Economy of Jaffna and Business

2/19/2009
Economic Affairs Division
SCOPP
Outline
Overview
• Geography
• Population highlights
• Economic status
• Employment status
Key areas
• Key agricultural l crops, livestock, fisheries
i
• Industries and industrial employment
• Infrastructure –power and telecoms
• Health indicators
• Education status
• Highlights from a field survey
Future
• Concluding remarks
• What next for Jaffna’s economy?
Overview:
Snapshot of Jaffna
Geography
• Jaffna district is one of 4 districts in the Northern Province (NP)
• Others are Kilinochchi, Mullaitivu, Mannar and Vavuniya
• Area of Jaffna (including inland water) –1,023 square km
• Entire NP is 8,846 sq km
• Jaffna peninsula divided into 4 main geographical zones
• Chavakachcheri
h h • Vadamarachchi (Northern‐most part)
• Valikamamam
• Islands
• Jaffna district is the largest in NP by population, but smallest by land
area
• De‐mining ‐ 120 villages (14,943,048.3 sq meters of land) have been
cleared of mines so far
Source: situation report issued by Jaffna GA
Population highlights
• Population (2007) – 559,619
• Down 24.2% since 1981, average reduction of 1% p.a.
• Valikamam East and South‐West and Nallur DS divisions have
largest populations
• Urban population ‐ 112,932 (20.2%), Rural – 446, 687 (79.8%)
• (Urban – Jaffna MC, Chavakachcheri UC, Point Pedro UC, Valettithurai UC)
• Population density ‐ 602 persons per sq. km
• Internally displaced population – 27,647 (UNHCR Sept. ‘08)
• Approx. 98.2% due to conflict, 1.8% due to tsunami
Source: DCS Jaffna District Special Enumeration 2007
• Rs. 500m proposed by GoSL for resettlement in the North
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Population highlights (cont...)
Age‐sex composition
• under 18 = 33.8%, over 18 = 66.2%
• male = 265,214, female = 294,405
• Sex ratio of 90.1 (90 males to 100 females)
• By DS division: Delft – 98, Jaffna – 96, Vad. East – 95.1, Nallur – 86.2
Ethnic composition
• 1981
• Sri Lankan Tamil – 86.2%
• Sri Lankan Moor – 1.4%
• Sinhalese –0.7%
• Indian Tamil – 0.6%
• Other –0.1%
• 2007
• Sri Lankan Tamil – 99.9%
• Sri Lankan Moor – 0.1%
• Sinhalese –0%
• Indian Tamil – 0%
• Other –0%
Economic status
• Per capita income per month ≈ Rs. 3,208
NB: Based on provincial p.c. income
Source: Consumer Finances and Socio Economic Survey 2003 / 2004
• Some degree of household inequality
• ‘Gini coefficient’ measure of inequality ≈ 0.44
• 0 = perfect equality, 1 = perfect inequality
Source: Central Bank of Sri Lanka (2005)
• Jaffna, historically ‘better off’ than other districts in NP, nearly 92% of
people are land‐owners
Source: Jaffna District Statistical Handbook 2003
• During the time of the conflict, much of the NP economy transformed
from agrarian to a service economy –category of ‘public administration
and defence’ was the single highest contributor to NP GDP
• Although agriculture contributes only around 20% to PGDP of NP, it
employs over 50% of the total employed population
Key economic activities
• Crop agriculture, livestock, and fisheries are the major economic
activities in the district
• Red onions, chillies, potato, tobacco etc are the major crops
• Livestock farms –meat, milk and egg production
• Next to farming, the largest employer is the fisheries sector – 12% of the
district population is involved in it (nearly 70,000 people)
Employed Population by Sector (%) 1985/86 to
2004
• 10.5% share of national red onion production
• 8.7% share of national fish production
• 4% share of national milk production
• 3.5% share of national egg production
• 2% share of national chilli production
• 0.7% share of national paddy production
• 0.6% share of national potato production
• 17.5% share of national tobacco production
Employment
• Total number of employed (136,685) is 23% of the total
population
• Employment in Jaffna is much lower than national levels (33%)
