How can the government improve small businesses

Promote small and medium-sized businesses

Brief description of the program

Description: SME sector development in Sri Lanka
Client: Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Sri Lanka
Lead executing agency: Ministry of Finance
Total duration: 2017 to 2019

initial situation

Support for small and medium-sized enterprises (SMEs) is an important pillar of the country's socio-economic development for the Sri Lankan government. Up to now, SMEs have often only been insufficiently involved in national and international economic cycles, especially in the north and east of the island. Business support and public services are typically only available in the Western Province. This has a negative impact on the competitiveness and environmental sustainability of the few companies in the north and east of the country. The number of start-ups is therefore low and there is little incentive for innovation.


SMEs in Sri Lanka have better access to local and international markets. This increases the competitiveness, the integration of disadvantaged population groups and the ecological sustainability of SMEs in the north, north-west and east of Sri Lanka as well as in other growth centers.


The project team focuses on five areas of activity.

  • The legal framework for SMEs is to be improved. A restructuring of national support for SMEs enables better coordination of actors and takes into account approaches to strengthen social inclusion.
  • Improved technology transfers and better market access are intended to increase the economic performance of SMEs and increase their ecological sustainability.
  • Access to finance is to be made easier for SMEs. For example, access to agricultural insurance should be digital. This enables insurance premiums to be processed faster and more cost-effectively for farmers.
  • The national innovation system and entrepreneurship are to be strengthened. The project develops measures to encourage the population to start a business. This should have a positive effect on social integration.
  • Together with the projects "Vocational training in the north and east of Sri Lanka" and "Support for national park and border zone management Wilpattu", the project creates the basis for the economic development of the national park and its zones of influence, which will help improve the economic situation in the region and reduce poverty Alleviate the population.


In cooperation with the project, the Ministry of Industry adopted an action plan to implement the SME funding concept. The national ministries are now coordinating the promotion of these companies among themselves. The project has been implementing two areas of the action plan since March 2017. A new SME authority (Enterprise Sri Lanka) has been set up. The framework policy for the regions of the country was presented.

The program initiated a cooperation between Sri Lanka and Vietnam (South-South dialogue). Vietnam has already successfully implemented a similar reform. The dialogue supports the exchange of knowledge between the countries and promotes bilateral economic cooperation.

The project and its partners identified products with particularly high marketing potential in international markets and with correspondingly secure customers. One example of this is the collaboration with Api Jamu GmbH, a German import company for processed organic products such as jackfruits (a tropical fruit). Another example is the work with Meris GmbH, a German-Swiss organic spice dealer. As part of these public-private partnerships, 100 companies from Sri Lanka receive an EU organic certification and can thus improve their competitiveness and resource management. These measures will give Sri Lankan SMEs and micro-enterprises market access to the European Union.

As part of the intensive cooperation established by the program with the Sri Lankan company Hatch Works, which is committed to the redefinition and future of work, the Hatch Kalam was founded together with the Yarl IT Hub, which is also supported by the program. In the co-working space, so to speak a communal office, young entrepreneurs can work and network.