With renewed emphasis on digital transformation, Sri Lanka is once again focusing on the long-standing goal of digitalisation. 

With numerous strategies in place, the question remains whether Sri Lanka will finally reach a point of adoption in digitalisation, recognised as an essential step for future economic growth. Pivotal to this transformation is the foundational step of a national data pool that would facilitate not just a connected government but the advent of the digital citizen as well.

Speaking to The Sunday Morning, cybersecurity and digital strategist Asela Waidyalankara emphasised the importance of a national data repository, stating that the first step towards achieving this goal should be digitisation. 

“We have been discussing digital identity for nearly two decades and it is high time to commence this initiative. Hopefully, there will be momentum now. This initiative could save Sri Lanka substantial funds.

“There is so much information scattered among various institutions, and while the Government possesses all this information, legal restrictions prevent it from being shared. This highlights the need for specific legislative amendments,” he said.

Waidyalankara discussed India’s Aadhaar scheme, which constituted multiple components such as an identity layer, a financial technology layer, and a DigiLocker that stores all important Government documents, with a separate institution to facilitate interdepartmental information sharing. 

He emphasised that Sri Lanka required similar policy measures, adding: “As a neighbour with many similarities to Sri Lanka, India is an ideal example, and there is no excuse for us not to pursue this path.”

Waidyalankara highlighted that for digital transformation, it was essential to engage people first and then adjust processes, with technology as the final piece of the puzzle. Successful implementation will require political will and robust technology governance to ensure sustainability and success.

Also speaking to The Sunday Morning, University of Sri Jayewardenepura (USJ) Department of Information Technology Professor Lasith Gunawardena, an expert advocate for a persistent digital identifier in research, noted that Government entities in Sri Lanka were highly protective of their data, as opposed to an open data approach, which could limit the effectiveness of a centralised mechanism unless an overarching agency took charge.

“A data-sharing mechanism could take the form of either a centralised repository or a distributed system. There is an Open Researcher and Contributor ID (ORCID) used by researchers worldwide to track academic publications in a common repository; a similar initiative could be adapted at the national level. 

“In practice, a national data exchange need not rely on a single repository as different agencies could maintain their data but use a common identifier for tracking and sharing purposes. However, centralising data could present performance and security challenges as well, particularly in the event of data leaks,” he said.

He emphasised that this kind of initiative needed top-down leadership, with regulations introduced at a higher level so that each agency aligned with broader digitalisation goals. Developing a data-sharing mechanism should be a priority, and it would lay the groundwork for further digitalisation efforts. According to him, as Sri Lanka already has a Personal Data Protection Act, a legal framework to support the implementation of such a mechanism already exists. 

Digital ID as a foundational step

The digital ID card programme was initially launched in 2012. Since then, this fundamental process has faced over a decade of delays, hindering the country’s digital transformation efforts. 

Recently, President Anura Kumara Dissanayake announced that a National Digital ID initiative would be fully implemented within one-and-a-half years, bringing digitisation to the forefront once again.

Moreover, a data-sharing policy has previously been discussed, with a focus on establishing guidelines to create an ecosystem allowing relevant stakeholders access to shared data while safeguarding security, with a national data-sharing policy being enabled by a departmental data-sharing policy.

Speaking to The Sunday Morning, Federation of Information Technology Industry Sri Lanka (FITIS) Chairman Indika De Zoysa noted that a digital repository, or data lake, was essential for Sri Lanka to enable individuals to be identified digitally, for which the foundation was the digital ID, which would link to all critical civilian data, granting respective institutions the necessary authority to access it. 

He further added that a national data exchange would allow institutions to retrieve individual data with varying levels of permission and authority with the regulation of the Data Protection Authority of Sri Lanka, ensuring consent at the point of data collection. Accordingly, this approach would eliminate the need to repeatedly provide the same documents to different Government agencies, facilitating the digital citizen.

“The Government is currently in discussions regarding this and it is hoped that the process will gain momentum with the establishment of the new administration. Naturally, the Ministry of Technology should lead in developing the necessary infrastructure. Technologically, the steps involve creating a data lake – a secure, cloud-based environment – and establishing a connectivity network across Government institutions,” he said.

De Zoysa noted that with these systems in place, respective institutions could then develop applications on top of them where Application Programming Interfaces (APIs) would facilitate inter-institutional connectivity. Throughout this process, data security remains a priority, with strict regulation of data access.

He stressed that digital ID was a pivotal step that the country should have implemented two decades ago. “Through a national digital ID, every individual could be identified digitally, enabling efficient delivery of all services, from social subsidies to tax payments, while increasing transparency. This is the way to eliminate corruption,” he noted.

