The Effects of Tsunami on Small and Medium Enterprises (SME's) Case in Hambantota District

Abstract

South Asia and a part of Africa was struck by a Tsunami, a long high sea wave caused by underwaterearthquake, on the 26 December 2004. In Sri Lanka costal areas around country were badly affectedand entire social, economic system in those areas were disintegrated and had to depend on outsidesupport. Those areas were less developed and income sources were intertwined with sea. In theabsence of large industries economic activities were focused on Small and Medium scale businesses(SMEs) inmost of these areas. This research made an effort to identify the rebuilding achievementsofSME's in post Tsunami period in both social and economic contexts.

Harnbanthota was selected for the study and 25 SMEsl were selected randomly in Rathupasgodalletown and Mirijjavila. Cluster of SME's randomly selected included traders, manufactures, fishing,representing services. It was a quantitative study and empirical statistics were studied to identify andinterpret objective of the study. Structured questionnaire was used and comprised before and afterTsunami positions. In all most all cases partner or proprietor was interviewed, researches madeinterpretative approach in analyzing the responses and arriving conclusions.

The study has found that SME's had started in small way but do not have a strength to recommenceon their own to the capacity they were hence look for financial assistance. Lack of accepted collateralhad been a major issue as the banks financial services maintained averse approach and only 8% hadreceived financial assistance. Self-employment and SME's had offered income source second toGovernment employment. Non-operations ofSME's created a vacuum for employment opportunities/income sources. 99% of employed were from surrounding areas thus made economic instability tofamilies. Authorities had considered SME's as mere business entities and ignored the fact they play insocial and economic aspect. SME's nor the society was ever prepared for a disaster in a suchmagnitude. They did not have any plan for risk evasion or business continuity. Only marginal numberhad insurance although one third had liability for loans/leases.