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

Introduction and Approach
International studies undertaken in countries such as Mozambique, Cambodia,
Rwanda and elsewhere show that microfinance interventions in areas affected by
conflict are different in nature from microfinance interventions elsewhere (c.f.
Doyle, 1999; Nagarajan, 1998).
In particular there are three main features of differentiation these are:
Microfinance can be implemented in cases where the local infrastructure has
been devastated.
Microfinance is a flexible tool that has the ability to assist relief interventions
to meet a community's basic needs and is used by a range of different actors
for different reasons across the relief spectrum.
Microfinance is an effective economic recovery tool that helps to regenerate
local economies and form a bridge into economic development.
There has been an ongoing conflict in Sri Lanka for the past eighteen years and
this has resulted in the economic landscape and the microfinance interventions,
structures, systems and actors in the North and East region being highly
differentiated from the rest of the country.
Over fifty reports have recently been published concerning the conflict situation
in the North and East region of Sri Lanka. The majority of these are focused on
the social and cultural impacts of the conflict such as human rights, the impact of
conflict on civil society and peace, reconciliation and conflict resolution (c.f.
Bush, 2001; Kuperus, 2000). Relatively few papers overview the localised
economic conditions of the region (c.f. Gant 2000; Gant & Durrant, 2001) or
discuss the role of microfinance in the economic recovery of the region (Gant &
Durrant, 2002d)
An economic survey was undertaken of the North and East region as part of this
report in order to gain an understanding of the operating conditions related to
microfinance. This has been done so as to assist the microfinance community to
better understand the situation and needs that underlie the effective planning of
microfinance economic recovery and development interventions. Effective
planning is a prerequisite for all medium term microfinance interventions if the
financial landscape is not to be skewed and the communities made more
vulnerable (Anderson, 1999)
To achieve this International Agencies, INGOs, NGOs, Government Agents, and
other microfinance practitioners were approached and asked to provide
information on the region with specific emphasis on the economy and
microfinance. A combination of semi-structured interviews, questionnaires and
official and ‘grey’ in-house documentation were used to complete this survey.
Field visits were undertaken in Batticaloa, Trincomalee, Vavuniya, Jaffna and the
Wanni area between November 2001 and January 2002.