The FITIS Chairman further emphasised the urgent need for Sri Lanka to encourage digital platform use by establishing robust Digital Public Infrastructure (DPI). He highlighted that while the country had foundational elements like the e-revenue licensing system, much of the infrastructure remained incomplete or fragmented, with only certain models functioning.

In order to deliver digital services, it is mandatory to build infrastructure. With the high costs involved, De Zoysa added that a Public-Private Partnership (PPP) model would be a more feasible approach. He explained that with the PPP model, private organisations could invest and then recover their costs over time.

“This model has worked globally and is the way forward. Otherwise, we’d have to wait for years until we recover economically to fund this infrastructure ourselves,” he said.

He further noted that technology itself was not a barrier as it was readily available, and identified lack of adoption and policy support as major hurdles, highlighting the need for discouraging cash payments to the Government and using financial technology instead.

What is holding SL back in digital transformation?

When asked by The Sunday Morning what was holding Sri Lanka back if technology availability was not the primary issue, De Zoysa noted significant policy gaps.

“Unlike in the past, financing is more of a challenge in the present context, which is why models like PPPs are essential and procurement processes also need to be scaled up at the policy level. 

“Execution has been a substantial hurdle as well. Government institutions need to step up to execute digitisation and digital adoption. To expedite processes, a streamlined Government framework is essential, alongside strict monitoring and evaluation of implementation and drive adoption,” he said.

While Sri Lanka is behind the curve in digital transformation, the digitisation process has been in place for several years. Speaking to The Sunday Morning, Information Systems Audit and Control Association (ISACA) Sri Lanka Chapter President Lakmal Embuldeniya outlined a three-step framework essential for advancing a digital economy.

“Digital economy essentially involves a three-step process. First is digitisation, which means converting anything analog into digital form, followed by digitalisation, which is using that digitised content to create systems that serve citizens. Finally, it involves digital transformation, which is more of a strategic approach,” he said.

Sri Lanka has made strides in digitisation since the early 1990s. However, according to Embuldeniya, the debate lies in whether that digitised content is being utilised effectively to provide services to citizens. He noted that in terms of digital transformation, the country was slow to advance.

He also highlighted that one major barrier was the absence of a unique digital ID, with even Government departments lacking identifiers, limiting cross-department connectivity and hindering full digital transformation. 

He further stated that the primary obstacle to establishing a national database was that various institutions operated with distinct data sets, each in isolated databases that were not shared with others. For successful implementation in Sri Lanka, developing a data-sharing policy across Government agencies is essential.

“A centralised data mechanism would enhance convenience, improve productivity significantly, and address fraud stemming from data coordination issues, ultimately benefiting the overall economy,” he noted.

Furthermore, Embuldeniya emphasised the need for an internal authentication system for Government employees whereby public service employees would have a common authentication platform, as it would curb issues of limited information access and prevent misconduct.

Addressing available technology, he stated that Sri Lanka had most of the prerequisites to move toward a digital economy. 

“Bandwidth infrastructure, particularly in urban areas, is solid. The main issue is connectivity in rural areas. Different mobile service providers have established overlapping networks in urban centres, which could be better coordinated. That creates a requirement for a central policy and coordinated approach to prioritise infrastructure expansion in underserved areas,” he added.

Beyond infrastructure, he pointed out the need for widespread awareness about available digital services. Improved awareness of citizens would drive adoption and usage of digital services.

Speaking to The Sunday Morning, technology enthusiast Ahamed Nishadh Najeem highlighted the significance of data. “Unfortunately in Sri Lanka, data has always been restricted to paper, and very rarely is our information available in a digital form. Mostly, even the digital formats are not machine-readable. Several years back, the Open Data Portal of Sri Lanka was initiated as an attempt in this regard, and this initiative should be re-initiated,” he said.

He noted that most public data was not available digitally, stressing the significance of a data repository, with precedents and the possibility to move forward with it already in place. He added that Sri Lanka could and should develop a national data pool as many institutions requested the same set of documents and data, which should be stored in a database with the option to update as necessary.

Furthermore, he stated that procurement of a Government certificate might take nearly two days to complete, whereas a digital system could allow for immediate updates. “In Sri Lanka, the Department for Registration of Persons (DRP) facilitates customer identification and verification for certain banks on an electronic Know-Your-Customer (eKYC) basis. Therefore, precedents and a legal framework are in place, with layers of security as well,” he noted.

Obstacles in adoption

There are notable similarities between the National Digital Economy Strategy 2030 proposed by the previous administration and the DoIT 5.0 digital policy of the National People’s Power (NPP), with focus areas that should be addressed regardless of the party in power.

Ministry of Technology Additional Secretary A.K.R. Alawatta told The Sunday Morning that while substantial planning had taken place, the implementation of digital transformation initiatives had faced multiple challenges.

