By Dr Kapila Fonseka, General Manager – Zincat Technology

SMEs and a growing number of startup companies are the foundations on which the Sri Lankan economy rests. These are not mere economic units but rather embody the soul of ingenuity and strength that define Sri Lankans. These enterprises and startups have played a crucial role in the country’s drive for eco-friendly development and digitization.

Sri Lanka’s economy greatly depends on SMEs. According to a report by the Central Bank of Sri Lanka (2022), about 45% of the Gross Domestic Product (GDP) and 52% of the workforce are employed in this sector. Their impact cuts across several sections, including agriculture, where it is imperative in the manufacturing and refinement of key export commodities like tea and rubber.

The emergence of tech startups in Sri Lanka proves that there are new dimensions to local enterprise. The founders of these startups are most often young IT enthusiasts who venture into new industries such as fintech, e-commerce, or information technology. Apart from strengthening the economic base, they are putting Sri Lanka into a group of developing digital economies. The amalgamation of traditional small and medium enterprises with tech start-ups is developing strong premises for economic differentiation and technology empowerment (Fernando & Perera, 2021).

The flexibility that defines Sri Lankan SMEs and tech startups enables them to adapt swiftly and innovate. They readily adapt to new technologies and models in business and quickly adjust according to the global demands of consumers. This plasticity is key to their survival and forms a major basis for Sri Lanka’s economic agility and competitiveness (Perera & Fernando, 2022).

Another important area is employment creation. Though SME’s offer large numbers of job opportunities all over the country, it is tech companies that create high-value and skilled employment. These startups play an important role in attracting and retaining competent employees, such as those in software development, digital marketing, and data analytics. The dual function of SMEs and startups in the economy helps to reduce socio-economical differences and promote uniform development among nations (Jayawardena & Thibbotuwawa, 2021).

In addition, SMEs and tech startups in Sri Lanka play vital roles in community services. They participate in community development by carrying out projects related to education, health, and environmental safety, which are indications of their responsible and sustainable business approach (Karunanayake et al., 2021).

Although they contribute heavily to national economic activities, SMEs and start-ups are confronted by financing limitations as well as market access issues, which is a very significant issue. It is hard for others to find financing, while they more often meet red tape. The Sri Lankan government and also external organisations have initiated different measures to assist these activities and, as a result, address these problems. Some of them have included grants, entrepreneur programmes, and market access internationally (World Bank, 2022; Asian Development Bank, 2021).

With Sri Lanka’s development towards economic growth and digitization, SMEs and tech startups are more important than ever. These factors are critical because they assist in driving innovation, creating employment, and promoting economic diversification for countries’ economies. This consequently makes it essential to empower these enterprises in order to facilitate a more technologically competent nation that is built along prosperous lines.

Lastly, it is SMEs and tech startups that constitute the core of the Sri Lankan economy. However, their work goes even further than that because it reflects both the aspirations and imagination of the people of Sri Lanka. In moving forward as a country, it will become imperative to grow and nourish these firms and ventures in the crafting of a story that speaks of a sustainable, technologically progressive, and cumulatively prolific future.

References

Central Bank of Sri Lanka. (2022). Annual Report.

Department of Export Agriculture. (2022). Export Agriculture Statistics.

Fernando, S., & Perera, H. (2021). SMEs and Economic Resilience: A Sri Lankan Perspective. Journal of Economic Studies.

Jayawardena, L., & Thibbotuwawa, M. (2021). Role of SMEs in the Sri Lankan Labour Market. Sri Lanka Economic Journal.

Karunanayake, I., et al. (2021). Corporate Social Responsibility in SMEs: Evidence from Sri Lanka. International Journal of Business and Society.

World Bank. (2022). Supporting Sri Lanka’s SMEs and Tech Startups for Sustainable Growth.

Perera, N., & Fernando, S. (2022). Innovations and Competitiveness in Sri Lankan SMEs and Tech Startups. Journal of Business and Economic Management.

Asian Development Bank. (2021). Boosting SME and Startup Development in Sri Lanka.