Poverty Alleviation in Sri Lanka:

Poverty Alleviation in Sri Lanka:
with special reference to Samurdhi
(Prosperity) Movement
By
Sunil Jayantha Nawaratne
Professor of Management & E-Commerce
Sri Lanka Institute of Information Technology
Chairman
Centre for Strategic Management

Contents
Poverty in the Global context
Poverty in the South Asian Region
Back ground of Sri Lanka
Sri Lankan Economic History
Poverty in Sri Lanka
Poverty Alleviation Programs in Sri Lanka
Samurdhi Movement of Sri Lanka
Samurdhi movement today
It’s Strengths and Weaknesses
Future of Poverty Alleviation of Sri Lanka
Future of Samurdhi Movement of Sri Lanka
Some comments on our Joint Research Project
Final Comments and Q&A sessions

Poverty in the Global Context
Definition :
People living with an
income of $1 a day –Low
income countries
$2 a day – middle income
National Poverty Rate
(NPR): – is the
percentage of the
population living below
that national poverty
line
Different countries have
different definitions of
poverty.
The commonly used
$1 a day standard,
measured in 1985
international prices
and adjusted to local
currency using
Purchasing Power
Parities (PPP).
There are many
problems related to
this poverty line

Poverty Rates in the Regions
Share of people living on less than $1 a day (%)
Sub-Saharan Africa 50%
South Asia 36%
China 20%
East Asia and Pacific 19%
Latin America and Caribbean 12%
Europe and Central Asia 8%
Middle East and North
Africa 5%
(Source: World Development Indicators, Page 1)

Poverty In the Global Context
Source: 2004 World Development Indicators, Page 55-56
Country
Algeria (1995)
Bangladesh (1996)
National Poverty Line
22.6%
51%
International Poverty
Line($1)
2% (1995)
36% (2000)
India (1993-94)
Kenya (1994)
Madagascar(97)
Pakistan (1993)
36%
40%
73%
28.6%
34.7% (2000)
23%(1997)
49.1% (1999)
13.4% (1998)
Sri Lanka (1991)
Zimbabwe (1991)
20%
25.8%
6.6% (1996)
36.0% (1991)

Extreme Poverty
1990 vs. 2001
1990 ($1 a day)
1,219 million people or
28% of the low and
middle-income
countries , lived in less
than $1 a day.
2001($1 a day)
During the next 11 years
GDP of those countries
grew 31%
Poverty rate has fallen to
21% or 1,100 million
people in extreme
poverty
Population growth of
those countries was 15%
during the period

Other Indicators of Poverty
Low Income
Hunger
Low education
Gender inequality
High child mortality
Poor Maternal Health
Poor Shelter
Poor Infrastructure

Brief Introduction to Sri
Lanka
Historical Back Ground
2550 years
1505 – 1948- Portugese / Dutch / British
1948 – 1977 – Closed Economy
1977 – To date – Open Economy
Overall Evaluation of Sri Lanka

Poverty Alleviation of Sri Lanka
History of Poverty Alleviation
Janasaviya (peoples vigor)
Samrudhi (Prosperity) Movement
1994 – 2004
2004 onwards

Reaching MDGs
in Sri Lanka
(MDG=Millennium Development Goal)

Background
In September 2000, all 189 UN member states
adopted millennium declaration: There is wide
spread political support in the development
mainstream – internationally and nationally
People Centered and clear roles for all
development partners (Governments,
international Organizations, Citizens, CSOs
and private sector): Scope for internalization
and national capacity building
(CSO=Community Service Organization)
Results oriented: MDGs are results based &
can make international institutions and
governments more accountable for results.

UN & the MDGs – Core Strategy
The guiding principles for the overall strategy are
that:
(i) all 8 MDGs
& their 18 targets are equally
important;
(ii) national ownership and participation will be pivotal
to the achievement of the MDGs;
(iii) partnership, with Governments but also with CSOs
and the private sector, will be essential;
(iv) much of the work required to achieve the MDGs is
already underway but demands greater focus &
urgency;
(v) focus on MDGs neither diminishes nor precludes
the important work of UN system in other mandated
areas

