## MSME Financing: Systemic Reforms Critical for Investability 📈

The UNDP and industry experts at the Lanka Impact Investment Summit emphasized that Sri Lanka’s financing gap is a structural issue of "enterprise readiness" rather than a lack of liquidity. Following the twin shocks of the 2022 crisis and Cyclone Ditwah, shifting from recovery to institutional investability is now a national priority. • Economic Impact & Vulnerability MSMEs account for 2/3 of Sri Lanka's employment and over 50% of GDP. Recent RAPIDA assessments show 93% of affected communities reported livelihood losses post-cyclone. 40% of cyclone debris originated from unauthorized structures, highlighting a critical lack of regulatory compliance. • Barriers to Capital Readiness Governance & Transparency: Many firms lack audited statements, tax compliance, and basic cash-flow visibility. Financial Discipline: Experts warned that taking on debt without structured systems leads to collapse rather than growth. Trust Deficit: Entrepreneurs often mistrust equity investors, fearing loss of control, and prefer informal debt. • Strategic Outlook Global impact investment assets reached US$ 1.571 Trillion in 2024, growing at a 21% CAGR. To tap into this, MSMEs must focus on four pillars: governance, financial discipline, data reporting, and standards. The UNDP is exploring a support package combining risk guarantees with capacity building to "crowd in" private capital.