Rescuing small businesses
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Serapina happily breezed into the garden, shouting “Avilla … avilla (It has come, it has come)”. Kussi Amma Sera and Mabel Rasthiyadu were already under the Margosa tree just about to sip their cups of tea.“Mokak-da lamayo, aei ke-gahanne? (Why child are you shouting)?” asked Kussi Amma Sera. “World Cup, World Cup avilla,” replied Serapina sitting down to have her cup of tea. Serapina is an avid cricket fan and she was referring to the 2019 edition of the World Cup cricket which began on Thursday with a match between hosts England and South Africa.
“Ah….” said Mabel Rasthiyadu, getting into the conversation which then steered to other issues in the country.
Watching from the window, I then walked to the computer preparing for today’s column but the morning was disrupted again by the ringing of the landline. It was Karapincha Perera, the tea-kade gossip, on the line.
“I say..….what’s your bet on Sri Lanka entering the final four in the World Cup?” he asks, also talking about cricket which could be a welcome respite from all the troubled political happenings in Sri Lanka today, that have daily greeted Sri Lankans since the April 21 bombings.
“I am not so sure, since Sri Lanka has been performing in fits and starts over the past few months without any consistency,” I reply. “Cricket is a strange game and sometimes even the lowest-ranked teams can spring a surprise,” he said, showing surprising faith in the local team which has had a dismal record in the past 12 months.
While cricket might be just what the doctor ordered for Sri Lankans who have had their hands full in the aftermath of the Easter Sunday bombings, there was some good news on the tourism front this week.
While China last week softened its travel advisory on Sri Lanka from “don’t travel” to “be cautious when travelling”, it was joined this week by India, Germany, Switzerland and Sweden in relaxing “don’t travel to Sri Lanka” advisories to the level of “be cautious when travelling”.
This was indeed good news since India and China are Sri Lanka’s main tourism source markets while Germany is in the top 10 arrivals. Travel bans not only deterred foreigners from visiting Sri Lanka but also put the brakes on insurance companies providing travel insurance.
Tourism industry officials said they were now looking forward to the UK also relaxing the advisory, a measure which might see a quicker revival of the tourism market than earlier expected.
After the Easter Sunday bombings in which 40 tourists were also killed, expectations – based on the experience of other markets affected by tourism – were that it would take 12 to 18 months for a full recovery. However, the early softening of travel advisories, partly due to a meeting Prime Minister Ranil Wickremesinghe had with heads of foreign missions last week, and the stabilisation of the security situation with schools reopening fully, have raised hopes that the recovery would be faster than other affected-markets.
While the government has provided a one-year moratorium on the repayment of loan capital and loan interest by hotels among other concessions, small businesses that rely on tourism don’t have the same benefits. Small businesses or SMEs represent a large segment of the supply chain in tourism and since most are from the informal sector, to be eligible for concessions provided to the formal sector is always an issue.
According to Prof. Suranga Silva who teaches tourism economics at the University of Colombo and has done a lot of tourism research, at least 30 per cent of the tourism chain is represented by SMEs.
Be it travel agents, tour guides, vegetable suppliers, small boutiques, taxi drivers, handicraft sellers, etc – small businesses depend a lot on the tourism industry which, until the Easter Sunday bombing, was the third largest source of foreign exchange. If not for the April 21 crisis, tourism was heading – in the coming years – to overtake remittances by Sri Lankan workers abroad and garments as the largest foreign exchange source.
“Small businesses and entrepreneurs are unfortunately not recognised like the hotel industry and thus are not considered as part of the recovery process,” said Prof. Silva adding that with elections ahead, the government might lose some votes if these SMEs are not supported.
SMEs are the backbone of the economy, representing more than 75 per cent of the total number of enterprises, providing 45 per cent of employment and contributing to 52 per cent of the Gross Domestic Product, according to government data. “SMEs also promote broad-based equitable development and provide more opportunity for women and youth participation in the economic development of the country,” according to one description of SMEs.
“They (SMEs) are facing a harsher situation than the formal hotel sector. They don’t have the means to survive unlike hotels,” said Prof. Silva, urging that the government could use this troubled period for tourism to bring small business and entrepreneurs into the formal sector. “There should be a kind of insurance scheme to help them when a crisis like this occurs,” he said.
In many ways, he is right. Small businesses form the backbone of the economy, as stated earlier, and are the engine of growth. In the tourism sector, their input is vital and particularly today when experiential tourism – where visitors get to experience local cultures, food, etc – is the next big thing, bringing village communities into the mainstream is the key to the success of tourism, also the country’s fastest growing sector. In this context it’s imperative that the government’s support to tourism, if not already done, extends to these small players.
Tourism has grown from less than 500,000 arrivals before 2009 to 2.3 million arrivals last year, tremendous growth not seen in any other sector. With that, the number of hotels and resorts has sharply increased over the 10-year period with two million dependent on tourism income.
Kussi Amma Sera walks past the sitting room where I am busily typing my column and towards the kitchen, asking: “Sri Lanka jaya ganivida (Will Sri Lanka win)?” Mama ese balaporoththu venava “(I hope so..….hope so),” I reply. A win at the World Cup or even reaching the finals would certainly soothe the nerves of today’s jumpy Sri Lankans.