The Task The Approach The Analysis The Outcome

Building Markets

· SME Development

· Sri Lanka

From fragmented programmes to a unified institutional framework for SME growth

SMEs are the backbone of Sri Lanka’s economy. The Asian Development Bank and the Government of Sri Lanka engaged Athaag to design the institutional architecture that could change how enterprise support actually reaches firms on-the-ground, moving from activity-based delivery to measurable outcomes.

Client

Asian Development Bank / Government of Sri Lanka

Geography

Sri Lanka

Status

Completed

Practice areas

SME Development Institutional Reform Investment Climate Industrial Policy

3

national institutions integrated into a unified enterprise and industrial development authority

25

district-level transformation hubs designed for nationwide SME support delivery

The Task

A unified institutional framework: from start-up to scale.

Sri Lanka’s SMEs were receiving support from several government agencies simultaneously. But the support was fragmented, low-intensity, and disconnected from any growth pathway. Training programmes had high drop-out rates and no unified system to track SME journeys or hold institutions accountable for results.

The mandate: design a cohesive, national-level institutional framework that could move SMEs from survival to scale, and drive broader industrial transformation in the process.

The Approach

Four steps. Designed to create markets from the ground up.

Step 01

SME diagnostics

A comprehensive diagnostic of Sri Lanka’s enterprise ecosystem, mapping where support was duplicated, where firms were falling through the gaps, and where accountability was weakest.

Step 02

Stakeholder deep-dive

Consultations with public institutions, private sector actors, and SME stakeholders to address key questions:

  • How can SMEs upgrade productivity and adopt technology?

  • How can firms transition into export-ready businesses?

  • How can government support be sequenced across the enterprise lifecycle?

Step 03

An Integrated Institutional Model

A unified institutional model built around a single-window interface with a shared enterprise database that offers lifecycle-based support from start-up to scale and outcome-based performance metrics. The model aligns innovation, finance, skills, and market access reducing duplication, and improving enterprise outcomes.

Step 04

Reframing results around outcomes

The engagement shifted focus from programme delivery to measurable outcomes: productivity gains, export readiness, and firm growth.

The Analysis

The redesign revealed that the institutional framework needs to evolve around the needs of the SMEs.

Enterprises often struggle to navigate a fragmented landscape of institutions, schemes, and services that operate independently of one another. While training, funding, innovation support, and market access programmes exist, they are rarely designed around the actual journey of an enterprise.

The most effective SME ecosystems are built around lifecycle support, from start-up and incubation through to scale-up and market expansion, all while integrating innovation, skills development, finance, and market access within a single framework. Embedding inclusion, innovation, and industry alignment from the outset, rather than layering them later, was essential to translating ecosystem assets into sustained startup growth, investment, and social impact.

The outcome

A national blueprint that puts SMEs at the centre of industrial transformation.

Unified national authority

A single coordinating body, integrating three national institutions, to align policies, institutions, and resources around SME outcomes.

Single-window SME interface

A unified access point for government support across the enterprise lifecycle from start-up to scale and global value chain integration.

Outcome-based performance system

Metrics tied to productivity gains, export competitiveness, and firm growth, replacing activity-based reporting with measurable SME transformation targets.

25 district-level transformation hubs

Designed for nationwide delivery, bringing enterprise support directly to firms rather than requiring firms to navigate a fragmented system.

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