ECONOMYNEXT – Sri Lankan authorities are in discussion with the Asian Development Bank to establish a venture capital fund to grant cheap finance access for the island nation’s small and medium sector enterprises (SME), a top official said.
Manjula Hettiarachchi, Director General of the Department of Development Finance at the country’s Ministry of Finance said, if the discussions succeed, the country will have a venture capital fund from the next year.
“Access to the finance for the SME sector has been a real issue with some commercial banks also hesitant to provide loans. We at the Finance Ministry have developed some schemes for those SMEs and we want them to access,” Hettiarachchi said during a discussion on Wednesday (08).
“We are at the initial stage of discussion with the ADB for this venture capital fund for SMEs.”
Sri Lanka’s SME sector forms the backbone of the national economy, accounting for over 75% of all businesses, more than 45% of employment, and contributing around 52% to the country’s GDP, according to the Ministry of Industry.
Despite its vital role, the sector continues to struggle with limited access to finance, a major barrier to growth and innovation.
Many SMEs lack formal financial records, collateral, or credit histories, factors that make traditional banks reluctant to lend.
High interest rates, complex loan procedures, and stringent collateral requirements have further restricted borrowing capacity, particularly for rural entrepreneurs and women-led enterprises.
The 2022 economic crisis and tightening monetary policy since 2022 have also worsened liquidity constraints, leading to reduced lending and delayed loan disbursements.
As a result, thousands of SMEs remain trapped in a cycle of underinvestment, unable to expand operations, adopt technology, or enter export markets despite being the key drivers of job creation and inclusive growth in Sri Lanka. (Colombo/October 09/2025)