Deputy Minister Chathuranga highlights capital challenges faced by SMEs in Sri Lanka

Deputy Minister of Industry and Entrepreneurship Development, Chathuranga Abeysinghe, has highlighted that one of the biggest challenges faced by small and medium enterprises (SMEs) in Sri Lanka is the lack of capital.

In a recent Facebook post, he explained that the root cause of this issue is the low level of financial literacy, particularly regarding the function and importance of capital. He pointed out that many Sri Lankans do not have access to capital from the start, leading most entrepreneurs to begin their businesses with borrowed money.

“Using borrowed capital to start a business is understandable,” the Deputy Minister said. “But as the business grows, if we fail to increase our equity capital, the risk also grows. It means our business ends up depending entirely on bank loans. In such a case, even a small economic downturn can push us into a crisis.”

He noted that this situation is now a reality for many medium-scale businesses in Sri Lanka, which are currently facing serious financial difficulties.

To overcome this issue, Abeysinghe suggested three key methods to increase equity capital:

1. Reinvesting surplus profits back into the business, which requires strong financial discipline.
2. Bringing in a business partner, a strategy commonly used by many successful Sri Lankan companies.
3. Raising capital through the stock market, a method that he said remains underutilized by most SMEs.

The Deputy Minister emphasized that the third option, stock market funding, is often overlooked due to a lack of awareness, even though a special structure already exists for SMEs to access this capital. He described it as “capital without interest, installments, or the need for collateral.”

He called on the public and the business community to raise awareness about this opportunity and announced that the National Enterprise Development Authority (NEDA) will soon begin facilitating this process to help SMEs gain better access to equity capital.

“This is a step toward building a stronger and more sustainable SME sector in Sri Lanka,” he added.

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