The ability of small and medium-sized enterprises (SMEs) to establish themselves and scale their operations is integral to Sri Lanka achieving equitable economic growth, a recent publication of the Asian Development Bank (ADB) says.
The publication of the ADB South Asia Working Paper series, titled “Catalyzing Small and Medium-sized Enterprise Venture Capital in Sri Lanka” says the SMEs are the bedrock of Sri Lanka’s economy and access of SMEs to equity or risk capital has to be improved.
Comprising 75% of all active enterprises, Sri Lanka’s SMEs provide 45% of employment and contribute 52% to its gross domestic product.
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Against this backdrop, the working paper seeks to evaluate the viability of supporting the SME sector by improving access to equity or risk capital.
The paper highlights market assessment of SMEs and SME finance in Sri Lanka currently, presents documentation of international precedents, and provides an analysis of fund structuring considerations. It presents recommendation for a government-initiated venture capital fund for SMEs in Sri Lanka.
