest but yet to reach its full potential
Though there is a great interest and emphasis on Small and Medium scale enterprises (SMEs) as the engine of growth and job creation especially in the rural and former conflict affected areas, the SME sector is yet to be developed its full potential.
nderstanding this factor and the potential, several institutions have attempted to reinvigorate this major component of the economy. One such institution, the German Corporation (Deutsche Zusammenarbeit (GIZ) has launched a programme of “Small and Medium-sized Enterprises Sector Development” in Sri Lanka (SME).
The programme supports the development of a “National Policy Framework for SME Development”, provides impulses for “Technology Transfer and Innovation” and takes on the challenge of “Access to Finance”.
According to German Muller, GIZ Senior Advisor, the programe creates employment opportunities and works with both financial institutions and SME to bridge the gaps. Financial institutions are capacitated to develop products for SMEs by trained staff.He said that a previous component, “Promotion of the Microfinance Sector”, (ProMiS) ended in November 2012 which helped build capacities of Sri Lankan microfinance institutions to reach marginalised groups including internally displace persons (IDPs), war widows and unemployed youth and reached around 2.5 million people, about 12 per cent of the population.
With regard to enhancing the growth of SMEs, a media briefing was held last week at the Ceylon Chamber of Commerce (CCC) auditorium to announce a programme of ‘North and South SMEs Strengthen Business and Social Links’ where GIZ partners with CCC for SME-ProLink programme in which 30 SMEs from the Northern Province would meet 30 SMEs from the Southern Province in Matara on 29 and 30 September.
Samantha Ranatunga, Chairman, CCC indicated that GIZ and CCC believe that this North and South SMEs meeting together would create opportunities for SMEs in the two provinces to build new market linkages, facilitate expansion of their businesses to other parts of the country and thereby support addressing some of the regional economic disparities faced by SMEs.
The SME-ProLink programme targets food and beverage sector SMEs who have been in the industry for more than two years and have a minimum annual turnover of Rs 2 million.
Mr. Muller said that the Sri Lanka German SME Development Programme, implemented by GIZ in cooperation with the Ministry of Finance, Sri Lanka, aims to support a policy framework enabling SMEs to grow in an inclusive and eco-friendly manner. Through a range of technical assistance, he said that it helps enhance competitiveness of SMEs through technology transfer, innovation and improved access to finance.
According to a statement issued by GIZ, it has been found that too few SMEs apply modern technologies, value addition is limited and even in agriculture they are not resource-efficient. It added that economic participation, especially remote areas, must be further stimulated.