Findings of the Survey
to assess the impact of the
economic crisis on MSMEs in Sri
Lanka
Department Of Census & Statistics(DCS)
Ministry of Finance, Economic Stabilization and National Planning
Introduction
▪ This survey of Micro, Small and Medium Enterprises (MSMEs) is an institutional survey conducted by the
Department of Census and Statistics (DCS) to gauge the impact of the crises faced by the country.
▪ This report presents the findings of a survey conducted at the request of the Presidential Secretariat to
assess the impact of the economic crisis on small and medium enterprises engaged in the non-agricultural
sector in Sri Lanka.
▪ The survey findings revealed that 79.8% of the MSMEs operating in 2018 will remain operational at the end
of 2022. 20.2% of businesses closed permanently or temporarily, 8.3% of closures were reported due to
economic crisis and 11.9% were due to reasons other than economic crisis. The number of permanently
closed businesses is more than three times that of temporarily closed businesses. The highest percentage of
closures was recorded for 2020 with 33.4%. Of the total businesses that closed during 2019-2022, 41.1%
reported an economic crisis as the reason for closing their businesses, indicating that 58.9% of the closures
were not due to an economic crisis.
▪ Furthermore, 45.3% of closed businesses reported the Covid pandemic as a reason for closure, indicating
that 54.7% of closures were not due to the Covid pandemic.
▪ A sectoral comparison of closed businesses reveals that only 78.8% of businesses are currently active and
the micro sector is the most affected. Small businesses were least affected with 91.7% of businesses
operating. Also, micro scale businesses engaged in all three categories of industry, trade and services are
equally affected. In small scale business, industrial sector units are most affected and in medium scale it is
service sector.
▪ Small and medium employment has fluctuated over the years since 2018. The decline was high in 2020 and
2021 and a slight increase was noted in 2022.
• Coverage : All the Micro, Small and Medium Enterprises /
Businesses (MSME) involved in non-agricultural economic
activities, which were active during 2018.
• Reference Period: 2018 – 2022
• Sampling Method: Stratified random sampling
• Strata : Economic activity, MSME
• Sample Size: 7,813 business establishments
•
Methodology Industry and construction sector contribution to the sample
Micro : 1630
Small: 901
Medium: 482
• Data collection
₋ By District Statistical Divisions, used advanced
Communication technology to monitor island-wide
(Dashboard)
₋ Editing through dashboards and emails
Methodology
Definition Used:
The definition derived from the Economic Census 2013/14 using
number of persons engaged
Sector Micro Small Medium
Industry and
Less than 5 5-24 25-199
Construction
Trade Less than 4 4-14 15-34
Services Less than 5 5-15 16-74
Establishments
closed after
2018
Status of MSMEs 2018-2022
Permanently
No. of MSMEs closed
Present Status % 15.7%
(000’)
Temporarily
Active 1,037.1 79.8 closed
4.5%
Temporarily closed 59.1 4.5
Permanently closed 204.1 15.7
Active
Total 1,300.3 100.0 79.8%
It includes all sectors of trade, services, industry and construction and depicts the closure of those businesses in the 5 years
from 2018 to 2022.
State of Micro, Small and Medium
Enterprises 2018 - 2022
Industry and Construction Sector
Present Status %
Active 79.6
Temporarily closed 7.8
Permanently closed 12.6
Total 100.0
This includes only the industry and construction sectors and depicts the closure of those businesses over the 5 years from
2018 to 2022.
Permanently or temporarily closed
Year of Closure %
businesses by year of closure
2019 9.9
• Percentages were calculated with 2020 33.4
respect to the total number of
closed businesses during 2019 – 2021 27.4
Closing year
2022was not reported in several no. of closed businesses. Hence the percentages in table 3 were calculated out of the
2022
total number of businesses those closing years were reported 29.3
• The highest number of closures
occurred between 2019-2022 was 2019 to 2022 100.0
reported for 2020.
