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Unlocking the potential of MSMEs vital for post-Covid 19 recovery

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By K.D.D.B.Vimanga

Sole proprietorships account for 63.1% of all businesses in the country,1 and account for 27.1% of national employment.2 Their contribution to the Sri Lankan economy is significant, and subsequent lockdowns due the pandemic have had an adverse impact on these small businesses. At present, we are unable to map out as to how many small businesses would be completely put out of business, but given that the department of labour has estimated (from a survey of 2,764 establishments) that 52.15% or 764 of firms, employing under 1 to 15 employees have closed down,3 it is likely that small businesses have also been hit hard.

However successive Sri Lankan governments have failed to strategize on the potential of these enterprises to Sri Lanka’s economic development. Emerging markets such as Vietnam have been able to capitalise on the potential of these businesses to accelerate economic growth4. Any hope of inclusive economic growth for Sri Lanka’s post covid recovery can only then be achieved if we utilize this sector, unlock their potential and empower them to grow, compete and thrive. While there is a lot of work to be done in terms of policy reform in this area, there are a few low hanging fruits, namely rehauling the business registration process, and bridging the digital divide.

In the form of a multi-part series, the Advocata Institute in partnership with LIRNEasia will provide an in depth analysis of these two vital policy tools to empower Sri Lanka’s small businesses.

Sri Lanka’s business ecosystem

According to the listing operation of Economic Census conducted in 2013/ 2014 the number of SMEs in Sri Lanka most of which are categorized as sole ownerships accounts for 1,019,681 of which 71,126 are small enterprises and 10,405 are medium scale enterprises.5 This number only represents enterprises that have registered under the above criteria. However according to the same survey there are 3 million people who engage in a similar SME related industry, trade or services. 45% of the micro enterprises and 10% of small enterprises remain unregistered. Overall, 42% of business establishments remain unregistered while 25% of these establishments are run by women entrepreneurs. In other words, informality is still high.

According to a survey done by LIRNEasia 40% of SMEs reported using the internet or social media for business; much of this use was limited to information seeking, rather than transactional use. Those who used the internet for business thought that access to the inteenet is either important or very important, while those who did not use the internet remained unconvinced of its benefits: most said there was ‘no need’ to use the internet. Few SMEs were capable of taking any form of card payment at the time of survey, and the majority of SMEs did not use mobile money services. This research points to a serious digital divide restricting the potential of Sri Lanka’s small businesses. This would be tackled comprehensively during next week’s Op-Ed outlining the serious implications of the digital divide.

 

K.D.D.B.Vimanga is Policy and Advocacy Executive at the Advocata Institute. He can be contacted at kdvimanga@advocata.org.

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Business

Sampath Bank continues to partner Central Bank on promoting QR payments

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Sampath Bank PLC joined hands with the Central Bank of Sri Lanka (CBSL) yet again to raise awareness and increase acceptance and usage of LANKAQR, the common Quick Response (QR) code standard for the country that was introduced in 2020.

Encouraging consumers to adopt LANKAQR for their day to day transactions, Sampath Bank held a 2-day promotional drive at one of Colombo’s latest outdoor dining destinations, Dining Capsule at Baladaksha Mawatha, near Galle Face Green on the 23rd and 24th of January.

Dharmasri Kumaratunga, Director – Payments and Settlements, Central Bank of Sri Lanka; Nanda Fernando, Managing Director, Sampath Bank PLC; and Tharaka Ranwala, Head of Operations and Group Chief Marketing Officer, Sampath Bank PLC, took part in the ceremonial launch of this initiative together with other senior representatives.

The Bank offered 25% cash back on payments made with the LANKAQR-enabled Sampath WePay digital payments mobile application at Dunhinda Colombo, Roots, Grand Monarch, Street Wok, Lavinia, Spice Junction, Giovanni’s Pizza al Taglio and BoxBar outlets at the Dining Capsule during this period.

“Offering greater convenience and security, technology continues to transform the way we conduct our day to day transactions. This is becoming increasingly true in Sri Lanka too, where consumers and businesses are actively adopting digital payments,” said Nanda Fernando, Managing Director, Sampath Bank PLC. “At Sampath Bank we have always focused on leveraging emerging technologies and delivering market relevant solutions that add value to our customers around the island. In line with this, we are delighted to partner with the Central Bank of Sri Lanka on driving the acceptance and usage of LANKAQR.”

