• ECCSL Project Lead for Inclusive Business Practices William Baxter on knowledge sharing with and among Sri Lankan entrepreneurs

Sustainable and inclusive principles, which encompass environmental conservation and social duty, increasingly define business practices and operations on both a local and global scale. These principles are very much alive amongst micro, small, and medium enterprises (MSMEs) in Sri Lanka, despite a lack of formal knowledge on these concepts.

This was highlighted at an event recently held at Good Market Colombo. Titled ‘Inclusive and Sustainable Business: Knowledge Sharing for MSMEs’, the event was organised by Good Market, European Chamber of Commerce of Sri Lanka (ECCSL), and Strengthening Social Cohesion and Peace (SCOPE).

To learn more about it, The Daily Morning spoke to ECCSL Project Lead for Inclusive Business Practices William Baxter. The project, fuelled by the combined efforts of ECCSL and SCOPE, and funded by the European Union and the German Federal Foreign Office, seeks to promote inclusive and sustainable business (ISB) practices in the Sri Lankan private sector.

The event, held on 5 July at Good Market and graced by three of its vendors as speakers for the day, opened up the conversation on balancing commercial objectives and sustainable goals among MSMEs.

Knowledge sharing and connections

The event came as the fifth installation in a series of successful knowledge sharing platforms which had so far featured larger corporations, given that these sorts of businesses primarily form the ECCSL’s member base. The shift of the focus to MSMEs signalled recognition of their role as “the backbone of the Sri Lankan economy”, as put by Baxter.

According to the Department of Census and Statistics, MSMEs currently contribute to more than 50% of Sri Lanka’s GDP and employ about 45% of the workforce, highlighting their essential position in the country’s economic future. Baxter explained how these smaller businesses, often being local and community-based and driven by social mission, are inherently sustainable and inclusive.

He elaborated: “Even if, say, there’s an owner of an MSME and they have never heard of the concept of inclusivity and sustainability, when you look at their business, it often is inclusive and sustainable in many ways. Just because you haven’t heard of the concept, and whether or not you’ve heard of the words in English, Sinhala, or Tamil, you don’t need to know what those words mean to practise inclusivity and sustainability. So often we see that people just intrinsically operate their business in this way.”

The next step in encouraging MSME prosperity in Sri Lanka, then, was to provide a platform for sharing this rich bank of ISB knowledge amongst themselves. Thereby, the goal of the event was to replicate the networking process of previous events for larger corporations amongst smaller businesses as well. This would aid in building a well-integrated chain of individual MSMEs around the country that can work towards promoting Sri Lanka’s brand name as an ethical producer.

MSMEs: local context and challenges 

There are, however, barriers to MSMEs flourishing in the current Sri Lankan socio-political and economic landscape. Baxter identified several challenges to MSMEs not only in Sri Lanka, but around the world, namely: Financial literacy and access to capital.

Amongst the views expressed by speakers at the event, there was an understanding that there is further potential for learning and training in financial literacy amongst MSMEs, especially if the entrepreneur is lacking a background in banking and finance. Moreover, a hurdle that is unique to Sri Lanka in the wake of its 2022 economic crisis is the difficulty for smaller businesses to access capital, what with elevated interest rates.

The inability to invest in further or newer ventures as a result of these challenges is significant not only in meeting commercial objectives and economic goals, but also in advancing MSMEs’ previously discussed social services.

According to Baxter, Sri Lankan MSMEs also suffer from the bubble that has been protecting the domestic market from the international market. “That protection for small Sri Lankan businesses in the short term might be beneficial, but in the long term, when businesses don’t face competition, they don’t innovate.”

This disincentive created becomes harmful to what has been identified as MSMEs’ end goal: Branching beyond the domestic market and exporting their products. This was put concisely by Baxter: “I think with the economic crisis there is now a push amongst many people to open the economy up more. There will be short-term costs, but I think it’s a necessary change. When we speak to the small businesses as well, almost all of them say their end goal is to export.”

He also recognised how, being a small country, the scope for the growth of Sri Lankan businesses depends on healthy interaction with the international stage. “There’s less of a push to find the things that Sri Lankan businesses really excel at on the international stage because you do have that protection from international markets, that you can just serve the domestic market and serve Sri Lankan consumers. But I think because Sri Lanka is a relatively small to medium sized country, if you only serve that domestic market, there’s not a lot of room for businesses to grow.”

These necessary changes would raise the entire country’s business profile, bringing in greater benefits even on a domestic scale.