• Besides the possible high unemployment in the district, this
number could also be due to not capturing the entire labour
force + informal sector employment is harder to measure
• No hard figures from national statistics, as QLFS hasn’t covered
these areas for over a decade
Occupations of the employed
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2/19/2009
Key Business
Opportunities
Red Onion production
• Sri Lanka ‐109,281 Mt
• Northern Province ‐ 22,484 Mt
• Jaffna District ‐ 11,422 Mt (largest producer in the
NP)
• Jaffna has approx. 10.5% share of national red onion
output(NP has 20.6%)
• Dramatic decline since 1990 (54%) and even more recently since
2000 (24%)
Source: PPID and DCS
35000
30000
Red Onion production (in Metric tons)
Chilli production
• Sri Lanka ‐60,870 Mt
• Northern Province ‐ 5,142 Mt
• Jaffna District ‐ 1,301 Mt
25000
20000
15000
10000
• Jaffna has approx. 2% share of national chillie output, down
from 6% in 1990
• NP has around 9%
5000
0
1990 2000 2001 2002 2003 2004 2005
Source: PPID and DCS
7000
6000
5000
4000
3000
2000
1000
0
Chilli production (in Metric tons)
1990 2000 2001 2002 2003 2004 2005
Tobacco production
• Sri Lanka ‐4,204 Mt
• Northern Province ‐1,147 Mt
• Jaffna District ‐ 736 Mt (largest producer in the NP)
• Jaffna has approx. 17.5% share of national tobacco
output, significantly up from 10.7% in 2001
• NP has a 27.3% share
Source: PPID and DCS
• Comments by CTC
• NP tobacco traditionally used for ‘beedi’ and cigars –for which demand
is now dropping
• High chloride levels and a different type of soil mainly in the coastal
areas, therefore not suitable for growing cigarette tobacco
• But with new agriculture technology, possibility of exploring interior
lands for growing cigarette tobacco?
• Lack of adequate transport facilities
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Tobacco production (in Metric tons)
Paddy Production
1200
1000
800
600
400
200
• Sri Lanka ‐2,628 thousand Mt
• Northern Province – 160 thousand Mt
• Jaffna District ‐ 14 thousand Mt
• Jaffna has approx. 0.7% share of national paddy output(NP
has 8.3%)
• Except for 3% in 1980 and 1.3% in 1990, since 2000 this share has
been roughly in the same region ‐ between 0.3 –0.7%
0
1990 2000 2001 2002 2003 2004 2005
Source: PPID and DCS
35
30
25
Paddy (in thousand metric tons)
Potato Production
• Sri Lanka
‐79,445 Mt
• Northern Province ‐ 464 Mt
• Jaffna District ‐ 443 Mt (largest producer in NP)
20
15
• Jaffna has approx. 0.6% share of national potato output(NP
has around 0.6%), down from 1.2% in 2000
10
5
0
1990 2000 2001 2002 2003 2004 2005
Source: PPID and DCS
1200
1000
800
600
400
200
0
Potato production (in Metric tons)
1990 2000 2001 2002 2003 2004 2005
Livestock, Milk and Egg production
• Mostly a household self‐employment activity rather than a commercial
activity
MILK
• Sri Lanka
‐192.7 million ltrs
• Northern Province ‐19.6 million ltrs
• Jaffna District ‐ 7.7 million ltrs (largest producer in NP)
• Jaffna has a 4% share of national milk output, and has remained in this
region since 1980/1990
• NP has around 10.2%
EGGS
• Sri Lanka
‐864.6 million
• Northern Province ‐66.3 million
• Jaffna District ‐ 30.1 million (largest producer in NP)
• Jaffna has a 3.5% share of national egg output, and steadily growing since
2000 (1.3%)
• NP has around 7.7%
Source: PPID and DCS
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8
7.5
7
6.5
6
35
30
25
20
15
10
5
0
Milk production (in million litres)
1990 2000 2001 2002 2003 2004 2005
Egg production (in millions)
1990 2000 2001 2002 2003 2004 2005
Fisheries
• Sri Lanka ‐153,180 Mt
• Northern Province ‐ 56,550 Mt
• Jaffna District ‐ 33,980 (largest producer in NP)
• Jaffna has a 8.7% share of national fish output, steadily growing
since 4.9% in 2000, but dramatically down from 29% in
1980, pre‐conflict time.
