LocationsHow Small Businesses in Sri Lanka Are Turning Climate Struggles into Strength
Financing the Future:
April 28, 2025
For Shalika Lakmali, the problem was floods. Every season, heavy rains would wash away her home garden, leaving her with nothing to sell. She had no way to protect her crops—until she learned about greenhouse farming and how climate finance could help her build one. Shalika is now actively exploring her first formal loan application, supported by her local Economic Development Officer (EDO)—a government official trained through the initiative to guide small businesses through the climate finance process.
For Linat Airangani Fernando, it was financial insecurity. When a global virus outbreak forced her to stop pig farming, she relied on microloans from welfare organizations, never thinking a formal bank loan was within reach. Through the project, she learned about SME-friendly financing options and is now preparing her first application to expand her poultry business—something she had never considered before.
For Rita Malani, it was the unpredictability of the weather. As a dried fish producer, she depended on clear, dry days to process her stock. But the rains no longer came when expected, ruining batch after batch. She had never considered that solar-powered drying systems could allow her to produce year-round—or that she could get financing to invest in one. She is now working toward applying for climate finance to invest in modern drying equipment.
Like many in Kalpitiya, they thought these struggles were just the cost of doing business. But through a climate finance training program, they discovered that adaptation was possible—and that financial support existed to help them do it. Since 2023, 88 small businesses in Kalpitiya—those most exposed to climate risks—have received direct support through training and grants. Others are beginning to benefit through awareness sessions and ongoing guidance.
Linat Airangani Fernando, a small-scale farmer in Kalpitiya, feeds her livestock as she prepares to expand her poultry business with support from climate finance training.
Kalpitiya: A Region on the Frontline of Climate Change
Kalpitiya is a coastal region in the Puttalam District of Sri Lanka’s North Western Province. Known for its mangroves, fishing communities, and agriculture, it is home to diverse livelihoods directly tied to natural resources. But climate change is reshaping life here—rising sea levels are salinizing freshwater sources, erratic monsoons are disrupting planting cycles, and warming oceans are driving fish further offshore.
For the many small-scale entrepreneurs who live and work here, these climate pressures are not abstract—they are daily realities affecting their ability to survive and grow.
Shalika Lakmali (right), a home gardener in Kalpitiya, discusses climate finance opportunities with an Economic Development Officer trained under the initiative.
Making Climate Finance Work for Small Business Owners
The climate finance training and grant program, implemented by the Department of Environmental Technology at the Faculty of Technology, University of Colombo, and financed through a grant from UNDP’s Climate Finance Network (CFN), supported by the UK’s Foreign, Commonwealth and Development Office (FCDO), brought together multiple partners to help small entrepreneurs like Shalika, Linat, and Rita access funding for climate adaptation.
Through a combination of in-person sessions, mentorship, and direct engagement with local banks, business owners in Kalpitiya learned how to apply for financial support, navigate SME-friendly loan procedures, and invest in climate-resilient technologies. Before the training, 77 percent of these business owners had never engaged with financial institutions for climate adaptation. Many assumed that loans were out of reach or not intended for businesses like theirs.
A key part of the initiative’s success has been the role of Economic Development Officers (EDOs). These local government officials were trained to act as climate finance advisors and have become a vital support link for women-led SMEs navigating the financial system.
“The training really changed how we work with SMEs. We now have the knowledge to advise them on climate finance options and guide them step by step through the process. Since then, more SMEs have come to us—not just for advice, but ready to take action.”
— N.N. Priyadarshani, Economic Development Officer, Kalpitiya
Building Local Momentum: Awareness, Partnerships, and Innovation
Beyond technical training, the project built a wider network of practical partnerships and community engagement.
In collaboration with the University of Colombo, students and faculty worked directly with SMEs to co-develop simple, actionable business ideas and visual materials to help entrepreneurs understand financing concepts. These efforts culminated in a Climate Finance Exhibition in Kalpitiya, where business owners connected with financial institutions and technology providers, exploring real-world solutions like solar-powered drying systems and rainwater harvesting setups.
Media also played a role. Local journalists received training on how to report on climate finance, resulting in stories published in national newspapers and featured on radio. Meanwhile, a digital outreach campaign launched by university students used platforms like Facebook, LinkedIn, and YouTube to raise awareness in local languages.
“We’ve seen a big change in how our small business owners think. Earlier, they were just trying to get through each day. Now, they’re planning ahead, learning new methods, and even working with banks to grow their businesses.”
— S.M.P. Nandasena, Divisional Secretary, Kalpitiya
“Working directly with SMEs gave our students a rare chance to apply what they were learning in real-world settings—and at the same time, co-create practical solutions with the community. It was a powerful reminder of how much can be achieved through collaboration.”
— Dr. Thakshila N. Dharmapriya, University of Colombo
Importantly, local banks that participated in the program have shown growing interest in offering tailored financial products for SMEs facing climate challenges. Conversations have begun about simplifying processes and making lending more accessible—a promising sign of longer-term systemic change.
Scaling Up: What’s Next?
With local momentum and cross-sector partnerships in place, the project team is now preparing to replicate this success where it's needed most.
There is already a confirmed plan to expand the model to other climate-vulnerable districts, including Jaffna, Hambantota, and Anuradhapura—regions where climate impacts are escalating and financial literacy remains limited. The initiative’s methodology—based on identifying vulnerable businesses, providing targeted training, and linking them with appropriate financial tools—was spotlighted during a national policy forum, where senior government officials, banks, and development partners called for it to be scaled up nationwide.
This endorsement reflects both the model’s success in Kalpitiya and the practical lessons it has yielded: from the importance of building trust with local entrepreneurs, to the need for simplified application processes and multi-lingual outreach. With a team experienced in working across Sri Lanka’s diverse regions and languages, and with strong relationships among government agencies and local banks, the initiative is now well-positioned to extend its impact.
For business owners like Shalika, Linat, and Rita, the future is no longer just about weathering the next crisis. It’s about investing in resilience—and planning for something stronger.
And with the right support, many more across Sri Lanka could do the same.