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

In 1998 SEEDS converted to a separate legal body registered under the
Companies’ Act as a company limited by guarantee, allowing it to raise finance
and contract as a legal entity in its own right. As part of this process a Board of
Directors, that includes eminent professionals from the commercial banking
industry and the development field, was appointed.
SEEDS’ goal as the economic arm of the Sarvodaya Movement, is to facilitate the
eradication of poverty by promoting the economic empowerment of the rural
people and working with them towards creating a sustainable livelihood. SEEDS
enables Sarvodaya members to pursue their income-earning activities more
successfully, firstly, through making capital available at fair rates of interest, and
secondly, through providing training, information, advice and product marketing
support towards improving their business and technical skills (SEEDS, 2000)
SEEDS believes that economic empowerment plays a crucial role in poverty
eradication, but that economic empowerment is not only increasing income levels,
but also increasing people’s economic discipline and awareness, as well as
building knowledge, abilities and the potential for livelihood improvement. For it
to be effective it is essential that these factors be combined with the resources,
opportunity and infrastructure and an environment that engenders progress.
SEEDS approach is focused on creating a lasting impact on people’s livelihood,
not on short-term intervention.
During this period SEEDS has been able to create over 500 Village Development
Banks that are sustainable grass-root level institutions managed by the people. By
the end of June 2001 SEEDS was working with over 2,600 village-level societies
across 18 of the 25 government administrative districts and in 2 secretariat
divisions in Ampara (ibid.)
SEEDS’ primary clientele are the membership of the Sarvodaya Shramadana
Societies that provide the conduit for SEEDS activities. Generally, they are lowincome
earners or those who do not have the opportunity to access finance from
the formal banking sector.
Recently, with commercialisation SEEDS has extended its services to a wider
market, including the provision of credit for solar home systems to non-members.
Currently SEEDS estimates that 80% of its clientele are members of Sarvodaya
societies with the remaining 20% of its members coming from the general
populace.
When SEEDS begins working with a society it encourages a savings culture by
promoting the benefits of small, but regular deposits to establish a rural capital
base. Products offered comprise compulsory and voluntary savings.
Compulsory savings are made up of the loan security fund and loan risk fund,
whereas voluntary savings include a range of savings products. With a total
savings of SLR 679 million in the year 2000/01 of which SLR 310 million or
45% is invested in SEEDS it can be seen that over 50% of the total is voluntary
savings (ibid.)
SEEDS has granted nearly Rs.2 billion worth of loans from central funds, with a
loan portfolio of over SLR 660 million and serviced over 45,000 small businesses
through training and counselling.
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