300 Int. J. Innovation and Learning, Vol. 5, No. 3, 2008 Copyright © 2008 Inderscience Enterprises Ltd. Improving Relevance and Quality of Undergraduate Education in Sri Lanka: the need for a change in public funding strategy 1 Pradeep Randiwela* Department of Commerce, Faculty of Management and Finance, University of Colombo, Colombo 03, Sri Lanka E-mail: pradeep@webmail.cmb.ac.lk *Corresponding author Siriyama Kanthi Herath School of Accountancy, J. Mack Robinson College of Business, Georgia State University, 35 Broad Street N.W Atlanta, GA 30303 USA Email: dinushka_h@yahoo.com Abstract: This article discusses the importance of improving relevance and quality of higher education in Sri Lanka. Undergraduate education should be directed towards the needs of the country. Graduate unemployment is an issue in Sri Lanka, which needs urgent remedial actions. This paper also reviews the main features of the funding mechanism in Sri Lanka and identifies issues of concern in funding strategy in Sri Lanka. This is an opportune moment to assess the extent to which Sri Lanka should and can reform its funding strategies for higher education and there are many lessons to be learned from international practice. Keywords: graduate unemployment; public funding strategy; relevance and quality of higher education; Sri Lanka; undergraduate education. Reference to this paper should be made as follows: Randiwela, P. and Herath, S.K. (2008) ‘Improving Relevance and Quality of Undergraduate Education in Sri Lanka: the need for a change in public funding strategy’, Int. J. Innovation and Learning, Vol. 5, No. 3, pp.300–316. Biographical notes: Pradeep Randiwela is a Senior Lecturer (former Dean/Faculty of Management and Finance) at the University of Colombo, Sri Lanka. He earned his MCom (Marketing) from the University of Colombo, and BCom (Hons) from the University of Peradeniya, Sri Lanka, and a Certificate in Modernising HRM – RIPA International, UK. His research interests include e-marketing, entrepreneurship, outsourcing, and strategic management in higher education. Kanthi Herath works in the School of Accountancy at the Georgia State University, USA. She earned her PhD and MCom (Hons) in Accounting from the University of Wollongong, Australia, an MBA and a BCom (Hons) from