“Across Sri Lanka, a growing number of merchants and consumers are getting on board the LANKAQR ecosystem and beginning to appreciate the value offered by QR based payments. We are witnessing this phenomenon with Sampath WePay, the secure, one stop digital wallet from Sampath Bank that allows users to store all types of financial instruments from any bank and carry out a wide range of real-time online transactions.

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Taking cashless transactions across the country

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The Central Bank of Sri Lanka in coordination with leading financial institutions and telcos in the country set in motion the ‘Rata Purama LANKAQR’ promotional campaign with a monumental event on January, 23. The ‘Rata Purama LANKAQR’ initiative represents the second phase of an island-wide campaign commenced late last year to introduce LANKAQR as the standard for mobile phone and digital payments countrywide, in moving towards a cashless and digitally-savvy society plus greater financial inclusion across Sri Lanka.

Held at Diyatha Uyana, Battaramulla, the event was graced by the Chief Guest, Ajith Nivard Cabraal, State Minister of Money & Capital Market and State Enterprise Reforms, Ms. Yvette Fernando, Deputy Governor CBSL and the chairperson of the National Payments Council, D. Kumaratunge, Director Payments and Settlements – CBSL, and Thilak Piyadigama, chairman – CBSL appointed LANKAQR Committee/CEO SDB bank, among other distinguished guests.

The Colombo-leg of the LANKAQR national campaign, drawing on the participation of numerous high-profile guests plus the island’s top banks and financial institutions, aimed to advance the program’s overall vision of promoting digital transactions as the new norm and included city-wide promotions, covering major commercial locations in and around the city.

Developed by the Central Bank of Sri Lanka, LANKAQR is a common Quick Response (QR) code standard, and its adoption by most major financial institutions in Sri Lanka is a progressive step on the path to Sri Lankans fully embracing a future that is inevitably digital, gradually leading to an entirely cashless mode of transaction.

The LANKAQR system will allow banks, financial institutions and telcos, through their digital payment apps and platforms, to facilitate fast, secure and low cost digital payments to any merchant or service provider. LANKAQR provides customers with a mechanism for payment for all their needs ranging from groceries, healthcare to utilities, and even the purchase of goods from street-side vendors, directly from their bank account through the use of any LANKAQR-compliant mobile payment app.

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SLT-MOBITEL gives ‘Power to Your Dreams’ with special connectivity offers

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SLT-MOBITEL is all set to launch the ‘Power to Your Dreams – සිහිනයට සවියක්’ campaign to provide the latest connectivity solutions to microbusinesses on the of January, 25 the company announced recently. This program will provide ICT solutions packages encompassing products and services essential for microbusinesses, at maximum affordability.

Understanding the connectivity needs of the microbusiness segment, the promotion provides them solutions that fulfil their requirements. Accordingly, communication, business networking, cloud technology, entertainment & IoT, communications devices and business infrastructure services for various market segments within the microbusiness ecosystem is provided utilising SLT-MOBITEL products and services such as voice & mobile telephony, 4G LTE, SLT Broadband, SLT Fibre and Peo TV services.

Speaking on the planned promotion, Sanjeewa Jayamaha, General Manager – SME Business Development, Sri Lanka Telecom stated, “Microbusinesses are the bedrock of Sri Lanka’s economic activity, supporting day to day transactions for millions of people. It is vitally important that they receive the full benefit of the connectivity solutions offered by the national ICT solutions provider, Sri Lankan Telecom. The brand unification of SLT-MOBITEL means now we can offer a full bouquet of products and services to our clients. This promotion will ensure that microbusinesses from various segments can now access the connectivity solutions most important for their businesses to thrive.”

Microbusinesses operating in entertainment and leisure, fashion and beauty, daily essentials, medical and health care, education, special occasion services, financial services, e-commerce and software development, professional services, construction support and transportation and delivery services will be able to benefit from bespoke packages crafted by SLT-MOBITEL with their specific industry needs taken into consideration.

 

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