By Dr. Tissa Ravinda Perera
Sri Lankan opened up her economy in 1977 to align herself with the global trends and achieve a higher level of economic development like Singapore. However, the internal conflict of thirty years and the political disturbances that occurred during 1989 have severely affected, the level of development assumed to be achieved with the new structural changes made.
After the successful conclusion of the internal conflict in 2010, Sri Lanka paved the way for new ways and means to achieve the level of development overlooked during last two decades. Therefore, the then Government made used of them and was able to take Sri Lanka to the level of a middle-income country from the status of less developed country. Hence, the present challenge of Sri Lanka is to maintain this level as well as to go up and achieve a higher level of development to crown as the first developed country in South Asia. On one hand, Sri Lanka has set developmental goals and infrastructure has been developing to support it.
However, she needs a set of strategies to achieve them in a novel way. Developing an entrepreneurial culture will be a strategy which gives the competitive advantage in achieving the development of the country. South Asian countries have not developed entrepreneurial cultures yet. They have a long way to go to achieve it. Therefore, Sri Lanka can make use of this gap and utilize it for the benefit of the country to achieve development.
Once the entrepreneurial culture is developed, it is easy for prospective businessmen and the investors to start and run businesses in Sri Lanka and it will be an attractive incentive for them. Hence, Sri Lanka must develop an entrepreneurial culture in which business is the part and parcel of this life of the people of the country. At the same time, to empower women, minorities and underprivileged groups of the country, it is a burning necessity to create and entrepreneurial culture to face issues related to youth unrest in the country as we faced in 1977 and 1989. Role of entrepreneurs to the country and society.
There are many ways that entrepreneurs can support the Sri Lankan economy. This has been understood by many governments, even though their policies were not consistent and effective enough to achieve the set goals by them. The main roles of entrepreneurs are;
Sustainable development is the main focus and the objective of any country. In achieving this, entrepreneurs in the country play a vital role as the engine of growth. Unemployment is a serious issue in any country. Sri Lanka is also facing a relatively higher unemployment rate of 4.5%. This can be reduced with the help of entrepreneurs and developing new businesses in the country. There must be domestic savings for a country to develop.
Entrepreneurs are the people who create wealth in a country and save the country. Poverty is a main issue that Sri Lanka has been facing over a long period of time. In the course of eliminating poverty, the role of entrepreneurs is very high. Sri Lanka has to get the help of the private sector entrepreneurs in this endeavor as an open economy. There is an economic disparity in Sri Lanka and entrepreneurs play a vital role in solving this issue. About 50.8 per cent of the country’s income is being distributed among the richest 20%. This is a serious situation and this disparity could be reduced only with help of entrepreneurs and developing entrepreneurs in the country.
Many counties try to develop their cities. There is no consistent development throughout the country like in Japan. In Sri Lanka most of the resources are accumulated in the Western province. Therefore, many people in the country want to come to the Western province or cites for everything. This type of scenario can be reduced and well-managed with the help of entrepreneurs. In a country there should be a skilled labor force.
The entrepreneurs in a country help to train workers to become skilled workers. Skilled workers add more to the national income than unskilled workers. There must be a link between SMEs and the largescale industries in a country. Therefore, SMEs can support large scale businesses and support the country’s development. This system creates a market for SMEs owners and helps to reduce the unemployment in the country. Entrepreneurs directly and indirectly support the export income of the country.
This supports in reducing the balance of payment issues in the country. Sri Lanka as a country has faced many issues related to youth unrest over the years. Entrepreneurs can help to reduce youth unrest by helping to provide employment.
Steps taken by the government or related institutions to meet the needs of entrepreneurs
The present Government has three initiatives to eliminate poverty in the country through the development of entrepreneurs. They are mainly Enterprise Sri Lanka, Grama Shakthi and Gamperaliya. Under the Enterprise Sri Lanka Program, there are many loan schemes for businessmen. The entrepreneurs have to provide a project report to get the specific loan. This program addresses the issues of entrepreneurs like; access to finance at affordable rate, lack of collateral, low level of technology, lack of market opportunities, youth unemployment and underemployment, trade balance deficit and foreign exchange outflow.
