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

There has been some continued access to microfinance through the TCCS,
however due to the conflict and displacement many branches and some of the
district unions have become defunct. The Cooperative Rural Banks that continue
to operate in the region are taking deposits, but the majority are only considering
disbursing loans with grant in aid funding from the international community.
Most access to microfinance for the communities in the region is through
interventions by international donors, agencies and organisations either directly or
implemented through regional and local non-governmental organisations.
This has resulted in a proliferation of NGOs utilizing microfinance for a broad
range of services including, health, education, social services, village
infrastructure as well as consumption smoothing and income generation activities.
The Government Agents and the LTTE ‘local authorities’ in the region act as
focal points using district committees for the overall planning of where and whom
the interventions reach, they however are somewhat restricted by the dictates of
the local military commanders of both protagonists.
Since the ceasefire in December 2001 there has been a rapid opening of
distribution routes, relaxation of the pass system and a growing flow of goods and
services are entering the region.
Conclusion
If the region is to be revived economically then, there is an urgent need for a
concerted shift from short-term relief-based interventions to medium-term
planned initiatives focused on economic recovery that employ development based
approaches. Microfinance in this context is concerned with helping to foster local
economic growth through ready access to financial services for all and access to
enterprise development services for the entrepreneurial poor.
Given that the process towards a negotiated settlement is successful then the
international community also needs to position itself for full-scale economic
rehabilitation and development activities as the flow of returnees and economic
recovery starts to take hold placing increasing stress on the regional
infrastructure. Microfinance in this context is concerned with an increased
formalisation of service provision, building the linkages and providing the
services that allow the development and flow of small business activity.