Sri Lanka yesterday unveiled an ambitious national strategy aimed at transforming the country’s small and medium enterprise (SME) sector into a key engine of economic growth, as the Government set its sights on tripling the economy to $300 billion.
The first-ever National SME Strategy Framework, branded ‘SME NEXUS,’ seeks to reposition SMEs at the centre of Sri Lanka’s economic development agenda through an integrated and coordinated policy approach. The initiative is being spearheaded by the Ministry of Industry and Entrepreneurship Development with the backing of public institutions, private sector stakeholders, development partners, and financial institutions.
At present, micro, small and medium enterprises (MSMEs) account for nearly 75% of all registered businesses in Sri Lanka, employ around 45% of the workforce, and contribute approximately 52% to GDP. Under the new Framework, the Government expects the sector’s contribution to increase to 80%, reflecting its growing importance in driving inclusive growth, entrepreneurship, and employment creation.
Launching the Framework, Industry and Entrepreneurship Development Minister Sunil Handunnetti described the initiative as a “turning point” for Sri Lanka’s economic future and a milestone for SMEs, which he referred to as the “backbone of the economy.”
“For years, SME development institutions have operated in silos, resulting in fragmented efforts and limited outcomes. SME NEXUS brings together all ecosystem stakeholders under one strategic direction to ensure a collective effort for the common good of SMEs and the economy,” the Minister said.
The strategy framework is structured around five strategic pillars: transformational growth, an integrated approach, market orientation, building an entrepreneurial society, and a focus on measurable outcomes and impact.
Implementation will be carried out through three core approaches — institutional strengthening, capability enhancement, and growth enablement and problem-solving — supported by 11 strategic pillars. These include technology and digital enablement, institutional integration, service delivery reforms, incubation and startup support, market development, value chain integration, business intelligence and research, ecosystem partnerships, relationship management, and enhanced access to finance and growth capital.
Deputy Minister Chathuranga Abeysinghe, who played a leading role in shaping the Framework, said the initiative was the result of nearly 15 months of collaboration among stakeholders and represented a “dream come true” for Sri Lanka’s entrepreneurial ecosystem.
“In a highly competitive global economy, fragmented SME development efforts are no longer sufficient. Sri Lanka needs to create and support a new generation of globally competitive entrepreneurs,” he said.
The Framework also aims to address longstanding bottlenecks affecting SMEs. According to the latest World Bank Enterprise Survey, the top constraints facing businesses include high tax rates, licensing and permit challenges, tax administration inefficiencies, limited access to finance, workforce skill gaps, competition from the informal sector, customs and trade regulations, electricity costs, transport issues, and concerns related to crime and disorder.
Minister Handunnetti assured stakeholders that the Government would work toward resolving controllable barriers and improving the business environment to enable SMEs to scale and compete more effectively.
The launch ceremony drew participation from senior representatives of the public and private sectors, development agencies, and the banking and financial services industry. The Government also acknowledged the support extended by Australia Aid, the World Bank, the Asian Development Bank, and the Sri Lanka Institute of Marketing in developing the Framework.
An industry forum scheduled for today will bring together key stakeholders for a deeper review of the Framework, which officials said would remain an evolving strategy subject to periodic revision and refinement in line with changing economic realities and market demands.
