Sandbox Consultancy Services, a wholly Sri Lankan and entrepreneur-run firm, providing performance consulting and people analytics to the top corporates in Sri Lanka, recently released a study titled ‘Micro Enterprise and the Sri Lankan Economy – Post-COVID insight’.
Having surveyed over 54 entities the results were eye opening, says Sandbox Consultancy Services Managing Director/Lead Consultant Angelo De Silva.
The Sandbox’s analysts team have compiled a comprehensive and insightful report with the goal of facilitating better financial policy change geared towards an often overlooked sector – the Urban Micro Enterprises.
This report is a much-needed insight into this sector and sheds light on the true reach of the relief schemes purportedly available to them. It also serves as a current snapshot of this sector’s impact to the economy and the ramifications of delaying support to them, given the whopping impact they have on employment and the GDP.
Key takeaways from the study are:
- 92% of all businesses, or 9 out of 10 business establishments in Sri Lanka is a micro enterprise
- 27% or 3 out of 10 people employed in Sri Lanka are employed by a micro enterprise amounting to a total of 1,338,675 people
- 73.2% of micro enterprises are facing a moderate to very high risk of unemployment due to difficulties caused post-COVID-19
- If they do not receive immediate assistance 3 in every 10 people face a risk of losing their livelihoods (approximately 980,000 jobs)
- The SME sector contributes Rs 8.8 trillion in economic output (52% GDP), making them the backbone of the economy
- 94.6% of all MSME respondents expected to be at Moderate, High or Very High revenue risk levels in the 12 months April 2020 to March 2021
- If distributed proportionally to current GDP activity (52% Contribution to GDP by Micro Businesses and SMEs), would indicate that they would bear Rs. 514.8 billion in revenue reductions for the year 2020
- In comparison with the member countries of the SAARC region Sri Lanka ranks last in terms of COVID relief measures as a percentage of GDP totalling approximately to 0.25% of GDP
- Reporting and data gathering on the micro enterprise category is vastly neglected, exemplified by the fact that the last national survey data is over 7-years-old (2014)
- Banks should shift focus towards supporting urban micro-enterprises, especially in the Western Province
- The financial sector should embrace the new generation of entrepreneurs who run business models that are both asset and people light with flexible and growth oriented schemes