Sri Lanka Human Development Report 2012.pdf

The length of national, provincial and local roads has
improved marginally over the years. 254 Agricultural,
local and gravel roads have particularly increased in more
deprived regions such as Sabaragamuwa. Roads connecting
the main towns have not changed much in terms of length,
but investments have been made in improving their
quality.
Investment in road infrastructure has increased significantly
from Rs. 18.8 billion in 2005 to Rs. 107.8 billion in
2010. Out of the 2010 investment, 72 percent has been
on improving, upgrading, rehabilitating and maintaining
roads. 255 Further, several projects have been initiated
to connect the main economic centres by expressways,
absorbing about 23 percent of expenditures. 256 One new
road is the recently opened Colombo-Galle highway, the
first of its type in the country.
While Sri Lanka’s road infrastructure is in relatively good
condition, poor transport conditions in terms of road
quality and the availability of transport facilities hold back
rural enterprises. The World Bank identified this as the
top hindrance they face. A survey found that more than
46 percent of respondents in rural areas said that transport
was an obstacle to doing business. Road quality is poorest
in the Northern Province followed by Uva Province.
The survey also reported that only 20 percent of
urban manufacturers said that transport was a severe
constraint. But traffic congestion and worker absenteeism
stemming from the unavailability of transportation were
identified as critical factors influencing productivity. 257
The examination of congestion in urban areas could
consider impacts like these, along with possible solutions.
The time to access economic and administrative services
varies across districts (Table A26). Those with a high
concentration of estates and/or lagging development,
experience longer distances and times. For a person in
Nuwara Eliya, which has many estates, on average it takes
about 14 minutes to reach a bus halt; the nearest would
be about two kilometres away. The closest local authority
is about 52 minutes away, the nearest local administrative
authority about 70 minutes away, and the post office about
22 minutes away. A person in Colombo can reach a bus halt
in about 8 minutes, and the other services are accessible in
under 30 minutes. Longer times to access services in some
areas may be due to poor quality roads and geography. The
estates, for instance, are located in hilly terrain.
Access to finance
Since capital is a major factor of production, businesses
should be able to quickly and cheaply access it through an
efficient financial system, and be able to use it in the most
productive manner.
Formal financial services in Sri Lanka have high outreach.
A 2008 study found that 82.5 percent of sample
households have used formal financial institutions,
while 47 percent have turned to loan services, mostly for
livelihood activities. There are, however, clear disparities
in the utilization of financial services. Only 75.2 percent
of households in North Western Province have used
them, along with 76.5 percent in Uva Province and 76.2
percent in Eastern Province. In North Central Province,
89.8 percent of households have used financial services. 258
It takes the average Sri Lankan about 25 minutes to get
to a financial facility, but access time is over 35 minutes
for the districts of Moneragala, Badulla and Ampara. It
is under 15 minutes for Colombo and Gampaha. For all
other districts, access time is about 20-25 minutes (Table
A26).
Financial service issues faced by enterprises vary across
urban and rural areas, and by types of investment. A
World Bank study found that both the cost of and access
to finance are major constraints for rural enterprises, but
only the cost of finance is an issue for urban ones. Over
one-half of surveyed rural enterprises cited the constraints
of current financial services on expanding or operating
their business. Of this number, 60 percent identified high
interest and 50 percent tedious loan procedures as severe
problems. 259
Despite the high outreach of formal financial institutions,
the share of formal finance in total financing is low for
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sri lanka Human Development report 2012