Pandemic – Stricken SME sector in Sri Lanka, can it survive?

Nov 16 2021

The Small and Medium Enterprises sector (SMEs) of Sri Lanka accounts to up to 80% of all businesses and contributes to nearly 35% of all employment. The SME sector has been vastly growing in the past decade. Nevertheless, in such an economy, Sri Lanka struggles to stabilize during these unstable times. CMA Sri Lanka Founder President, Prof. Lakshman R. Watawala recently stated that, ” SMEs are the backbone of the Sri Lankan economy… the COVID-19 pandemic has severely affected (these SMEs)”. Thus, the status of SMEs in Sri Lanka during these times are quite destabilized.



Furthermore, it is evident that SMEs are diverse from fast food to the apparel industry. SMEs around the world have continued to flourish in the recent years, in particular the online food delivery industry grew by billions of dollars during 2020. Many started their online businesses using tech and innovation to sell their ideas.


Nevertheless was the pandemic a blessing for one and all? Doug Garden and Anil K. Makhija in a recent article in the Harvard business review titled, ‘The Middle Market Is Stressed, But Resilient’ state that more than 40% of business owners claim that the pandemic was devastating to their business. Due to the abrupt stop of tourists and the increase in lockdowns many restaurants and cafés in Sri Lanka have closed down. Last May I visited Negombo – a top tourist destination, more than 50% of cafés were shut down permanently, while the other coffee shops were doing poorly. Thus, the pandemic is taking a huge toll on the food industry of Sri Lanka.



Understanding the challenges that SMEs faced due to lockdowns and the global pandemic, local authorities introduced


the ‘Saubagya COVID-19 renaissance facility’ in August 2020. The facility which was introduced with a Rs. 50 billion budget was later increased to a Rs.150 billion budget. While many have benefitted from this loan scheme it is apparent that it comes with a risk. Within the fine print it is stated that “CBSL will obtain suitable collateral to mitigate the credit risk relating to credit facilities granted”(CBSL). This has left many Micro business owners without this loan due to this high risk.


Thus, it is apparent that the government is continuously supporting the SME business owners by looking for more innovative ways to support them. Nevertheless, SMEs should not only depend on financial aid but look for more innovative ways to move forward. Collaboration and partnerships coupled with more sustainable concepts is the future.


Sales Play is a business solution software that empowers SMEs with Point of Sales aids and built-in, customizable loyalty and discount features. This free mobile POS software is currently used in cafés, retail stores and other professional services such as salons for seamless shift management and book-keeping purposes. The SalesPlay POS basic software is free of charge and can be downloaded from the Google play store. Find out more on And follow us on Linked in, Facebook and Twitter