National Microfinance Study of Sri Lanka: Survey of Practices and ...

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In Wayamba the sustainability of the village organisations and of the divisional level social organisations is doubtful unless at least a strong credit linkage is developed between the village organisations at divisional level and village level The current linkage with WHDRA is very uncertain due to lack of funds, management ability, and the sustainability of WHRDA itself. The Dry Zone Participatory Development Project ended in March 2000, the Badulla Integrated Development Project is due to end in September 2002 and the NCP Participatory Project in Anuradhapura is also scheduled to end soon. The sustainability of the project efforts at least in savings and credit is very unlikely unless another donor or the government strengthen the local institutions and the microfinance programme. Funds for credit are still available from the balance of IFAD loan funds but the system is faulty and credit availability low. It is believed that donors, instead of starting new projects, should help ensure the sustainability of past projects that have a massive outreach to the poor who previously had no access to a formal savings and credit programmes. There are valued options to ensure the sustainability of these projects such as linkages to new projects including PAMP, or to substantial national NGOs such as SEEDS, or even to banks such as the Provincial Development Banks. All of these options require focused work and donor assistance to achieve operational and financial sustainability. Examples of Projects that were started in the 1990’s are as follows: North Central Province Participatory Development Project Funded by IFAD and earlier SIDA this project works in 15 of the 21 divisions in Anuradhapura and had mobilised 20,929 families into 3093 small groups and 377 village organisations by end of June 2001. This is covers 1/3 rd of all families in the 15 divisions with the other 6 divisions covered by a separate ADB project. Some 282 out of 475 Grama Sevaka divisions in the fifteen divisional secretariats are covered by the project. Savings amongst all groups, both small savings groups and village societies, have reached SLR 13.8 million. Each of one hundred and fifty village organisations has been given credit seed funding for their loan funds of SLR 25,000 each. Credit is given at three levels: Small Group Village Organisations Participating Banks The size of the loan increases up through the organisational from the lowest at the small group level upwards to participating bank level. At village group level the loans are mainly for consumption and emergency needs, whilst at village society and bank level, credit is granted for income generation activity only. 101
The participating banks were the Bank of Ceylon, the Peoples Bank, the Hatton National Bank and the Seylan Bank. However the interest of the Banks in this scheme was low as initially the project offered a two percent incentive to the banks to provide credit under the project. It is believed that this was not attractive to the banks and credit moved slowly with only sixty loans being granted in a two year period. Although a total of 204 loans to a value of SLR 4.4 million had been recommended by the project, recently the strategy to re-finance loans was changed and as of September 2001, 16 loans to a value of SLR 583,000 were granted by banks Some of these are being processed, but the project is still experiencing low interest enthusiasm of the participating banks with slow processing and many loans taking weeks sometimes months to process. Unfortunately the Bank with the most interest in micro credit is the Raja Rata Development Bank. However, it is not a participating agency, probably because it was being restructured at the inception of the project. It is believed that new participating agencies such as the Rajarata Development Bank and SEEDS be included if the credit component is to be able to attain its required outreach and if this project is to succeed. It is also possible to include district TCCS as participating agencies after an evaluation of their competencies. Second Badulla IRDP In Badulla district the most important poverty alleviation focused project with a microfinance component is the second Badulla IRDP. This has by the far the largest social mobilisation component with the largest number of people in savings and credit in any project currently under Ministry of Plan Implementation. The project funded by IFAD and UNDP started in 1993 and its second phase is ongoing with completion targeted for August 2002. Some 41,700 villagers have been mobilised into small groups and of this number 23,589 people are members of 278 village organisations including 18 in the tea estates. The 278 village societies named Integrated Community Organisations (ICOs) are registered with the Social Service Department. The remainder of the communities are mobilised in small groups that will be formed into village organisations. At present their work is co-ordinated at project level as well as divisional level and there are social mobilisers responsible for each village. All of the people involved are now saving at small group level with some savings graduating to the village society level. A limited volume of credit is given by some of the small groups as well as at the village society level. 148 ICOs were given seed funding ranging from SLR 50,000 to SLR 100,000 from the project to supplement their own funds. The total funds available at village society level for credit including savings is no more than SLR 500,000 per society. Besides access to credit through the village societies and the small groups, access is also available to members through Participating Credit Institutions including the Bank of Ceylon, the Peoples Bank, the Uva Development Bank, SEEDS, TCCS and the Prajashakthi District Organisation. 102
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National Microfinance Study of Sri
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(b) Lenders .......................
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Introduction into the pawning busin
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Microfinance Overview .............
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Savings ...........................
