IDB to oversee functions of NEDA and SMED to develop SMEs

By Shannine Daniel

The functions of the Industrial Development Board (IDB), National Enterprise Development Authority (NEDA) and Small and Medium Enterprise Development Division (SMED) would be consolidated, under the new budget proposals. 

The IDB would oversee the functions. 

This was proposed by President Anura Kumara Dissanayake yesterday, during the second hearing of the Budget Speech for 2026, in a bid to ensure more efficient coordination in the development of small and medium-sized enterprises (SMEs).

As such, Rs.4 billion would be allocated to the IDB for this purpose, along with Rs.1 billion more for the establishment and development of industrial zones.

The proposed allocation for the development of SMEs was Rs.55.7 billion, of which Rs.53.4 billion would be capital expenditure and Rs.2.3 billion would be for recurrent expenditure. 

In a bid to improve access to finance, a new loan scheme was also initiated through the Small and Medium Enterprise Development Loan Scheme, with an allocation of Rs.7.7 billion. New loans up to Rs.50 million would be provided at concessional interest rates through local banks. This programme would also target micro-enterprises through innovative financing, rating systems and targeted credit lines.

According to Dissanayake, SMEs contributed more than 52 percent of the country’s GDP and employed nearly half of the total workforce. 

Dissanayake also highlighted the development of SMEs through the Enhancing Small and Medium-sized Enterprises Finance Project, for which Rs.5.9 billion would be allocated as well as the Agriculture Value Chain Financing and Commercialisation Sector Development Project, for which Rs.6.2 billion had been allocated. 

The Enhancing SMEs Finance Project would target all sectors except trading, leasing and renting businesses to provide access for investments, working capital and combined loans. The loans provided would be capped at Rs.50 million and the project would be implemented through 13 licensed state and private banks. 

The Agriculture Value Chain Financing and Commercialisation Sector Development Project would target SMEs, cooperatives and agri-start-ups engaged in agriculture value chains.  

Moreover, by developing auxiliary zones as service zones, there is potential to improve the efficiency of the main investment zones, expand the economic benefits at provincial level and integrate SMEs into the value chains, Dissanayake stressed. 

This in turn would create new opportunities for SMEs and improve labour mobility, he added. 

Rs.2 billion had already been allocated for this purpose and Dissanayake proposed the allocation of a further Rs.1 billion.