Sri Lanka’s ambition to become a competitive regional investment destination is being undermined by an economic weakness that receives considerably less attention than foreign exchange reserves, debt restructuring and foreign direct investment targets: the persistent failure to bring a substantial proportion of the country’s working-age population into productive employment.
President’s Special Envoy for Foreign Direct Investment and Western Province Governor Hanif Yusoof has brought this contradiction into focus, pointing out that only around one-third of working-age women participate in Sri Lanka’s labour force. His remarks at the Orange Economy Summit 2026 in Colombo expose a development challenge that goes beyond social inclusion and directly affects national productivity, household incomes and the country’s ability to compete internationally.
While successive governments have pursued foreign investment to stimulate economic growth, the domestic workforce remains an underutilised economic asset. The contradiction is particularly significant when Sri Lanka is attempting to expand exports, develop technology-driven industries and attract investment into emerging sectors.
The economic consequences extend across households and businesses. When women are excluded from employment and entrepreneurship, families lose potential income, businesses lose access to skilled workers and the national economy sacrifices productive capacity.
The problem cannot be resolved simply by encouraging women to seek employment. Structural obstacles, including inadequate childcare arrangements, workplace discrimination, transport difficulties, limited access to professional training and restricted financing, must also be addressed.
Yusoof’s argument that people without opportunities should not be mistaken for people without potential is particularly relevant to rural entrepreneurs and small-business owners. Many enterprises possess commercially promising products and services but lack the financial resources, digital infrastructure and market connections necessary to expand.
Small and medium-sized enterprises face additional difficulties when attempting to obtain bank financing. Conventional lending requirements, collateral obligations and limited access to investment networks frequently restrict businesses that could otherwise develop into exporters.
This raises questions about whether Sri Lanka’s financial system is sufficiently equipped to support an inclusive investment strategy.
Yusoof has suggested linking impact investment with institutions such as the Colombo Stock Exchange, creating opportunities for international investors to finance enterprises that combine commercial returns with measurable social benefits.
However, translating this concept into practical financing arrangements will require credible project assessments, transparent reporting, appropriate investor safeguards and mechanisms to ensure that smaller enterprises can participate.
The Government must also examine whether its education and vocational training systems adequately prepare women and young people for employment in technology, tourism, agriculture, creative industries and modern services.
Digital connectivity is another critical requirement. Rural businesses cannot compete effectively in international markets without reliable internet access, digital payment systems, logistics networks and the ability to market products globally.
Climate vulnerability further complicates the challenge. Cyclone Ditwah demonstrated that years of economic progress can be threatened by disasters, making climate-resilient infrastructure and sustainable enterprise development essential components of investment policy.
The Government’s proposed five-year measurement of success should therefore extend beyond the number of investment agreements signed. Female employment, access to enterprise finance, rural business expansion, export participation and quality job creation require measurable targets and regular public reporting.
Sri Lanka cannot build an inclusive economy while leaving a substantial part of its human capital economically underutilised. The real investment challenge is not simply attracting more money from overseas, but creating institutions and opportunities that allow the country’s own people to become productive participants in national development.
