Startups and local digital services: The elephant in the room

Over 20 years ago, the Sri Lanka Government had a plan via the BOI, to build capacity for ICT professionals who would pass out as graduates to support the software industry. This eventually helped to make our software industry one of the top five foreign exchange earners in the country. Sadly, we seem to have got stuck in this groove and not thought beyond. What lies ahead is what we need to put in place to create a start-up ecosystem that will attract angel investors. It is only then that we can target our digital economy to move towards establishing soonicorns and then on to unicorns.

With Sri Lanka Internet Day 2022 just round the corner, it is time for us to take a closer look at the elephant in the room. Addressing the situations around this large digital pachyderm is better done sooner than later, as it is becoming a huge stumbling block, not just for the digital ecosystem of Sri Lanka but the country at large.

Most of our economic woes could be handled effectively if everyone grasps the concept of startups and local digital service companies and what they can do for our economy. It is unfortunate therefore, that the will to understand this concept is lacking. The reasons for this could be many; key amongst them is the possibility of reluctance amongst people living in an analogue world to think digital. 

While this may be understandable, what would be a matter for concern is whether there is a deliberate attempt to sabotage the digital economy, specifically because of the transparency, accountability and good governance it brings to the equation.  If it is so, this is a huge problem and one that would need to be addressed by someone in authority.

The recent history of badly managing our terrestrial economy is a prime example of this. Because we lacked good governance, foreign organisations today are putting their foot down and asking us to get our house in order before they can lend us any money for our survival. This is even more a reason to ensure that our digital economy gets on track to bring benefits to the country. It also has the promise to save millions of dollars in foreign exchange to our economy with the mass adoption of local digital services.

It is vital for Sri Lanka’s digital arena to create the right environment for start-ups and local digital service companies to thrive. If we don’t do it soon, foreign digital companies are bound to gradually move in through our porous digital borders and take control. 

The digital economy is such that it can be done very subtly and smoothly, so that not only will it give the upper hand to a foreign entity to take control of our country’s economic activity, but also will edge out our local entrepreneurs and investors in our start-ups. This will only result in a huge knowledge vacuum in Sri Lanka in the form of digital entrepreneurship.

Over 20 years ago, the Sri Lanka Government had a plan via the BOI, to build capacity for ICT professionals who would pass out as graduates to support the software industry. This eventually helped to make our software industry one of the top five foreign exchange earners in the country. Sadly, we seem to have got stuck in this groove and not thought beyond.  What lies ahead is what we need to put in place to create a start-up ecosystem that will attract angel investors. It is only then that we can target our digital economy to move towards establishing soonicorns and then on to unicorns.  

This year India held the ET Soonicorns Summit 2022, their first-ever start-up initiative to celebrate their future unicorns. India has emerged as the 3rd largest ecosystem for start-ups as well as become the 3rd largest unicorn community across the globe. Up to 7 September 2022, India has established 107 unicorns with a total value of $ 340.79 billion.  The Government of India is seriously promoting digital start-ups with Prime Minister Narendra Modi taking the vanguard.  

What Sri Lanka currently lacks to create a similar environment, primarily has to do with our inconsistent policies – policies which are the foundation to making laws and regulations.  Thus, a serious discussion is necessary to create policy, but in the case of Sri Lanka the intriguing question that begs an answer is, even if this discussion happens amongst relevant industries, are policy makers paying any heed?   There are the types of important matters ticketed to be discussed at the Sri Lanka Internet Day 2022, such as the power of Digital to rally people together and how to use the Internet positively to boost the economy; Power of Digital; Bandwidth and Connectivity - Infrastructure Limitations; Digital Entrepreneurship - Why haven’t we see Unicorns in Sri Lanka?; No traction for  Start-ups; Lack of Neo/ Digital Banking - Is banking democratized in Sri Lanka; Health - Petcare; E Learning - Delivery of Education; How our children can learn via e-learning/Digital education; ICT Professionals - Lack of knowledge; How we can safeguard them in Sri Lanka (stop migrating/increasing knowledge); Tourism and Digital Nomads - Promotions; Tax; Fuel Crisis - QR code, limitations, Adoption; Public services; State owned enterprises; and Post pandemic impact etc. These are some of the current and growing concerns of the industry. But the question is, what happens after the conclusion of Sri Lanka Internet Day 2022 and post all the discourse?  Will it all be relegated to the dustbin of history, or can we hope for follow up by relevant authorities, so that we see real outcomes. This year, the feedback from the President’s office is encouraging as he has promised the support of state authorities to improve the local digital ecosystem. The industry will deliberate and discuss these critical aspects at the event, but it should not merely end up as interesting discussion points. We need to follow up and work with the state agencies to make certain it actually delivers positive outcomes for the sake of our country.

(The author is the current President of the Digital Services Chapter (DSC) of Federation of Information Technology Industry Sri Lanka (FITIS) and he is also the Chief Executive Officer of LankaPay National Payment Network. He is a pioneer technology professional who was instrumental in setting up the first Internet Service Provider of Sri Lanka in 1995. Sri Lanka Internet Day 2022 is organised by the DSC to propel local digital service companies to reach greater heights and to encourage the masses to adopt their services.)