8 Goals 18 Targets and 48 Indicators
1
GOAL 1 – Eradicate extreme poverty and hunger
2
3
4
5
6
7
8
GOAL 2 – Achieve universal primary education
GOAL 3 – Promote gender equality and empower
women
GOAL 4 – Reduce child mortality
GOAL 5 – Improve maternal health
GOAL 6 – Combat HIV/AIDS, malaria and other
diseases
GOAL 7 - Ensure environmental sustainability
GOAL 8 – Develop global partnership for
development

8 Goals & 18 targets at a glance
Goal 1 : Extreme Poverty & Humber
Half (1) extreme poverty and (2) hunger by 2015
Goal 2 : Universal Primary Education
3. Achieve Universal Primary Education by 2015
Goal 3: Gender Equity
4. Eliminate disparity in all levels of education
Goal 4 : Reduce Child Mortality
5. Reduce under 5 and infant mortality rate by 2/3
Goal 5: Improve Maternal Health
6. Reduce MMR by 75%
Goal 6 : Combat HIV/AIDS, Malaria …
7.Halt and reverse spread of HIV/AIDS; 8. Same for
Malaria and other major diseases

Goals, targets & indicators at a Glance
Goal 7 : Ensure environmental sustainability.
9. Integrate “Sustainable Development” in national
policies & progs & reverse loss of environmental
resources. 10. Halve lack of access to safe drink water;
11. Improve the situation of slums
Goal 8: Develop a Global Partnership for
development
12. Open, rule-based trading & financial system
13. Address special needs of LDC
14. Address special needs of Land locked Cos
15. Deal with debt problems
16. Dev. & implet. . strategies for youth employment
17. Affordable essential drugs in dev. Cos
18. Make available benefits of the new technologies
especially infor. . & comm.

Goals, targets & indicators at a glance
Goals (8) & Targets (18)
Goal 1 : Extreme Poverty &
Hunger
Halve (1) extreme poverty and (2)
hunger by 2015
Goal 2 : Universal Primary
Education
3. Achieve Universal Primary
Education by 2015
Goal 3: Gender Equity
4. Eliminate disparity in all levels of
education
Goal 4 : Reduce Child Mortality
5. Reduce under 5 and infant
mortality rate by two – thirds
Goal 5: Improve Maternal Health
6. Reduce MMR by 75%
Indicator(48)
1. Population < $1;
2. Poverty Gap ratio;
3. share of consumption of poorest 20%;
4. % of underweight >5y;
5. % below min. dietary energy consump.
6. Net Primary Enrolment Ratio;
7. % children reaching Grade five;
8. Literacy rate of 15-20
9. Female Gross Primary Enrol Ratio as a %
of male ratio;
10. 15-20 M:F Literacy Ratio.
11. Share of women in non agric. wage
employment.
12. % women MPs
13.

Introduction
Samurdhi means – Prosperity.
Started in 1994 as the national poverty
reduction program.
It’s just an 11 year old movement but a
strong and steady one.
The original concept was designed and
developed by Hon. S.B. Dissanayake, who
was the Minister of Samurdhi, then.

Situation Now
Today, it is a giant organization with a
national network of CBOs as well as public
administration network.
(CBO=Community Based Organization.)
At present, nearly 26,000 full-timers are
engaged as “Change Agents” of the
movement. 24,000 SDOs and 2,000
graduate managers.
(SDO=Samurdhi Development Officer)
Nearly 2,000,000 families are covered.

Vision & Mission
Samurdhi movement has a very clear
Vision. Mission, Goals, Objectives,
and Strategies.
We will highlight the Vision and
Mission here.

Vision
Prosperous Sri Lanka with
Minimized Poverty

Mission
Contributing to the national development
through empowerment and graduation of
the low-income people out of Poverty Line
and reducing disparity in their livelihood in
the manner of participatory development
through the process of identification and
development of innate abilities of the low
income families in the form of effective,
efficient, sustainable and pro-poor poor manner.

Our Major Achievements
During the last 10 years the
movements major achievements are
as follows:

Our Formal & Informal
Organizational Structure
Samurdhi Movement is a combination
of both formal & informal structures.
Formal Structure
Ministry, Departments, Authority,
District Secretaries, Divisional
Secretaries, Areas(kalapa), Village
Vasama (Grama Vasama).

