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

Executive Summary
This report provides a map of microfinance activity throughout the whole of Sri
Lanka. It is an empirical source of reference for the microfinance community as a
whole. The report looks at microfinance in terms of the policies and practices of
existing actors and environment. It also analyses and maps supply of
microfinance at a district level. The results of this study are presented through
two main surveys that look at actor activity and track existing levels of supply.
Two additional surveys examine the commercial banking sector's microfinance
activity and the operating environment in the North and East region of Sri Lanka.
1. The Microfinance Landscape in Sri Lanka
The survey found that microfinance activity in Sri Lanka is both a traditional
community activity and a tool for economic development, with the clientele being
mainly the poor. Microfinance in Sri Lanka is practised by a broad range of
different organisations for purposes of poverty alleviation, social and community
development and as an multi-faceted intervention tool in areas affected by
conflict. The rationale, methods and models behind such schemes varies
significantly according to actor. At the same time issues of sustainability, political
capture, standards of professionalism and transparency are to the fore throughout.
The survey in Part A defines the microfinance landscape according to actor type
and describes existing policies and practices of intervention. Actors are grouped
according to whether they are:
Granters
Practitioners
Granter-Practitioners
Facilitators
Funders of Microfinance in Sri Lanka
The survey found broad-based coverage of microfinance funding throughout the
country with significant levels of funding readily available to microfinance
practitioners at all levels from local NGOs up to the professional national-level
MFIs, INGOs and government programmes. There appears to be a mixture of
short and medium term funding activity with some funders historically prepared
to commit to long-term partnerships.
In terms of the provision of lending services one funder has recently become a
granter-lender. This along with the existence of the presence of the national
lending institutions means that there would appear to be adequate access to
wholesale and retail funding for the professional MFIs. Furthermore there is
some evidence to suggest that the NDTF has successfully managed to encourage
local NGOs to switch from grant in aid funding. It is to early to say whether this
is tactical behaviour on the part of the NGOs or that it is the start of a longer-term
shift.
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