Sri Lanka launches first Climate Resilience Revolving Fund for MSMEs – ‘Risk to Resilience’

In a landmark step towards strengthening the resilience of micro, small, and medium-sized enterprises (MSMEs) against climate-induced disasters, Chrysalis, with the support of CARE Germany, officially launched Sri Lanka’s first Climate Resilience Revolving Fund for MSMEs today in Colombo. The initiative, co-funded by the German Federal Ministry for Economic Cooperation and Development (BMZ), the European Union, and Co-Impact, and implemented by Chrysalis, is part of the broader Climate and Disaster Risk Financing and Insurance (CDRFI) framework. It aims to safeguard livelihoods, accelerate post-disaster recovery, and embed long-term resilience practices among MSMEs in the Uva and Central Provinces.

MSMEs form the backbone of Sri Lanka’s economy, contributing significantly to employment generation, economic diversification, and community development. Many of these enterprises are women-led or women-powered, making them vital not only for household income but also for advancing gender equality and community resilience. However, they are increasingly exposed to floods, droughts, landslides, and other climate-induced shocks, which can disrupt operations and threaten livelihoods. The newly launched Revolving Fund will provide rapid financial support through MSME consortia in Badulla, Monaragala, Matale, and Nuwara Eliya, enabling quicker recovery, safeguarding women’s economic participation, and ensuring business continuity in the aftermath of disasters.

Hannah Bartels, Programme Coordinator MAP II CARE Germany Representative, emphasized “With the leadership of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the commitment of global partners, this initiative in Sri Lanka illustrates how international funding can directly strengthen resilience at the community level”.

Speaking at the launch, Ashika Gunasena, CEO of Chrysalis, said: ‘SMEs are the backbone of Sri Lanka’s economy, but women-owned businesses are hit hardest by floods, droughts, and other climate shocks. Building climate resilience is not just about protecting enterprises, it is about safeguarding women’s livelihoods and strengthening communities’.

The initiative is a multi-actor collaboration involving government ministries, private sector financial institutions, civil society organizations, and development partners. By linking disaster risk financing directly to MSME consortia, the Fund not only supports immediate recovery but also fosters long-term resilience practices that can be scaled nationally.

The launch event also featured discussions on integrating CDRFI into Sri Lanka’s National SME Policy, the development process of the Revolving Fund, and the symbolic handover of the first round of grants to MSME consortia. It provided a platform for policymakers, private sector actors, and development partners to explore scalable solutions for climate risk preparedness.

This pioneering initiative seeks to strengthen MSME resilience, diversify market opportunities, and foster sustainable livelihoods in tourism, agriculture, and industry. The Revolving Fund marks a critical milestone in the journey toward comprehensive CDRFI solutions, ensuring that Sri Lanka’s MSMEs are better prepared for the climate challenges of today and tomorrow.