Sri Lanka will need people with good upbringing and education to create a new breed of entrepreneurs, said Rasitha Gunawardana, Senior Deputy General Manager (Business Banking) at People’s Bank.
“We need a new generation of entrepreneurs. For us to create an entrepreneurial culture in Sri Lanka, we also need students who stand up in the class and question the teachers as well as people who question the authority.”
In addition, access to finance is the key concern for SMEs. At the same time, lack of access to market information and basic knowledge on financial management have also hurt aspiring local entrepreneurs’ ability to start their own ventures to a great extent, Gunawardana said in an interview with Daily News Business.
“They lack the knowledge of financial management to plan or manage their own finances, maintain balance sheets and to do basic investment analyses. To address these issues, the school curriculum should include financial management as a subject.” He said.
He also emphasised that funding is not the only panacea to create an entrepreneurial culture in Sri Lanka. “Funding is just one component of it,” he said.
Total number of entrepreneurs, as a percentage of overall working population in Sri Lanka remains low or less than 3%. Nonetheless, total entrepreneurs in Thailand and Vietnam are around 18-20% respectively, compared to their overall working population. In Bangladesh and China, it is around 11% and 7.5% respectively. Gunawardana said.
Highlighting other factors that have led to the decline in entrepreneurs in Sri Lanka, Gunawardana said the majority of Sri Lankans tend to work under someone else rather than investing money to establish their own ventures.
“Even people, who have come to a certain stage as entrepreneurs, find it difficult to access the market. They don’t get any kind of support from the authority or to access different markets. Sometimes, they also lack skills in negotiating terms with foreign buyers,” he said.
“In other countries, pioneers of major social media and e-commerce sites were university dropouts. They started with no financing. When the idea is good; in those countries there is a system where they could go to an investment banker and sell company’s shares to him. So he will package it nicely and sell it to other investors.” He said.
“However, the pioneers of these sites have ended up acquiring 20% -30% of the company. They don’t own the entire company. But they have the market clout and the holding power. If they have a good balance sheet, they can go to the bank and raise more funds. Unfortunately, we don’t have that sort of avenues in Sri Lanka.” So the banks will never want to take all the risks, they want someone to take the equity risk.”
He said the ‘Empower’ SME Board, recently launched by the Colombo Stock Exchange in collaboration with the Securities and Exchange Commission to help SMEs raise money in the capital market, will not address the entire issues facing the industry and also, listing and raising funds via the capital market is considered as a costly affair for SMEs in Sri Lanka.
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