Note: Closing year was not reported in several no. of closed
• The lowest number of closures was
businesses. Hence the percentages in the table were
reported for 2019. calculated out of the total number of businesses those
closing years were reported
Status of MSMEs
by the reported reason for the closure
11.9 %
Active
8.3 %
Closed due to economic
crisis
Closed due to reasons
other than economic
79.8 % crisis
8.3% of units have reported economic crisis as a reason for
the closure of their businesses
Status of MSMEs – Industry and Construction
by the reported reason for the closure
11.1 %
Active
9.2 %
Closed due to economic
crisis
Closed due to reasons
other than economic
79.6 % crisis
9.2% of units have reported economic crisis as a reason for the closure of their
businesses
Status of
Businesses at
2022
Status of businesses by scale of businesses - 2022
• The highest percentage of closed Micro Small Medium
businesses due to the economic crisis Major % % % % % %
was recorded in the industrial sector economic Active Closed: Close: Closed: Close: Active Closed: Close:
Active
sector Economic Covid Economic Covid Economic Covid
compared to the trade and service % Crisis % %
or Crisis or Crisis or
sector. Other Other Other
Industry 78.5 9.8 11.7 87.1 5.6 7.3 92.7 1.5 5.7
• Service activities recorded the lowest
percentage of active businesses (77.2%) Trade 79.8 9.1 11.0 96.6 0.9 2.5 97.1 1.1 1.7
and the highest percentage of closed Services 78.4 8.2 13.4 90.0 2.3 7.7 77.2 1.2 21.6
businesses (22.8%).
Total 78.8 8.8 12.4 91.7 2.7 5.6 86.8 1.3 11.9
Distribution of closed businesses due to 10%
Percentage of Businesses
economic crisis by the main economic
sector and scale of businesses 8%
Industry
• More than 8% of micro-enterprises have 6% Trade
been closed due to the economic crisis
of all three economic sectors while it is Services
4%
less than 2% for Medium scale
enterprises.
2%
• The lowest percentage of closed due to
economic crisis was reported in small 0%
sector trade businesses and the Micro Small Medium
percentage is less than 2%.
MSME Sector
Industry Sector and Construction Sector
Status of 2022
Economic Activity Active Closures due to Closures for other reasons
economic crisis
Mining and quarrying 55.8 24.6 19.6
Manufacture of food products 77.5 11.9 10.6
Manufacture of beverages 85.7 4.6 9.7
Manufacture of textiles 74.7 4.1 21.2
Manufacture of wearing apparel 86.5 5.9 7.6
Manufacture of leather and related products 76.5 1.8 21.7
Manufacture of wood and of products of
wood and cork, except furniture; manufacture 88.0 6.0 6.1
of articles of straw and plaiting
Manufacture of paper and paper products 75.7 0.4 23.9
Printing and reproduction of recorded media 80.5 6.5 12.9
Manufacture of chemicals and chemical
82.9 12.2 4.9
products
Economic Activity Active Closures due to economic Closures for other
crisis reasons
Manufacture of other non- metallic
68.3 15.2 16.5
mineral products
Manufacture of fabricated metal
products (except machinery and 79.2 10.2 10.6
equipment)
Manufacture of furniture 89.7 2.2 8.1
Other manufacturing 86.0 8.5 5.5
Repair and installation of machinery and
95.2 1.3 3.5
equipment
Other Industry (water supply, sewerage,
89.8 2.7 7.5
waste management etc.)
Construction 71.3 13.0 15.7
More than 20% i.e. more than 1/5 of the above are covered fields during 2018-2022. It is significant quantitative
analysis.
The above industry classification is classified according to the Sri Lanka Standard Industry Classification (revision iv)
prepared by the Census and Statistics Department. Among the businesses included in the sample, all the businesses related
to the industry and construction sector are included in the above mentioned sub-sectors.