• NP has around 16% share
Source: PPID and DCS
60000
50000
40000
Fish catch (in Metric tons)
Industries
• Around 2,800 industries in Jaffna
• Industries with < 10 employees ≈ 2,684
• Industries with 10 or more employees ≈ 113
Source: DCS: Census of Industries 2003
30000
20000
• NP has 4,828 industries, Jaffna has the largest number in the
province
10000
0
1980 1990 2000 2001 2002 2003 2004 2005
Source: PPID and DCS
Employment in Industries
• Around 9,200 are employed in industries
• in industries with < 10 employees ≈ 6,933
• in industries with 10 or more employees ≈ 2,224
Source: DCS Census of Industries 2003
• NP has 17,176 industries, Jaffna is the largest employer in the
province
Resource
Limestone
Livestock
Marine resources
Palmyrah
Fruits & vegetables
Coconut
Paddy & rice
Potential industry
Cement and limekiln
Processed milk, yoghurt, ice cream, dairy & poultry farm, bio
gas, and manufacture of compost manure
Fish, dry fish, manufacture of fishing gear, ice plants, boat building, and
processing of lobsters for exports
Bottling of toddy & sweet toddy, jaggery & palm sugar, distilling arrack, odiel
flour, fibre & fibre products, mat weaving, and palmyrah leaves products
Fruit processing, jams, cordials, savouries, pickles, dehydrated fruits &
vegetables
Coconut oil, soap, animal fodder, charcoal, fibre & coir products
Rice milling, rice flour
Chillies
Tobacco
Sauces & powder
Cigars and cigarettes
Clay
Pottery
Source: Ministry of Rehabilitation, Reconstruction & Refugees, Jaffna Plan, 2003
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Tourism
• Domestic tourism to Jaffna increased during the ceasefire period
• Jaffna boasts historically important sites as well as sites of religious
worship that attract thousands of people to the peninsula –
Naagadeepa Vihare, Nallur Kovil, ancient temples on the islands etc
• However, tourism authorities note the total lack of infrastructure to
support the industry –everything needs to be built from scratch
• Industry actors also note some lack of interest by central govt. in
developing the tourism sector
Minerals
• The Vadamarachchi East area of the peninsula said to be endowed with
large deposits of silica sand, which can be used in the manufacturing of
glass products
• Distinction between silica and pure silica –only pure silica (free of iron
stains) can be used for manufacturing glass
• Deposits of normal construction sand
• Has not been systematically ti tapped, but will be a very useful resource
when Eastern and Northern revival takes off
• Limestone deposits at Kankasanthurai (KKS)
• Some of it already being tapped by the cement factory there
• No recent data with GSMB regarding deposits and utilisation in Jaffna
• Jaffna can benefit from proximity to Pulmodai mineral sand deposit and
Seruwavila iron copper deposit
Power and Telecoms in Jaffna
• No. of electricity connections ‐ 81,536
• 108,507 in NP
• No. of land phone connections* ‐ 9,743
*(Sri Lanka Telecom, Suntel, and Lanka Bell)
• 20,059 in NP
Source: CEB and TRC
• Mobile phones – Jaffna shows one of the highest usage rates, possibly
due to lack of fixed line coverage
• Jaffna mobile users spend as much as 12% of income on
telecommunications
• High spending on making/receiving international calls
• Removing a major constraint to business, Jaffna has just received highspeed
internet coverage from Mobitel
Selected health indicators
• Infant mortality rate ‐ 22.3%
• Maternal mortality ratio –62%
• Low birth weight ‐ 30.5%
• Underweight 0‐5 years ‐ 43.1%
• Home births ‐ 4.4%
• Safe sanitation ‐ 79.0%
Source: WHO 2002
• Shortage of doctors in the district, those passing out from the Jaffna
medical faculty shift elsewhere to work
• Some reports of as much as 200 vacancies for doctors, not filled
• Some govt. doctors spending more time practising in private hospitals
and clinics after work than in govt. hospitals and clinics
• Patients are charged high consultation fees (as a proportion of their
income) at these private clinics (around Rs. 300‐350)
Education status
• Literacy rate, Net Initial Intake rate in Grade 1 not available as in
depth household survey not conducted
• Survival rate from Grade 1 to 9 in NP (2007) = 78.3%
• Male = 73.5%, Female = 83.3%
• Second lowest, after Eastern Province
• National average is 87.09%
• Even lagging provinces of Uva and Sabaragamuwa are higher, h at 86.8% 8% and
87.6% respectively
Source: ‘Student flow analysis’ based on Min. of Educ. School Census 2006 & 2007
Performance at Secondary School Examinations (2004)
• G.C.E O/L pass rate – 40% (up from 34% in 1998)
• G.C.E A/L pass rate – 58% (down from 67% in 1998)
Source: Dept. Of Examinations
Education status –GCE A/L
• 51.6% of students enrolled for GCE A/Ls in 2008, having sat GCE
O/Ls in 2007
• Recent A/L examinations ‐ breakdown by subject stream:
• Science – 20.2%
• Commerce – 12.1%
• Arts – 67.7%
• Due to appear for A/Ls in 2009 – breakdown by subject
• Science – 18.8%
• Commerce – 14.8%
• Arts – 66.4%
Source: Calculations by M. Sivagnanam, Former Director Primary Education, Ministry of Education, based
on School Census 2007 & 2008
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Results from a field survey – PPID/ILO
• Survey carried out by PPID; included all districts in the North;
target group was children and youth (aged 15‐19 yrs)
• 57% of the respondents were female and 43% male
• 85% of respondents in Jaffna wanted to pursue further or higher
education – within this, a higher proportion of females (49%)
than males (36%)
• 28% preferred to follow arts and humanities, 25% preferred commerce,
21% preferred biological sciences, 15% preferred physical sciences,
7% preferred to follow teaching education, and 5% social sciences
• A further 7% wanted to follow vocational studies
• Around 7.4% wished to work immediately after formal schooling
• Preference of sector and category of employment
• 36% sought the professional/technical category of employment, 19%
administrative, 15% managerial in the public sector
• 4% of children sought managerial, 3% sought administrative and 2%
sought professional/technical positions in the private sector
• So significant preference away from working in primary sector
(agric., fisheries, farming etc) –only around 6% in total
Desired skills training ‐ results from a field survey
(cont...)
