Microfinance Industry Report SRI LANKA - Microfinance in Sri Lanka

Regional Coverage
The regional and sectoral distribution of microfinance
outlets is depicted in Figures 1 and 2 below, based
on the MFI survey. 12 Although 3 of the country’s 25
districts could not be covered (see footnote), the
MFIs which were covered by the survey include all
the large providers of microfinance in the country,
therefore the data given below is considered to be
quite comprehensive.
The regional distribution depicted in Figure 1
covers 7,141 microfinance outlets of the MFIs which
participated in the survey. It includes all the RDBs,
all the SBSs and the 3,794 active societies of Sanasa.
It also covers over 85% of CRBs and 83 NGO-MFIs.
Given our estimate of c. 10,000 microfinance outlets
in the country, the regional distribution depicted
below covers at least 70% of outlets. There is clearly
a strong presence of MFIs in the Southern Province,
with nearly a quarter of outlets located there. On the
other hand, the predominantly agricultural North
12 It should be mentioned that 3 districts in the North (namely
Kilinochchi, Mullaittivu and Mannar) could not be included in
the survey due to the unfavourable security situation in these
areas. Further, MFIs with a client base of less than 500 (less than
100 in the Northern and Eastern provinces), were excluded from
the survey.
Central Province is relatively underserved accounting
for 3.9% of outlets. The conflict affected Northern
Province accounts for 5.2% of outlets based on the
information from the survey. However, this is likely
to be understated as all districts of this province
could not be covered.
Sectoral Distribution of Outlets
Microfinance in Sri Lanka is clearly concentrated
in rural areas. Almost 90% of the 7,141 outlets
represented in Figure 2 are located in areas classified
by the Department of Census and Statistics as
“Rural”. Less than 10% of outlets are located in urban
areas and only 1% in the estate sector. This latter fact
especially, points to a vacuum in terms of availability
of microfinance services in the estate sector where
the poverty headcount is nearly 17 percentage points
higher than the national average. In fact, according
to data published by the Department of Census and
Statistics, while the national poverty headcount
index has decreased from 22.7% in 2002 to 15.2% in
2006/07, in the estate sector the index has increased
from 30% to 32% during the same period. 13
Figure 2 - MF Outlets by Sector
Figure 1 - MF Outlets by Province
13 Household Income and Expenditure Survey 2006/07 –
Department of Census and Statistics Sri Lanka
Banking With The Poor Network 15