Formal Structure
MINISTRY OF SAMURDHI
POOR RELIEF DEPARTMENT
SUBSIDY PROGRAMME
SAMURDHI AUTHORITY
SAMURDHI COMMISIONER'S DEPARTMENT
EMPOWERMENT AND DEVELOPMENT PROGRAMME SOCIAL INSURANCE AND INFRASTRUCTURE DEVELOPEMNT

Formal Structure
National Level
Provincial Level – 9 provinces (no
office)
District Level – 25 Districts
Divisional Level – 323 Divisions
Grama Vasam – 14,100 vasam
Villages – 52,000 villages
Families – 4,000,000 (total number)

Informal Structure
Family level – 2,000,000
5 member group – 326,000 groups
Samurdhi Society – Village level
Area (kalapa) Society – Area level – 1,000
General union (Maha sangam) level – 179
District level – 25
National level – 1 ( Poor Peoples
Parliament)

Major programs
Programs are divided into six major
areas.
1. Social Welfare (safety net)
2. Social Insurance
3. Infrastructure Development
4. Micro Credit
5. Income Generation
6. Socio-cultural Development

Social Welfare
Implemented by the department of
poor relief.
Poverty Line – Rs. 1,500 per
family/per month.
Subsidy scheme – Rs. 1,000, 700,
400, 350, 250, 140
Total subsidy amount Rs.
12,000,000,000.
(US$120,000,000)

Samurdhi Subsidy Program
by year 2005 – No. of Families
9,6
35
mil.
4,7
42,
70
5
2,0
65,
55
4
3
6
8,
2
5
7
2
4
4,
4
5
7
3
6
7,
6
5
5
4
6
4,
2
1
8
6
1
3,
7
8
2
7,
8
4
0
All
Am
ou
nt
Tot
al
Fa
mil
y
Nu
mb
er
Rs.
1
4
0
Rs.
2
5
0
Rs.
3
5
0
Rs.
4
0
0
Rs.
6
0
0
Rs.
1
0
0
0
Dis
tric
t

Social Insurance Program
Implemented by Samurdhi Commissioners
Department
Rs. 30 deducted from the subsidy and
entitled for followings:
Death – Rs. 5,000
Wedding – Rs. 3,000
Child birth – Rs. 2,000
Hospitalization – Rs. 1,500 (Rs.50 x 30 days)
Educational Scholarship Program for AL
students.
6,000 students are getting this.

Infrastructure Development
Program
Implemented by Samurdhi Authority
Participatory Development Approach
Basic Material Cost from the
Government and labor contribution
from the beneficiaries.
Up to now progress is as follows:

Rural Development Division
Infrastructure development through
community participation – Rs. 200
million in year 2003.
Bank building network development
Canals, rural roads, steps, culvert,
agro-wells, common amenities
development
One month subsidy donation program
Ratnapura district – Kuruwita example

Micro Credit Program
Samurdhi Bank network has been
developed.
At present 1010 banks are operating.
(Including North-East areas)
Two types of savings
Compulsory savings: Rs. 100 from
subsidy
Voluntary savings
Program progress is as follows:

Samurdhi Bank Program
- Compulsory Savings - Rs. 6 Billion
- Voluntary Savings – Rs. 4 Billion
- Self Employment Loans
- Agricultural Loans
- Consumption Loans
- Recovery Rate
- Bad Debts

Socio-cultural Development
Social Development, Human
Resource Development, Youth &
Cultural Development Programs are
implemented.
Samurdhi Housing Development
Lottery
Rs. 10 from subsidy
Rs. 150,000 x 100 houses in a month.
Up to now progress is as follows:

Social Development
Anti smoking, alcohol, and drug prevention
program.
Reducing Illiteracy program
Suicide prevention and reduction program
Anti smoking flag day – housing
development for acute poor ( Rs. 18 mil-
2002) – 2000 houses
Child care and widow mother development
Specially trained 450 SDOs are engaged

Youth and Cultural
Development
New division of the authority
Alleviate poverty through youth
development (empowerment)
Vocational training
Talent identification and development
Organizing the youth and provide
knowledge, information, attitude and
skills

Income Generation Programs
Also Implemented by SA.
Agri-Business, Livestock
Development, Small Industry
Development, Marketing Network
Development Programs.
Up to now progress is as follows:

