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

There is a demand for this level of loan activity as seen in Vavuniya with the
introduction of ‘added value’ growth in the agriculture & livestock, fisheries and
related services sectors such as engineering.
However, demand has been drastically weakened by insufficient supply through
risk, a credit squeeze, and complex application and collateral requirements. The
demand for this level will grow and be readily supported only if there is continued
stability in the environment with a settlement of the conflict and existing Level 3
& 4 entrepreneurs can be encouraged to expand and or start-up new businesses.
It is possible that financial instruments such as a the proposed loan guarantee fund
in alliance with GTZ/RBIP and the People’s Bank that is to be tested in Jaffna
early next year so that some of the present demand can be met. However,
microfinance by itself is not enough. It is essential that professional demanddriven
enterprise/business development services accompany Level 3, 4 & 5 loans.
Enterprise Development Services in the North & East Region of Sri
Lanka
It is well established that employment is the ‘portal’ to increasing individual
quality of life, household income and community stability. The growth of
sustainable private enterprise in the economy is the key that will access this
portal.
The processes of building sustainable private enterprises can hardly be left to
spontaneous growth mechanisms or financial tools alone; much better that they be
supported in some key elements such as:
Orientation towards production that values the local potential.
Improvement of the qualification of the work force generally.
Access to business information and inter-business communication.
All this requires an organised and coordinated effort, so that knowledge of the
reality and the local needs are transformed into a technical capacity to encourage
business, opportunities of income and employment and thereby leverage the
potential for economic growth.
Over the past five years, training and business development services have grown
mainly through the supply-side, implemented through international organisations
and agencies. However, as entrepreneurs discover the value of these services to
the competitiveness and profitability of their enterprises, client-based demand is
growing. For example in Vavuniya, where FORUT has established skills and
personal development training, clients are entering the economic stream more
easily both in employment and self-employment.
The World University Services of Canada (WUSC) operate throughout the North
& East providing skills & vocational training and temporary placement services.
They also support Career Service Centres (CSCs) in concert with local NGOs -
such as Sarvodaya in Batticaloa, and GoSL departments in Trincomalee and
Vavuniya. The CSCs supply employment and training guidance and linkages
between the unemployed, training centres and local businesses.
At the level of enterprise development services, in Jaffna, where the GTZ
Competency-based Economies through Formation of Enterprise (CEFE) project
has been established for the past three years, some 200 prospective micro and