Dr Ganga Tilakaratna highlights that improving access to finance and promoting technology adoption are key to enabling MSMEs to become resilient and agile to future shocks

11 – 13 December 2024

IPS Research Fellow and Head of Poverty and Social Welfare Policy Research Dr Ganga Tilakaratna discussed the resilience and agility of Micro Small, and Medium Enterprises (MSMEs) in Sri Lanka amid multiple and overlapping vulnerabilities in recent years. She pointed out several challenges faced by MSMEs in mitigating risks and outlined measures required to address these challenges. Dr Tilakaratna made these remarks while speaking at the session on ‘Resilience and agility of MSMEs and inclusive businesses’ at the 15th South Asia Economic Summit on “Unleashing an equitable green transformation in South Asia” organised by South Asia Watch on Trade, Economics and Environment (SAWTEE), Nepal. The summit was held in Kathmandu, Nepal from 11th to 13th December 2024.

Dr Tilakaratna emphasised that limited access to affordable and flexible financing has been a key challenge for many MSMEs to invest in innovative and disaster-resilient solutions, and to scale up their operations. This is partly due to collateral requirements, and other stringent conditions by formal financial institutions, which have resulted in MSMES, microenterprises in particular, to depend on informal financing options. She further mentioned that the lack of technology adoption by MSMEs due to a lack of digital skills and the digital divide has also been a constraint to mitigating risks and scaling up operations.

She highlighted that increased access to affordable finance, and promotion of technology adoption as key measures to enable MSMEs in Sri Lanka to build resilience and improve access to markets. This will further require enhancing financial literacy and digital literacy among entrepreneurs and strengthening the country’s microfinance sector, particularly to support microenterprises led by females and vulnerable segments.