Agri- Development Division
Forward contracting – cutting flower &
leaves, horticulture, organic rice and
vegitable
Export Oriented Agriculture
New Technology – Drip / Sprinkler
/Poli-Tunnels / Post-harvest
technology
42,000 families to be empowered in
2003

Livestock Development
Reduction malnutrition and improve income
generation
Back yard poultry / Goat farming
Sub-contracting with private sector
Nelana Farm + Samurdhi Program
- cage for 1000 birds by the people
- chicks, food, drugs and extension services
from the company
- after 42 days guaranteed purchase
- average income after 42 days per family –Rs.
25000 – 30,000.
( Nelana = a poultry company)

Small Industry Development
Alleviate poverty through value
addition
Micro and small industry development
red-clay, coconut fiber pots, garments,
metal crushers, lime processing, rice
milling and packing, steel furniture,
decorating lights, electric and
electronics, wooden furniture for
some examples.

Marketing Network
Development
Rural fair development – 300 rural fairs
Home based retail shops
Wholesale suppliers
Door to door distribution (milk, bread, news
paper, vegetables, etc.)
Samurdhi Home Services Ltd.
Ice-cream distribution through three
wheelers – Cargils Magic Ice Cream

Ultimate Objective
Graduation of low income families from the
poverty through total empowerment:
Economic Empowerment
Social Empowerment
Cultural Empowerment
Physical and Psychological Empowerment
Political Empowerment (Leadership)

National Targets - 2003
Contributing to the national economy more
than the double the cost of the program
Total Cost – Subsidy –Rs. 9 bil.
Admin. - Rs. 3.5 bil.
Total - Rs. 12.5 bil
Estimated total contribution – Rs. 28 bil
In way of Income improvement,
Infrastructure development, Housing
development, and improved savings.

Graduation from poverty
Monthly income has to be improved more
that Rs. 5000
Total families in the year 2003 – 200,000
families.
District allocation and divisional allocation
is given to each district and divisional
heads.
Various poverty reduction plans:
NPRP / DPRP/ DivPRP/ KPRP / VPRP

Investments in
Community Projects
1995–2001 (Rs. mn)
Year
No. of District
Secretariat
No. of
Divisional
Secretary
Divisions
Investment
s
No. of
Projects
1995
18
235
114.06
11,306
1996
18
235
210.52
11,640
1997
18
235
562.54
11,288
1998
21
283
373.50
6,061
1999
21
283
611.90
13,206
2000
21
294
416.65
6,071
2001
21
301
169.67
2,005
Total
21
301
2458.84
61,577

Community Dev. Projects
Project Category
Irrigation
Canals/Dams/Anicuts
Public Wells/Agri
Wells/Small Scale
Water Supply
Schemes
Transport/ Roads/
Bridge / Culverts /
Climbing Steps
Marketing Centers /
Collection Centers/
Public Facilities
Total
7,099 x Rs. 10,000
12,428 x Rs. 50,000
28,318 x Rs. 100,000
5,443 x Rs. 10,000
Actual Value
70,990,000
621,400,000
2,831,800,000
54,430,000
( Anicut = a concrete dam in a canal)

3. Samurdhi Banking Program
Savings Program
No. of Families
Amount Rs.
Million
Compulsory
886,055
6,367
Voluntary
366,234
(Small Groups)
4,556
Promoted
by
Change
Agents?

Quantum & Value of Loans
given by SBs
Category
Quantity
Percentage
Amount Rs.
Million
Percentage
Agriculture
192,514
22.00
1,084
17.9
Consumer
41,074
4.70
46
.8
Fishery
12,087
1.40
14.8
.24
Distress
14,076
1.60
15.1
.26
Selfemployment
613,595
70.30
4,869
80.80
Recovery %
Default %
Market
Leader
Micro Fin.
104.0
3.5
4 th in the
Market

Labor Intensive People's Projects
(LIPP)
Special feature of this Programme
is the expenditure 65% of the
allocated provision for rural labor
and balance 35% as the Capital.

