Small and Medium-Sized Entrepreneurs’ Perceptions of Flood Loss and Damage in Sri Lanka

Abstract

As climate change has intensified flood risk and damage in many low-lying areas of the world, small and medium-sized enterprises (SMEs), which typically exist in developing countries, have endured high flood risks without much support for relief. This study investigates how SMEs in flood-prone areas of Colombo, Sri Lanka, the largest business hub in the country, have perceived and dealt with flood loss and damage in the past ten years. We conducted field surveys and a questionnaire survey among 60 SME owners in two flood-prone administrative units from March to June 2020. The results show that informal businesses experienced more flood loss and damage than other community members. Also, the community dominated by informal businesses tended to be located closer to potential flood sources. Ownership and awareness about flood insurance were very low in our study areas. Temporary business closure was the most serious loss experienced by informal business communities. These communities depended on personal savings to recover from floods. Our multiple regression analysis found that age, education, and experience significantly influenced SME owners’ perceptions and experiences about floods. After discussing these findings, this paper offers recommendations to mitigate disaster loss and damage to SMEs. In particular, it highlights the importance of community-level awareness and mitigation efforts rather than administrative unit-level mitigation plans. Also, the government needs to register informal businesses by providing a more flexible business registration mechanism.