Thus, with a more conducive trade environment in place, Baxter identified how, combined with initiatives such as the ECCSL’s knowledge sharing event, MSMEs connected with one another can focus on building Sri Lanka’s reputation as an ethical export hub. “Across all of Sri Lanka, all that knowledge and experience is already here. It’s just about sharing it between each other and the idea there is that it makes more sense to share your successes and tricks and strategies as opposed to keeping secrets and being overly competitive. We think that as Sri Lanka opens itself up more and more to international markets and competes on the global stage, it actually makes sense to share your knowledge, share your experience.”

A reputation for sustainability

It can be said that the knowledge sharing event on inclusive and sustainable business practices for MSMEs aligned with the overarching long-term goal of the ECCSL, which, according to Baxter is for Sri Lanka to develop a reputation or a national business brand centred on inclusive and sustainable business. This, he said, was key to Sri Lanka’s progress and economic recovery.

“If we look at different industries, it’s important that Sri Lanka is known for quality. In certain industries, say the apparel industry, it’s very difficult to compete on price with other countries or industries,” Baxter pointed out, adding that he was of the opinion that Sri Lanka’s only option was to go for quality. “Don’t compete on price. If you’re known for quality and for being ethical, inclusive, and sustainable, then buyers will pay more for your products,” he explained.

“What we want to see in five, 10, or 20 years’ time is that internationally, when people think of the Sri Lankan business brand – whether it’s big businesses or MSMEs – it is known for inclusivity and sustainability, which is a win-win for all those different businesses,” Baxter added.

Moreover, in the spirit of sustainability, another line of action MSMEs and even larger businesses can consider, according to Baxter, is pivoting export focus closer to home. This takes into consideration logistical concerns such as emissions and the unnecessary costs of long-distance shipping. Such decisions would also present spillover benefits in terms of greater trade opportunities with rising economies within the region, such as India.

Therefore, the most important takeaway for MSMEs from ECCSL’s event as well as the insights brought to the table by Baxter is that a shared bank of ISB knowledge aligns business objectives along all dimensions of the economic, social, and environmental.

There is also emphasis on moving beyond the jargon and technicalities of development agendas to focus on action and implementation, ensuring that businesses are given the space to expand on the invaluable ISB knowledge they already possess. Thus, whether it is ISB practices or corporate social responsibility (CSR), there appears to be little distinction in the actual substance of what they stand for, and all terms and acronyms lead to the same message: That it is high time Sri Lanka and its rising entrepreneurial landscape capitalise on the knowledge it lays claim to. 

Baxter praised Sri Lankan MSMEs: “You can talk about these different terms with Sri Lankan businesses and maybe they’ve never heard about the term before, but they know what it is. When you explain it to them, they have plenty of examples of implementing inclusivity and sustainability. It’s more important to talk about the actual actions and the actual activities and that’s why with these events as well, we tried to focus on concrete examples from real businesses. Across all the businesses in the room, there’s so much experience and they know what inclusivity and sustainability are. So, all we need to do is give them the space to share and unlock that knowledge for everybody in the room.”

It is thus clear that what is key is helping Sri Lankan entrepreneurs rise in the economic landscape, bolstered by the principles of inclusivity and sustainability, in a way that makes sense to them.

An opportunity for MSMEs

The Daily Morning had the opportunity to connect with participants of ‘Inclusive and Sustainable Business: Knowledge Sharing for MSMEs’ to gain a better understanding of the effectiveness of the event.

“The inclusivity discussion held at the Good Market was a wonderful opportunity for our small business to gain the exposure we need. I started my soap-making venture as a side hustle, but over time, it grew into a small business. I’m humbly proud to now be able to provide both direct and indirect employment opportunities to women in my own community,” Ravihari from Mineral Earth Soapery said.

Ravihari added that during the discussion, she had the chance to share stories about her journey and the work done by Mineral Earth Soapery. She went on to say that ECCSL Project Lead for Inclusive Business Practices William Baxter emphasised the importance of sharing their stories with the wider community. Ravihari said the discussion was a great platform to do just that. “I’m truly grateful for the opportunities Good Market has brought to my business,” she added.

Meanwhile, Wild Collection Organic said: “The event was highly successful. During the panel discussion, many important points were addressed. There was a discussion on the actions that the government can take to support the establishment of small and medium-sized enterprises. Additionally, entrepreneurs shared their experiences and clearly explained the journey of their success.”