• Computer studies topped the preference of all respondents all the five
districts of the North, followed by accounting studies
• 50% of the children and 53% of their parents stated a preference for
computer studies training
• 24% of the children and 22% of their parents stated a preference for
accounting studies training
• Females showed a stronger preference than males, in both
categories
• Preferences for training in electrical/electronic/telecommunication
(4%), clerical/typing/secretarial (4%), and hairdressing/beauty culture
(3%) were also noted
• On the supply side, of the firms interviewed, 37% stated that lack of
English language skill is the main problem among the employees, 23%
lack IT awareness, and 19% lack Sinhala language skills
Source: Sarvananthan, M. (2005), ‘Identification of Economic Opportunities for Children Affected by War in the
Northern Province of Sri Lanka’
What next?
Reconstruction and revival
• ‘Uthuru Wasanthaya’ – Northern revival plan by GoSL
• Rs. 3 billion for rebuilding 80,000 houses and to restore livelihoods
• Rs. 500 million for resettlement programmes
• The World Bank
• North‐East Irrigated Agriculture Project (NEIAP)
• North East Emergency Rehabilitation Project (NEERP)
• Education Sector Development Project (ESDP) – includes N‐E among other provinces
• Community Livelihoods in Conflict Affected Areas Project
• Latest Country‐Assistance Strategy (2009‐2012) notes in the section on post‐conflict
development:
• Integrated rural infrastructure and livelihood project
• Addressing needs in public service delivery –rebuilding schools and clinics
• Support for housing, rehabilitation of inter‐village roads and community
infrastructure, improving the business environment
• Support for reducing youth unemployment, introducing trauma counselling at village
level
• Enhancing inter‐ethnic awareness – learning a ‘link’ language plus learning each others
languages etc
• Asian Development Bank
• North East Community Restoration and Development Project (NECORD)
• Conflict Affected Area Rehabilitation Project (CAARP)
Concluding remarks
• Large untapped, unmarketed potential in the key agricultural crops of the area
(paddy, red onion, chilli, potato, tobacco) and livestock produce – creating better
market linkages, better utilisation of agricultural/farming capacity and skills, better
access to micro‐funding/SME loan guarantees etc
• However, aspirations of the youth appear to lie in the services industry, not the
agriculture cum fisheries sector
• Having traditionally enjoyed high levels of education achievement and
intellectual capital, are knowledge‐based businesses the way forward for Jaffna?
• Immediate need for matching the keen interest among the youth population in
higher education services, skills and vocational training, with the provision of such
services
• Potent to train a workforce suitable to tap the BPO industry, other knowledgeeconomy
industries
• Meanwhile, building up essential infrastructure and create a business friendly
environment – electricity, telecoms, financial services, roads and transport
• Innovative measures to attract investment and business interest from the displaced
Jaffna Diaspora – converting the accumulated financial and human capital among
the Diaspora into assets in the development process –as the case in India –
converting the ‘brain drain’ into a ‘brain gain’
• Anecdotal evidence suggests that as much as 75% of the Tamils who fled Sri Lanka to
Western countries are from the Northern Province, particularly from the Jaffna
peninsula
• Formal and informal foreign remittances received by Jaffna labour might be
creating a disincentive to supplying more labour hours – needs more investigation
• Urgent need to gather data and statistics on the region – providing necessary
funding and administrative measures to conduct surveys following resettlement
7