Microfinance Industry Report SRI LANKA - Microfinance in Sri Lanka

implementers like GTZ and ADB contractors, there
are no self-described microfinance experts among
the donor organizations.
> > Appropriate instruments – There is an imbalance
of money provided for loan funds vs. capacitybuilding,
as well as too much funding through
governments and credit components of multisector
programs. Usually, capital should follow
capacity. There is a lack of capacity to absorb all
the loan capital funding.
According to the review, the heavy investment
in loan capital is unnecessary given the apparent
availability of liquidity in the system. The role of
donors should be to facilitate the flow of funds
from local markets, and increase the capacity
of institutions to meet client needs. However,
funding through government which might dictate
terms of the loan to the end client (borrower)
reduces the room for managers to operate their
MFIs in a sustainable manner. The review finds
that donor interventions sometimes reinforce the
inappropriate role of government as a retailer by
funding microfinance through line ministries and
supporting various government programs.
> > Accountability – The review mentions that there
appears to be a lack of monitoring and evaluation
by donors of their funding in microfinance. It points
out that some donors carry out monitoring of their
grants by asking for unnecessary information such
as the names of borrowers, while not collecting
generally accepted performance indicators. The
fact that donors do not appear to be doing any
serious monitoring of their funds contributes to a
lack of transparency in the industry.
> > Knowledge management - Little coordination
between and amongst donors, international
NGOs, and practitioners. Despite attempts at
coordination through the GTZ co-ordinated
donor network, the review finds limited
information sharing outside of the Sri Lanka
microfinance website (www.microfinance.lk)
Banking With The Poor Network 27