“A bill has been drafted to establish a digital transformation agency, incorporating three institutions. However, the final decision on this agency remains pending until after the new administration [takes office],” he said.

Alawatta noted that while a series of concept papers existed, the focus at present was on refining these plans. “Rs. 3 billion has been allocated for digital transformation activities in 2024. However, due to various obstacles, this amount has not been spent. As of now, only a limited fraction far below this budget has been utilised,” he added.

Digitalisation in crucial sectors

The report on assessing the digital maturity of small- and medium-sized exporters in Sri Lanka, prepared for the Partnership for Accelerating Results in Trade, National Expenditure, and Revenue (PARTNER), notes that there is substantial room for improvement in incorporating digital initiatives into business strategies. 

In Sri Lanka, the digital maturity scores of Small and Medium-sized Enterprises (SMEs) range from 8.8% to 98.8%, but most SMEs fall into the range of 25% to 75%, highlighting significant room for improvement and potential for contribution to the digital economy.

Speaking to The Sunday Morning, Information and Communication Technology Agency (ICTA) Associate Chief Digital Economy Officer Sachindra Samararatne pointed out that the IT industry was the largest segment within the digital economy, with e-commerce also playing a significant role. 

“ICTA has focused on initiatives that support several of the pillars of Digital Economy Strategy 2030 and foundational aspects of the strategy, including industry growth, SME digitisation, and connected government,” Samararatne said. 

He noted that ICTA had also led legislative efforts that supported certain pillars, such as cybersecurity, and had actively assisted SMEs in expanding to new markets, facilitated companies and investors in establishing local operations, and supported policies that drove the industry and the digital economy forward.

Samararatne further highlighted that ICTA had played an instrumental role over the past 15 years in supporting the tech industry and startup ecosystem through comprehensive programmes that assisted startups from idea stage to growth.

“Since 2010, ICTA has run the ‘Spiralation’ startup incubator, the country’s longest-running incubator, and since 2015, we have increased our focus on the startup ecosystem,” he said, noting that ICTA had introduced initiatives such as the ‘Towards a Startup-Friendly Government’ report, which examined 29 obstacles facing startups.

“Rs. 250 million was disbursed by NDB Bank to six companies, serving as a model for alternative credit scoring and non-collateral-based lending, which we aim to further advance. The alternative credit framework was developed by ICTA and PricewaterhouseCoopers (PwC). Currently, this is being taken forward by the US Agency for International Development (USAID) and the Palladium Private Sector Development (PSD) programme, and we anticipate more results from this initiative. 

“With the establishment of the new National Credit Guarantee Institution, there is possibility to explore additional financial products and schemes for the tech sector and digital transformation, particularly around non-collateral or minimal-collateral lending. 

“The National Credit Guarantee Institution will back the banking sector with the loans facilitated through the banking sector. This will fund the digitalisation of the SMEs and industries as well. For instance, the GoviLab accelerator is accelerating 10 agritech startups, focusing on digital solutions for smallholder farmers. The banking sector can provide support at the point of technology adoption,” he said.

Looking forward, Samararatne added that there were many aspects of the digital economy which ICTA hoped to activate through Global Entrepreneurship Week activities.

According to an estimation by United Nations Trade and Development (UNCTAD) in 2022, the digital economy-to-GDP ratio in Sri Lanka stood at only 5%. In 2020, the digital economy in Sri Lanka was estimated to be $ 3.47 billion or 4.37% of GDP. Two years later, this had risen to 5%.

The report ‘Economically Digital’ by Chanuka Wattegama highlights that digital economy success can be achieved by incorporating a large segment of the population into the digital economy, particularly those from lower socioeconomic backgrounds, with more opportunities for them within the digital economy. Therefore, the digital economy holds substantial value for Sri Lanka. 

Concerns regarding infrastructure development 

With certain districts of the country experiencing poor connectivity and bandwidth, and concerns regarding telecommunication aspects such as Number Portability (NP), the infrastructure development aspect remains pivotal for an impactful change.

According to a Telecommunications Regulatory Commission of Sri Lanka (TRCSL) statement, the commission has coordinated with telecom operators to plan and implement the NP service, with technical evaluation completed and financial evaluation projected for completion by January 2025, which will be followed by a launch of the service.

In terms of connectivity development, 50 towers have already been completed according to the Ministry of Technology, with plans for additional towers underway. 

Moreover, The Sunday Morning learns from the TRCSL that the commission has been preparing infrastructure-sharing regulations to accelerate infrastructure deployment for connectivity expansion. For a digital strategy, foundational regulations have been developed to strengthen outcomes and facilitate digitisation, including groundwork for the 5G spectrum assignment. Meanwhile, the construction of communication towers is also progressing.