The lack of vision and planning, culture, family concepts and lack of entrepreneurial know-how hinder the growth of small and medium enterprises in the North and the East, a recent study conducted by the Centre for Poverty Analysis (CEPA) states. The findings of two CEPA researchers, Gayathri Lokuge and Anupama Ranawana were presented at the discussion forum ‘CEPA Café on Micro, Small and Medium Enterprises: backbone of Sri Lanka’s economy’ in Colombo recently.
Though the government has initiated numerous programs to develop entrepreneurial skills throughout the Northern and Eastern provinces to uplift economic standards critically affected by three decades of the war against terrorism, the community faces too many obstacles and challenges when it comes to practically putting the programs into action at ground level, the study found.
War and business
One of the case studies brought into attention by Lokuge was Riyaz’s footwear business in Batticaloa. According to her findings, the business had been very lucrative for Riyaz during the war. As the war had barred many products entering the market, the situation had served his best interests. The arrival of Chinese and Indian footwear at a cheaper price accounted for massive loses in the business after the war.
“During the time of the war my business was doing really good and I was able to send my parents on Haj. Now the business has been squeezed” Riyaz had said during the study.
Coming across a number of entrepreneurs like Riyaz, a major conclusion of Lokuge’s study states that “War and its continuity has affected different entrepreneurs differently.”
Financing issues
Another significant observation is that starting a business is something inevitable as the family background had drastically changed after the war. In other words, male-centric families turned in to female-centric as the war took away lives of males in large numbers. Starting a small business therefore has been one of the few options left to unskilled women in those areas.
Nevertheless the most common businesses, such as sewing, livestock management and farming are very conventional in these areas.
Instead of being a blessing and a support to the community, Micro financing has turned out to be a reason for stagnation in the community’s development, according to Ranawana’s study. Especially the high interest rates, the trappy nature of such loans and the inability of making loan repayments on time has created huge problems for the business community.
“Micro finance is seen as a disruptive factor. Especially unlicensed micro finance agencies and their activities have made the community more and more debt pressured,” said Ranawana.
In terms of financing their businesses, the upcoming entrepreneurs of the North and the East displaying a lack of financial literacy, it was said.
“They take loans from every possible place without a proper plan. For instance, we’ve met people who had taken loans from commercial banks, Samurdhi banks and even borrowing from relatives,” Ranawana said.
Entrepreneurship
Reconciliation through entrepreneurship was another aspect discussed. The economical uplift of the people through entrepreneurship was instrumental in achieving reconciliation in a sustainable manner, Ranawana said.
Reconciliation, Development and Democracy are the main components in the recently introduced national entrepreneurship development program, ‘Enterprise Sri Lanka’. Only on focusing on these three areas can sustainable economic growth be achieved, Ranawana stressed.
One interesting outcome of the discussion was, no matter how hard the government and the Colombo fraternity try to label these businesses run by families in the North and the East as entrepreneurial, there is a huge gap between the call and practicality. Using the term ‘entrepreneurs’ to identify them is arguable as most of these business owners do not posses the key feature of an entrepreneur, which is having a vision. This particular community is engaged in businesses, which are home based, as there are less options open to them.
Ranawana said that jobs are preferred as the way to get money quickly. Therefore, even if they are in business, they hardly think and take decisions beyond the daily or monthly cash flow.
Lokuge and Ranawana could remember one or two young entrepreneurs who had a proper business plan and a vision. There were very few online based businesses.
“There was this young guy who visited me after we came back to Colombo. I was actually impressed by his activeness. Before he said bye, he wanted a google review to his business from me. But unfortunately, very few such spirited entrepreneurs were seen during our study,” said Ranawana.
Recommendations
According to Ranawana, the community needs an entire overhaul of entrepreneurial schemes and a redesigning of project schemes, which give them the primacy of designing a livelihood scheme that meets their survival needs. Ideally, this will also shift the focus away from encouraging the ‘risky business’ of entrepreneurship, and a smooth transfer towards building a ‘more community owned space’ for resilient and secure livelihoods.
To address these issues, there must be realistic analysis of ongoing government and non-governmental schemes for economic growth.
In what ways are the schemes themselves driving financialisation and promoting wealth creation? In what ways can radical breaks be achieved? What non-market centred paradigms of development can be built and encouraged? These are vital issues to be addressed.