Projects Constructed Under the Labour
Intensive People's Projects (LIPP)
Particulars
1998
1999
2000
Total
Total number of projects
1,385
571
916
2,872
Small Tanks
645
183
209
1,037
Minor irrigation
587
348
595
1,530
Agro wells
116
24
101
241
Other
37
16
11
64
No. of beneficiaries
92,005
42,644
83,202
217,851
Extent of land cultivated
27,301
21,254
45,175
93,730
Number of labor units engaged
-
400,154
678,826
1,078,980
Amount of expenditure Rs. million
200
100
140
440

Other Programs
Program
Small Industry Dev.
Agriculture Dev.
Animal Husbandry
Marketing
Development
Social Security
Program
No. of families
5,256
4,326
1,022
8,173
21,142
All Implemented By
the Change Agents
Benefit
Training &
Employment
Training & Financing
Projects
Training & Financing
Projects
Weekly fairs, Trade
Centers, Mobile
Stalls
Death/Marriage/Birth
/ Ailments Relief

Budgetary Allocation and Actual Expenditure
for Development Programmes – 1996 to 2002
(Rs. mn)
Year
1996
1997
1998
1999
2000
2001
2002
Allocation
400.0
978.7
930.0
942.0
500.0
403.0
50.0
Expenditure
308.5
749.0
991.0
845.0
564.0
406.0
32.4

Cost & Benefit of the Change
Agents?
Total Cost of SDOs & SMs
28,000 x Rs.10,000 = Rs. 280,000,000
If one officer can graduate 10 families out-of
poverty trap by improving their income up-to
Rs.3,000 a month the Total Benefit will be 26,000
x 10 x Rs. 3,000 = Rs.780,000,000
If 200,000 families income can be improved up-to
Rs. 3,000 per month then = Rs.600,000,000
If 100,000 families income can be improved up-to
Rs. 3,000 per month then = Rs. 300,000,000.

Samurdhi Movement Has Done
a Lot
Through our village based Change Agents
has done a lot to Empower the Poor and
Graduate them out of the Poverty Trap.
It has a giant network
Let’s use that network more Effectively and
Efficiently through Pro-poor Approaches for
the benefit of Poor People themselves.

Percentage of poor household by area and
survey period
Area
Sri Lanka
2002
Percentage of
poor
households
23.9
Survey Period
1995/96 1990/91
Percentage of
poor
households
26.7
Percentage of
poor
households
30.4
Sector
Urban
7.9
13.4
18.2
Rural
26.4
28.7
34.7
Estate
22.1
26.1
20.5

Per capita income (average monthly) by
area and poverty status of the
household - 2002
Area
Mean per capita income per
month
Non- poor
households
Rs.
Ppoor
households
Rs.
All households
Rs.
Sri Lanka
3709
1341
3048
Sector
Urban
5654
1435
5243
Rural
3402
1348
2765
Estate
1928
1135
1707

Electricity, Telephone and LP Gas using;
households (percentage) by area 2002
Area
Sri Lanka
Mean per capita income per
month
Electricity
using
households %
65.7
Telephone
using
households %
22.9
LP Gas
households %
22.9
Sector
Urban
86.8
47.1
57.7
Rural
64.2
19.6
18.8
Estate
37.1
14.6
2.5

We vs. Them
1950 - 2000
Per Capita Income in US$
Country
SRI LANKA
JAPAN
SINGAP
1950-$
89
90
30

Japan vs. Sri Lanka
Per Capita income in US $
Country
SRI LANKA
JAPAN
SINGAPOR
E
1950-$
89
90
30
2000-$
840
32,000
28,000

Growth Compared
Country
1950
2000
Growth %
Sri Lanka
89
840
9
Japan
90
32,000
355
Singapore
30
28,000
933
Malaysia
30
3,420
114

Why did this happen to us?
1. No Long-term Vision
2. Too much freedom / No discipline
3. Giving every thing, everyday, to
everybody free of charge
4. Working on wrong paradigms and
conflicting policies

Public Debt
Central Bank Report 2002
Year
Total Rs.
Millions
As a
GDP %
As a
GDP %
As a
GDP %
(‘000)
Domestic
Foreign
Total
1950
654
13.7
3.2
16.9
2000
1,218,70
0
53.8
43.1
96.9
2002
1,669,28
4
59.8
45.5
105.3

War Expenditure
Defense Budget 1998 – 2003 –
Rs.Million
Year
1998
1999
2000
2001
2002
2003
Rs.
Mill.
42,496
40,071
56,915
54,242
50,212
49,721