Employment
Trends
• Steady decrease in the total number of employees from 2018 to
2020 with a slight increase of 0.1% in 2021. But it has not reached
the level of 2018
Number of persons engaged • The number of employees in Small and Medium sectors decreased
up to 2020 and witnessed an increase from 2021 onwards
by scale of business and %
change during 2018 – 2022 • The micro sector is the least affected experiencing only slight
fluctuations in employment throughout the years
• There has been a steady decrease in the total number of
employees in the industry sector from 2018 to 2021 with a slight
Number of persons increase in 2022.
engaged by industry sector • The number of employees in the Trade and Services sectors
during 2018 – 2022 decreased up to 2020 and witnessed an increase from 2021
onwards
Facing the
challenges
Credit obtained sources by scale – 2022 (%)
Scale
Sources
Micro Small Medium
Bank 67.4 79.2 91.0
Other financial institution 39.8 29.9 25.9
Money lender 13.4 14.8 8.7 39.8%
Other 2.8 1.7 1.3 29.9%
25.9%
Credit obtained from other
financial institutions by scale Micro Small Medium
Scale of Business
Strategies
Industry Trade Services
Debt restructuring by financial
15.4 18.6 20.2
institutions
Increasing the solvency of the
15.1 15.4 9.7
business by limiting its expenses
Obtaining new loan or other financial
15.5 18.0 13.1
facility
Disbursement of company assets,
utilization of savings/fixed deposits of 10.9 12.3 8.0
the business
Strategies adapted for
loan settlement and by Liquidating personal assets,
scale – 2022 (%) withdrawing FDs, pawning or 17.0 18.1 15.3
managing with personal resources
No action taken 3.7 2.3 4.6
9.2%
No action taken on
loan settlement–
2022 (%)
• 9 in 100 micro sector enterprises have
done nothing on loan settlement
2.7%
• That amount (9.2%) is remarkably
higher than other scale of businesses 1.1%
• A proper system for enhancing
financial literacy among micro-scale Micro Small Medium
enterprises is needed Scale of Business
Scale
Strategies
Strategies adopted to Micro Small Medium
mitigate the financial Limiting business expenses 46.0 62.4 66.1
difficulties – 2022 (%) Utilization of savings/fixed deposits of the
27.1 40.9 36.9
business
• Enterprises in all three Liquidating personal assets, withdrawing
scales limited their FDs, pawning or managing with personal 33.6 38.9 34.5
expenses resources
Obtaining service of money lenders 29.1 29.2 19.0
• Comparatively greater Limiting the activities by
number of micro and stopping/reducing the import/trade of 15.2 21.4 16.9
small-scale enterprises specific items or services
obtained services from
Disbursement of company asset 10.9 17.0 13.9
money lenders than those
of Medium scale No action taken 15.3 5.1 11.6
15.3%
No action taken for
mitigating financial
11.6%
difficulties – 2022 (%)
• 15 out of 100 micro sector
enterprises have done nothing to 5.1%
mitigate financial difficulties
• That amount is considerably high in
Medium scale enterprises too as they
have enough capacity to face it.
Micro Small Medium
• A proper system for enhancing Scale of Business
financial literacy among micro-scale
enterprises is needed
Measures taken to manage the impact - 2022
Future plans (%)
Scale
Plan
Micro Small Medium
Continuation of current business 75.4 77.3 73.3
Expanding the current business 11.4 12.8 20.7
Starting another business while carrying on the current business 6.4 4.7 3.2
Changing the current business to another economic/business activity 1.6 0.7 0.2
Contraction of business activities (reducing or curtailing
1.0 1.8 1.7
production/laying off employees etc.)
Selling or leasing the business 1.3 1.3 0.3
Closing the business 2.9 1.3 0.6
Total 100.0 100.0 100.0
Future plans (%)
Plan
Industry Trade Services
Continuation of current business 73.6 73.5 77.5
Expanding the current business 16.4 14.9 7.8
Starting another business while carrying on the current business 4.8 4.0 8.1
Changing the current business to another economic/business activity 0.7 2.0 1.5
Contraction of business activities (reducing or curtailing
1.6 1.7 0.5
production/laying off employees etc.)
Selling or leasing the business 0.7 0.9 1.7
Closing the business 2.2 2.9 2.9
Total 100.0 100.0 100.0
Source...
❖ http://www.statistics.gov.lk/Industry/StaticalInformation/OtherTablesReports/MSMEs_Report
Special thanks..!
❖ Department of Census and Statistics
❖ Ministry of Industries
