Inaugural Lanka Impact Investment Summit 2026 kicks off

Sri Lanka is seeking to position itself as a convening platform for impact investing in South Asia as more than 200 delegates from home and abroad gathered in Colombo yesterday for the inaugural Lanka Impact Investment Summit 2026 (LIIS), against the backdrop of persistent structural financing gaps in the domestic economy.

The two-day summit, organised by the Lanka Impact Investing Network (LIIN) and Global Steering Group for Impact Investment Sri Lanka, brings together investors, policymakers, development partners and entrepreneurs to examine how private capital aligned with social and environmental outcomes could support Sri Lanka’s recovery and longer-term growth, particularly through small and medium-sized enterprises and climate-aligned businesses.

Global Steering Group for Impact Investment Sri Lanka Chair Chandula Abeywickrema said the summit reflected nearly a decade of efforts to build an impact investing ecosystem capable of moving beyond traditional, collateral-driven bank finance. He said Sri Lanka’s core challenge was not the absence of entrepreneurs, but the difficulty of transforming them into commercially viable and scalable enterprises.

“What the country needs is entrepreneur transformation,” Abeywickrema said, arguing that enterprises unable to achieve viability and scale would not deliver durable economic change. He said impact investing offered access to private-equity-style capital for SMEs that remained underserved by conventional finance.

The summit takes place as data from LIIN highlights the scale of Sri Lanka’s financing constraints despite strong global growth in impact capital. The study estimates Sri Lanka’s annual investment demand at $ 7–10 billion to meet sustainable development goals, including $ 3–5 billion for infrastructure and $ 2–3 billion for climate finance, while access to capital remains constrained by high borrowing costs, policy fragmentation and limited non-bank financing channels.

SMEs, which contribute about 52% to GDP and employ nearly half the workforce, have declined from around 1.3 million in 2018 to roughly 1.04 million in 2024 following the economic crisis. Bank lending remains the dominant source of finance, but interest rates ranging from 10% to 27% and collateral requirements often exceeding loan values have sharply limited credit access.

Addressing the summit, Canadian High Commission Counsellor for Political and Trade Gwen Temmel framed impact investing as a market-based response to rising global uncertainty. She said global impact investment assets had reached about $ 1.5 trillion in 2024, but emerging markets accounted for only around 6% of total flows, while South Asia attracted roughly $ 20 billion despite contributing 45% of global GDP.

“Impact investment is not charity and not traditional investment,” Temmel said, describing it as an approach aimed at strengthening markets by delivering social and environmental outcomes alongside financial returns. 

She highlighted Sri Lanka’s low female labour force participation and limited formalisation of women-led enterprises as structural constraints, arguing that gender-lens investing could expand the investable pipeline and reduce long-term risk.

LIIN estimates that women-led enterprises face a funding shortfall of nearly $ 700 million, even after recent legislative reforms, while only around 700 to 1,000 SMEs are considered investment-ready due to weaknesses in governance, financial reporting and record-keeping.

Global Steering Group for Impact Investment Director – Regional Coordination Raffaella De Felice said Sri Lanka illustrated how locally driven impact ecosystems could generate solutions tailored to domestic needs while linking into regional and global capital networks. She noted that national partners played a critical role in convening investors, policymakers and enterprises to establish a common framework for impact measurement and capital deployment.

Institutional constraints, however, continue to limit scale. ESG-linked portfolios account for less than 2% of commercial bank lending, while pension and insurance funds remain restricted from investing in impact assets. The absence of a national impact investment policy, tax incentives or a clear definition of impact enterprises has contributed to fragmentation across the ecosystem.

Against this backdrop, LIIN plans to launch Sri Lanka’s first Impact Enterprise Fund in partnership with United Nations Development Program, targeting the “missing middle” of SMEs underserved by traditional finance. 

The $ 5 million fund will deploy capital through convertible notes ranging between $ 50,000 and $ 100,000, supported by a first-loss guarantee covering up to 20% of potential defaults, with early investments expected by mid-2026.

The summit concludes today (11 February) with the adoption of a Declaration outlining a shared vision to mobilise capital for inclusive and sustainable development, strengthen cross-border collaboration and lay the groundwork for longer-term mechanisms, including a proposed South Asia Impact Fund.