Lack of Consultation Hampers MSME Recovery after Cyclone Ditwah

The aftermath of Cyclone Ditwah has laid bare the fragile foundations of Sri Lanka’s MSME recovery framework, raising serious questions about the government’s approach to disaster management in the industrial sector. While swift announcements were made to register affected enterprises and offer limited financial assistance, the absence of expert consultancy and consistent stakeholder engagement has created new challenges for already struggling businesses.

MSMEs form the backbone of regional economies, particularly in rural and semi-urban districts where alternative employment opportunities are scarce. According to industry estimates, nearly one in three MSMEs in cyclone-affected areas has experienced operational paralysis, either due to destroyed infrastructure, damaged machinery, or disrupted supply chains. Yet, policy responses have largely been designed at the central level, with minimal input from ground-level practitioners.

The SMEs Association has urged authorities to extend the industry registration deadline to January 16, 2026, citing delays in official assessments. District-level administrators themselves have acknowledged that data is still being compiled, underscoring  disconnect between policy deadlines and administrative realities. Despite this, the original timeline was allowed to lapse, excluding many genuine claimants from relief eligibility.

Furthermore, the uniform compensation model adopted by the government has drawn criticism for ignoring sectoral diversity. A micro-enterprise employing five workers faces vastly different recovery costs compared to a medium-scale manufacturing plant employing 50 people. However, both are offered the same Rs. 200,000 assistance, a figure that fails to address even short-term working capital needs.

Industry analysts argue that this policy misalignment stems from the lack of structured consultations with economists, disaster management specialists, and MSME development professionals. Countries that have successfully navigated post-disaster industrial recovery—such as Bangladesh and the Philippines have relied on public-private task forces and phased recovery plans tailored to enterprise size and sector.

Without concessional financing, insurance-backed recovery mechanisms, and infrastructure rehabilitation support, the MSME sector risks prolonged stagnation. Calls are growing for interest-subsidized loan schemes, technology replacement grants, and coordinated rebuilding programs aligned with regional development priorities.

Cyclone Ditwah should have been a catalyst for reforming MSME disaster-response policy. Instead, it has highlighted systemic weaknesses in governance, consultation, and execution. Unless these gaps are urgently addressed, the long-term cost to employment, exports, and local entrepreneurship may far exceed the immediate damage caused by the storm