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List of Tables Table 1 Microfinance
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Table 70 Ratnapura District Microfi
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JBIC MFI MFN MIS MPCS MSME NCPPDP N
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Figure 1 Map of per Capita Value of
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Figure 3 Map of per Capita Value of
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Executive Summary This report provi
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Practitioner Microfinance Activity
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As a result the banks are moving aw
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The operating conditions of the con
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Donor Strategies There should be a
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Introduction to the Study The objec
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The survey does not claim to repres
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Introduction Socio-Economic Overvie
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These five years saw a spate of new
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The 'Economic Stream' Employment is
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Microfinance Clients and Beneficiar
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1. Funders of Microfinance in Sri L
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CIDA believes that microfinance act
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The Department For International De
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NOVIB Partnerships tend to be long
Page 52 and 53: HIVOS The HIVOS Desk concentrates o
Page 54 and 55: Over time SIDA noted that the loan
Page 56 and 57: Comment freely given from one of th
Page 58 and 59: the time period of the project, wit
Page 60 and 61: Only a very small part of the US 50
Page 62 and 63: The demand for loans from this fund
Page 64 and 65: Without permanent access to institu
Page 66 and 67: This broad strategy means that the
Page 68 and 69: Beneficiary targeting was generally
Page 70 and 71: The FCSs were developed the followi
Page 72 and 73: CARE's new strategy commits the org
Page 74 and 75: Each CBO determines the level of in
Page 76 and 77: The project’s overall approach re
Page 78 and 79: Figure 6 GTZ/JRP - Project Interact
Page 80 and 81: The Social Development Foundation F
Page 82 and 83: There are no sector-based quotas ap
Page 84 and 85: Over the past five years SCN has as
Page 86 and 87: UNDP in the North & East - The Jaff
Page 88 and 89: In December 2001 a new UNDP Program
Page 90 and 91: From previous experience and lesson
Page 92 and 93: World Vision Lanka WVL believes tha
Page 94 and 95: Membership Development 3500 3000 25
Page 96 and 97: Table 14 World Vision - Gramashakth
Page 98 and 99: ZOA works with community groups in
Page 100 and 101: At the village society and bank lev
Page 104 and 105: Table 15 Badulla IRDP - Summary Dat
Page 106 and 107: DZPDP/WHRDA credit operations comme
Page 108 and 109: In the initial years they did not f
Page 110 and 111: Table 18 SPRDP- Loans 1993 to 1999
Page 112 and 113: (c)Lender-Practitioners The Central
Page 114 and 115: Society members have access to cred
Page 116 and 117: The RDBs were re-structured in 1998
Page 118 and 119: Table 25 Value of Loans Disbursed b
Page 120 and 121: The total savings and credit issued
Page 122 and 123: Table 29 Samurdhi - Loans by Distri
Page 124 and 125: In 1998 SEEDS converted to a separa
Page 126 and 127: Within the loans from SEEDS funds t
Page 128 and 129: The Arthacharya Foundation practice
Page 130 and 131: The program was assisted by some li
Page 132 and 133: However in general the majority of
Page 134 and 135: Table 33 Growth of MPCS CRBs -1990
Page 136 and 137: As at the end of December, 2000 a s
Page 138 and 139: Some 1,176 of the 1,476 Co-operativ
Page 140 and 141: A total of 74 NGOs were identified
Page 142 and 143: Finally only a small proportion of
Page 144 and 145: Table 38 TCCS Active Societies and
Page 146 and 147: District Unions - National Federati
Page 148 and 149: 4. Facilitators a) National Level F
Page 150 and 151: International Centre for the Traini
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Funder-Practitioner Microfinance Ac
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As practitioner experience increase
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Introduction and Approach The major
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State-Owned Banks The Bank of Ceylo
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Starting in 1994, the NCRCS is aime
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The Seylan Bank The Seylan Bank ent
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Figure 9 Linking of the RBIP Tools
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People's Fast reduces loan processi
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In addition, RBIP monitors the impl
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The Hatton National Bank Case Study
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Seylan Bank Case Study The Seylan B
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Until 1961 private pawnbrokers were
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Bank officials stated that PSC staf
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The urban PSCs have on average more
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The lack of flexibility has induced
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From the borrowers perspective not
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The Peoples Bank, on the other hand
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Introduction and Approach Internati
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Displaced populations are dependent
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Large tracts of land have become to
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Public markets, shops, guest houses
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The previous thriving local economy
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The Wanni Access to the area known
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Remembering that these intervention
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This type of situation is seen thro
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People IDPs in welfare centres, sho
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World Vision has been working in al
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small entrepreneurs have received t
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The exception to this is a governme
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There has been some continued acces
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Introduction and Approach A distric
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The MPCSs were equally disrupted an
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The main body of the survey is pres
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Local NGOs 11 NGOs were identified
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Local NGOs 1 NGO was identified in
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Local NGOs 1 NGO was identified in
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Local NGOs 2 NGOs were identified i
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Local NGOs No NGOs were identified
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Gampaha District Microfinance Overv
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Hambantota District Microfinance Ov
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Jaffna District Microfinance Overvi
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Staring in 1998 each DS received SL
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Matale District Microfinance Overvi
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Matara District Microfinance Overvi
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Moneragala District Microfinance Ov
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Nuwara Eliya District Microfinance
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Polonnaruwa District Microfinance O
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Puttalam District Microfinance Over
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Ratnapura District Microfinance Ove
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Trincomalee District Microfinance O
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Vavuniya district Microfinance Over
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The Wanni Area Microfinance Overvie
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Summary Microfinance Activity by Ac
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The NGO questionnaire survey identi
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World Vision Lanka works in 5 distr
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Given that these figures do not inc
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Overall, 13 of districts had levels
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Averages Value of Loans Table 78 Av
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Volume and Number of Loans The surv
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Findings The key and main findings
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Service Providers The service provi
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those incapacitated by conflict, wi
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Cultures of Dependency in Microfina
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Strategic Recommendations The key s
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Conclusion The study found that the
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Charitoneko, S. and D de Silva (200
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Remenyi, J (1991). Where Credit is
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Technical Appendix
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