📈 SL Faces US$ 7–10 Bn Annual SDG Funding Gap; First Impact Fund Launched

A new report by the Lanka Impact Investing Network (LIIN) highlights critical structural financing gaps needed to achieve Sustainable Development Goals (SDGs): • Investment Gap: An estimated annual investment demand of US$ 7–10 Bn is required for sustainable development. • Infrastructure: US$ 3–5 Bn annually. • Climate Finance: US$ 2–3 Bn annually. • Women-led enterprises: Face a US$ 695 M financing shortfall. • SME Constraint: SMEs, which contribute 52% to GDP, remain severely underfinanced. Access to credit is constrained by high interest rates (10–27%) and demanding collateral requirements. The number of active SMEs has declined from 1.3 M (2018) to 1.04 M (2024). • Banking Sector: Institutional lending for Environmental, Social, and Governance (ESG) portfolios by commercial banks is currently less than 2% of total lending. • New Initiative: LIIN is launching Sri Lanka's first Impact Enterprise Fund, initially capitalised at US$ 5 M, to specifically target the financing gaps for SMEs and startups. • Key Feature: The Fund includes a first-loss guarantee covering up to 20% of potential defaults, aimed at boosting investor confidence. • Target Sectors: Investments (US$ 50k–100k) will target agriculture, tourism, IT, healthcare, and apparel, with deployment expected by mid-2026. The Fund aims to serve as a prototype for future blended finance vehicles and accelerate the evolution of Sri Lanka's capital markets.