There are many conditions to be satisfied in getting these loans. Grama Shakthi is also a project initiated and conducted under the president’s office and its main objective is also to develop the rural community and entrepreneurs in the country to achieve the sustainable development goals. Gamperaliya is a program initiated and conducted by the Ministry Of Finance to develop the infrastructure in the villages and also develop the village community in the country. There are similar programs conducted by different banks in Sri Lanka.
In addition to them, Industrial Development Board, Federation of Chambers of Commerce Sri Lanka, The National Chamber of Commerce Sri Lanka, The Ceylon National Chamber of Commerce and The Ceylon National Chamber of Industries also support the entrepreneurs in the country.
Have governments or related institutions met the needs of entrepreneurs?
The aforementioned programs have many issues when it comes to achievement of their objectives. As mentioned earlier, previous Governments have launched programs such as Uthuru Wasanthaya, Divi Neguma to develop entrepreneurs in the Country. However, those programs were abandoned with the change of the Government. Here the issues are what is the guarantee that the present programs will also not face the same issue. Therefore, policy changes and regime changes affect the effectiveness of these programs.
These programs are being conducted by different people. They are not aware of the objectives of the program and they work in a very subjective manner due to this. This type of situation may affect the effectiveness of the program. There are many rigid procedures along with rules and regulations when it comes to the operation of this type of projects.
The entrepreneurs have to provide project reports to get loans and other facilities. However, they are not in a position to make them properly. There are no places also to make such project reports properly in Sri Lanka. This also affects the effectiveness of such programs.
There is an issue of whether the recipients of such facilities under relevant programs are the most suitable people to receive them. Therefore, there should be a proper mechanism to identify the suitable recipients of the benefits under these programs. As mentioned above, there are many financial institutions which support the businesses in Sri Lanka.
However, it is very difficult for entrepreneurs to get their services easily due to rigid procedures, rules and regulations followed by such organizations. These organizations ask for many documents from the entrepreneurs such as project reports, business plans. They are unable to provide these since they are incapable of preparing them properly. These organizations sometimes do not have proper financial statements. Therefore, how are they going to provide such documents to outside parties?
Financial institutions assess the loan applications from the entrepreneurs and determine their ability to provide collaterals to get the loan. Many entrepreneurs face a problem of providing collaterals to financial institutions.
Unique plan to boost an entrepreneurship culture in Sri Lanka
It is evident that Sri Lanka has moved from a Less Developed Country situation a Middle-income category. However, it is not satisfactory when compared to the number of years spent after opening up the economy in 1977; it almost 40 years. Therefore, it is evident that the private sector has not done their job as the engine of growth in achieving the set developmental goals. Presently, the issue is how to overcome this issue.
The only solution that I suggest is creating an entrepreneurial culture which develops new business to create wealth to the country which will definitely help the achievement of the desired level of development. In fact, Sri Lanka has faced two main issues during the last four decades; one is the internal conflict for 30 years and the other is 1989 riots.
The consequences of these two catastrophes have had a high impact on the development of country. That’s why Sri Lanka started her development after 2010 and she became a middleincome country afterwards. Many new big projects came to the country and they help the business of country directly. However, Sri Lanka missed many opportunities after the change of government in 2015 to achieve her development due to political and social instability in the country.
Even though Sri Lanka has missed opportunities, still Sri Lanka is in a competitive advantage position of achieving her development goals and achieving the desired level of development. Finally, the only solution to achieve development is developing an entrepreneurial culture through which the country can energize the private sector and develop an achievement oriented nation too. Universities, other educational institutions and the organizations which support the businesses in the country can support developing an entrepreneurial culture in the country. Government support with a national level policy on this will lend sustainability to an entrepreneurial culture movement in the country.
The power changes happening in the country must not affect the country’s trade policy and it must be consistent. Otherwise, it may have an adverse effect on businesses in the country. Financial institutions also can play a bigger role in developing an entrepreneurial culture in the country. They can make the process of getting loans more convenient and easier for entrepreneurs. These institutions also can reconsider their assessment criteria for granting a loan to entrepreneurs as well as rethink about the collaterals they request to grant loans. bmd
The writer is a Senior Lecturer, Department of Management and Organisation Studies, Faculty of Management and Finance, University of Colombo.