“I started my business in 2013 and applied for a loan of Rs. 250,000 in 2015, with help from the Monaragala District Small Business Development Unit. I had a good credit report and submitted all the required documents, including government guarantees. However, the state bank turned down my loan. The officer who visited my business didn’t think I would be able to repay the loan and doubted that a business selling baby products could succeed.”

This story is not unique. Across Sri Lanka, women-owned businesses are often confronted with invisible yet entrenched barriers to accessing financial capital when setting up and growing their businesses. To deepen understanding of these barriers, UNDP conducted research, drawing from three studies on women’s access to finance with funding from Chrysalis. It confirmed our assumptions that these invisible barriers are rooted in deep-seated norms, institutional bias, and structural inequalities. In fact, findings from UNDP’s Global Gender Norms Index (2023) complement those of the study done by Chrysalis; two of five people believe that men should have more of a right to do a job than women and that men make better business executives than women.

Negative social norms and socio-cultural constraints are further compounded by gender-blind policies and institutional structures, which in turn leave women out of the country’s formal economy. Gender inequality in the labour market undermines overall economic growth and development, impacting not only individual women but also men and society as a whole.

While women make 52% (Department of Census and Statistics, 2021) of Sri Lanka’s population, they continue to be underrepresented and underserved across the economy. While the country has achieved near gender parity in adult literacy and boasts a higher life expectancy for women [(80 years for women vs. 74 for men, (World Health Organisation, 2021)], these gains have not translated into economic participation. Women’s labour force participation remains low at 32.1%, compared to 70.5% for men (Department of Census and Statistics, 2021).

The finance gap: Why the system isn’t serving women-owned businesses

The studies have identified structural issues and pervasive invisible barriers that stifle women’s access to finance. Women are often perceived as high-risk borrowers and face stricter collateral rules, rigid loan structures, limited outreach and networking – all factors converge to keep women at the periphery of the financial system. Many remain confined to the informal sector, with little opportunity to scale up or contribute to formal value chains. 

At UNDP, we believe that access to finance for women-owned businesses is central to Sri Lanka’s inclusive post-crisis recovery, growth and long-term human development. This conviction underpins our work on women's economic empowerment and financial literacy.

In our development approach, we have mainstreamed financial literacy and engaged directly with women-owned businesses, financial institutions, and policymakers to unpack constraints on both supply and demand sides. We have seen that meaningful reform is entirely within reach if the system chooses to prioritise it.

From awareness to action: What women entrepreneurs really need

On the supply side, the assumption that women are riskier borrowers must be removed. The real disconnect lies in products that do not reflect the realities of women-owned businesses, especially those in the informal sector. Loan amounts are often insufficient to support growth. Repayment schedules are inflexible. And documentation requirements are out of step with what women can realistically provide.

Many institutions also lack incentives and the capacity to serve women-owned businesses effectively. Client-facing staff are rarely trained to recognise gendered needs. Product teams are not inclusive, and unconscious bias remains unaddressed. These are not insurmountable issues, but they require active leadership and deliberate, concerted action towards system change.

On the demand side, many women continue to lack awareness of financial options or the confidence to responsibly engage with them. That is why we partnered with the Central Bank of Sri Lanka to implement the National Financial Inclusion Strategy (2021) and launched the financial literacy modules in July 2025, after pilot testing the modules with women entrepreneurs connected to Chrysalis. 

Financial and digital literacy are critical, but not enough on their own. Access to knowledge must be complemented by a comprehensive set of support, including access to finance, entrepreneurial skills and market access.

Women need safe spaces, support networks, role models, and business mentors. Finance is not just about money; it’s about agency, inclusion, and control over one’s future.

Rewriting the rules: How inclusive finance can power national growth

Financial institutions have an opportunity to lead by designing products that truly meet the needs of women-owned businesses. This includes offering loan terms that reflect real business realities, such as flexible collateral options and repayment schedules that account for variable income flows.

Second, we can strengthen decision-making by investing in gender-disaggregated data. When we understand who is being reached and who is still being left behind, we can design more effective, inclusive programmes that deliver real impact.

Third, we can unlock the power of last-mile networks. Regional and grassroots actors, whether public, private, or donor-funded, can serve as crucial connectors between women entrepreneurs and the financial services they need, especially when they are well-resourced and integrated into the broader ecosystem. 

Finally, we can transform how financial literacy is delivered. When education is localised, sustained, and built on trust, it empowers women not just with knowledge, but with confidence and agency. And financial literacy, or financial inclusion, must be mainstreamed in the national approach to economic recovery. The recently launched Prajashakthi programme, which emphasises community-led development initiatives, presents an excellent opportunity to have financial inclusion at the heart of rural development efforts. 

A fairer future begins now: Women’s finance is everyone’s business

At UNDP, gender equality and women’s empowerment have been at the heart of our mission for decades. As we mark 60 years globally and 58 years in Sri Lanka, we know that true progress requires women’s full economic participation. Ensuring access to finance for women-owned MSMEs is essential to building a fairer, more resilient economy. The barriers are clear, the solutions within reach, and the time to act is now.