Foreign Exchange
Central Bank Report: 2002
Year
US$
UK
Pounds
Japanese
Yen
1950
Rs.4.76
13.33
0.01
2000
Rs.75.78
114.78
0.70

The Way Japanese
Think
Kuni
Country
Kaisha
Organizatio
n
Kazoku
Family
Boku
Self

Our GNP vs. Global 500
2001 Our GNP was Rs. 1,377.1
US $ Bil. 15.4
2000 GLOBAL 500-World’s Larges Corporations
RAN
K
1
10
20
30
34
40
41
292
CORPORATION
GENERAL
MOTORS
ITOCHU
NISSHO IWAI
SONY
HONDA
FIAT
NESTLE
KAJIMA
REV:$
Bil
176
109
65
60
54
51
49
15 5
EMPLOY
EES
388,000
5,306
18,446
189,700
112,000
221,043
230,929
12 247

Honda’s Growth
Mr Honda also started his company in
1948
In year 2000 -34 rank /US$54 bil /112,000
employees
In year 2003 -25 rank / US$72 bil/ 131,800
employees.
2000 – 2003 – 33% growth, 9 positions up.
If assumed in year 2003 – our GNP is
US$ 20 billion, there are 248 companies
are their bigger than our GNP. 248 th
Company –Aventis (France)

Sri Lanka’s s Largest Companies
2001 GNP was Rs. 1,377.1
1,377.1 (US $ Bil. 15.4)
2000 TOP TEN In Sri Lanka
RANK
1
2
3
4
5
6
7
8
9
10
COMPANY NAME
JOHN KEELS
HAYLEYS
HNB
CENTRAL FINANCE
NDB
COMMERCIAL BANK
DISTILLERIES COMPANY
CEYLON TOBACCO COM.
NESTLE
AITKEN SPENCE
REV:$ Bil
0.105
0.089
0.078
0.062
0.046
0.045
0.043
0.041
0.0395
0.0394

2004 Top Ten Companies
Overall Performance
1. Distilleries Company of Sri Lanka (5.940)
2. John Keels Holdings (5.750)
3. Sri Lanka Telecom (5.075)
4. Hatton National Bank (4.160)
5. Commercial Bank (4.065)
6. Ceylon Tobacco Company (3.800)
7. Aitken Spence & Company (3.565)
8. Hayleys (3.060)
9. DFCC (2.910)
10. Carson Cumberbatch & Co. (2.850) -

Top Ten 2004
Based on Turnover (‘000)
1.Sri Lanka Telecom –Rs.25,553,000
2.John Keels Holdings – Rs.20,924,520
3. Hayleys – Rs.15,476,576
4. Hatton National Bank –Rs.15,158,444
5. Seylan Bank – Rs.11.110,059
6. Distilleries Co. SL – Rs.10,651,406
7. CIC –Rs.10,018,981
8. Commercial Bank – Rs.9,749,463
9. Aitken Spence – Rs.9,049,244
10. Central Fiance – Rs.8,408,531

Strategic Approach
1995
1990 2000
1985
1980
1975
2005
Strategic
2010
1970

Effectiveness & Efficiency
Effectiveness
Do the right things

Poverty Indices – District
wise
(Except N/E)
District
Poverty
Incidence
District
Poverty
Incidence
Colombo
10
K’negala
34
Gampaha
11
Puttlam
33
Kalutara
26
A’pura
33
Kandy
30
P’naruwa
27
Matale
35
Badulla
30
Nuwaraeliya
21
M’gala
49
Galle
25
R’pura
37
Matara
28
Kegalle
25
H’tota
27
Sources: Poverty estimates: Gunawardana 2000;

GDP Shares and Average
Growth (Province)
Province
Western
North Western
Central
Sabaragamu
wa
Southern
Eastern
Uva
North Central
North
1996
43.5
11.3
10.6
8.9
9.1
4.8
5.0
4.5
2.4
2000
49.4
10.4
9.9
9.3
6.7
4.5
4.0
3.8
2.1
Average
Growth %
3.3
-1.8
-1.6
1.2
-7.1
-1.2
-5.1
-3.6
-2.6

“Tada
ga Ichiban
Takai”–
FREE IS MOST
EXPENSIVE

DEAD MONEY
&
LIVE MONEY
“Shinigane – Ikigane”