Robust and resilient economy through Enterprise Sri Lanka | Daily News


Robust and resilient economy through Enterprise Sri Lanka

Amidst crucial economic challenges, debt crises and bold policy decisions, the one economic sector which stood out by way of prominence and state encouragement was the promotion of entrepreneur culture among the masses.

The government in June 2018 launched two economic development projects Enterprise Sri Lanka and Gamperaliya (village re-awakening program) in order to accelerate economic growth, upscale rural economies and also to develop a new culture of entrepreneurship among the youth in these days of ‘start-up’ culture around the globe.

Finance and Media Minister Mangala Samaraweera who spearheaded these two ambitious development programs was keen on working together with the private sector. At the launch of the program, he told the private sector, “We must work together to rekindle the spirit of entrepreneurship and innovation that thrived in the hearts of our forefathers.”

The Gampereliya scheme was the primary focus of the government’s economic agenda when unfortunately it was suspended by the purported government in mid November 2018.

Last week the Cabinet of Ministers granted its approval for the continuous implementation of the rural infrastructure investment scheme “Gamperaliya”, recognizing its importance to develop the rural economy through innovation, job creation and empowering rural masses monetary values.

In 2018, the Cabinet had allocated Rs 20 billion under this project for the reconstruction of rural water tanks and religious places, developing rural roads, providing sanitary facilities for schools, building school playgrounds, markets, eco-friendly gardens and houses, providing electricity, and granting land deeds.

Furthermore, the proposal presented by the Minister of Finance and Mass Media Mangala Samaraweera to allocate Rs 48 for the implementation of Project Gamperaliya in 2019 providing Rs.300 million for each electoral division to proceed with their respective developmental activities.

Under the theme of the “Enterprise Sri Lanka”, the government is driven its forces to emerging the production economy in order to achieve the governments’ medium-term targets such as per capita income of USD 5,000, one million new jobs, doubling exports, more than five percent continuous GDP growth etc. There are 15 tailor-made local funded and donor funded financial and non-financial schemes under the umbrella of “Enterprise Sri Lanka Credit Programme” with an aim to support the SME sector which has been recognized as the driving force of the economic development and support to the farmers and agro based companies who are engaging in small scale subsistence agriculture to commercial scale agriculture respectively by infusing low-cost capital for mechanization and adopting the modern agro technologies. It is also encourage the industrialist and households who are willing to transfer the fossil fuel energy to renewable energy with the intention of facing future energy crisis.

The “Enterprise Sri Lanka” will facilitate not only the established private sector enterprises but also micro enterprises, self-employees, young entrepreneurs to be the engine of our economic model. It is also facilitated the selected vital groups of the society such as school service van owner to move to 32 seats busses from old van in order to establish the more secure school services, low income groups to upgrade and complete their houses and media personal correspondents who work under difficult circumstances to purchase necessary equipment. Not only the financial support but also non-financial technical support such as technical support to incorporate companies, maintain books and records, tax computation, boost market opportunities, negotiate with financial institutions will also be provided through the “Enterprise Sri Lanka Programme”.

The most challenging issue that faced by SMEs is easy access to finance and absorbing the high interest rare. Even though they have a huge potential, difficult in rising funds when compared with the well-established Large Scale Enterprises ( LSEs) since the banks typically consider SME loans as riskier and more expensive to administer. The massive effort was made by the Government by introducing refinance and interest subsidy loan schemes to assist the SMEs but the unfilled low cost credit gap still remain in the market and access to credit and cost of funds still stand as the most impacted constraints on SMEs. The situation of the micro enterprises and self-employees is worse than that of the SMEs. The requested loan amount is smaller, no proper financial records, low productivity, and poor financial management; therefore, the traditional bankers are reluctant to provide more risky micro loans. Therefore, SMEs, Micro Enterprises and Self-employees have led to access private informal lenders and small investment companies for fulfilling their investment needs. . However, the cost of such financing is exorbitant and finally they will face the loan-trap. The Enterprise Sri Lanka creates a path for SMEs, Micro Entrepreneurs and Self Employees to access to finance at affordable rate with a range of financial products.

Generally, the existing traditional banking sector prefers to provide collateral based loan even though cash flow based loans are more convenience to the SMEs. Therefore, some SMEs, Micro Enterprises and Self-Employees fail to obtain credit facilities as they are unable to provide accepted collateral requested by the banks. Especially the entrepreneurs who are based in the North and East Provinces are really suffered since the title of their real states which is willing to accept as collateral by banks still not cleared. The NCGI which is proposed to establish under the Enterprise Sri Lanka will address this issue by issuing necessary government guarantees for SMEs, Micro Entrepreneurs, Self-Employees and other all businessmen who need a guarantee to obtain a loan without producing collaterals. It will also be encouraged the banks to more from collateral based lending to cash flow based lending which is more continuance to entrepreneurs.

The low level of technology and absence of technical and managerial skills have also been identified as an important constraint affecting SME and Micro sector development. The level of technology is directly related to the operational efficiency of the any business and Lack of technological applications has severely constrained the SMEs’ ability to face competition from both local and foreign products and services. In many instances, the use of technology levels tends to be low, and it’s not frequently available for rural based enterprises. This issue is highly effected to agricultural sector which is 1/3 of labor force has been employed and priority is given through the loan schemes of the Enterprise Sri Lanka Programme to enhance the productivity of the agriculture sector by supporting to mechanized their agricultural activities of small farmers, farmer organizations and commercial and large scale agro companies.

SMEs, Micro Entrepreneurs, self-employers and especially small scale farmers find it difficult to find the market and the reasonable price for their products continuously. Therefore, the quality of the production, packaging and branding is important to grab the market share with the reasonable price for their productions. It is planned to support the entrepreneurs by infusing capital to access to the domestic and international markets through the loans schemes comes under the Enterprise Sri Lanka. The out grower system which is linked the small scale farmers with the commercial scale agro companies are promoted through the Enterprise Sri Lanka Programme in order to established the guaranteed price specially for supporting the small scale farmers which are being suffered due to unavailability of reasonable fixed price for their seasonal agricultural products

As per the government policy document, it is expected to create around 1 mn new jobs opportunities by 2020. Since, the SMEs have the heights potential to create new jobs, the one million jobs that the government hopes to create could mostly generated through the tourism, construction, services and ICT sectors which is targeted to support through the Enterprise Sri Lanka loan schemes. It is expecting to minimize unemployment and underemployment through Enterprise Sri Lanka programme by enabling environment to engage the economic activities by providing low cost capital and other non-financial supports under less condition especially for youth for capitalizing their valuable business ideas.

Along with introducing the loan schemes and their features, there was also a program to conduct large-scale exhibitions disseminating information form culture of entrepreneurship to mentoring and market access. It was a platform for guidance, training, and mentorship for potential entrepreneurs. It will create opportunity to connect their business ideas with markets and larger companies in the ecosystem.

As the program was launched in 2018, State Minister of Finance Eran Wickramaratne told journalists with Enterprise Sri Lanka, the government was poised to end ‘end ‘begging’ attitude.

“The dependence on the government especially on one person and one family mentality to obtain employment and other favours to scale up the social ladder will be brought to an end with the ‘Enterprise Sri Lanka’ program coming into fruition and create sustainable livelihood and income generation opportunities.”

Following the two-months set back, with the suspension of Gamperaliya project, the Government is now ready to vigorously launch a vigorous and rural revolution, by supporting the middle income earning segment and move onto next step in the revival of ‘Good Governance’ establishing economic independence and democratic rights of the people in Sri Lanka. 

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