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

The funding of microfinance activity in Sri Lanka has the following key
characteristics:
Most micro credit activity is funded through savings.
There is a need for widespread technical assistance funding throughout much
of the country.
There is little need for large-scale direct grant in aid funding of ‘hard’
financial instruments other than in the North and East region and possibly
second tier wholesale organisations.
There is an urgent need for a range of economic recovery initiatives
encompassing both ‘hard’ and ‘soft’ policy instruments that focus on wide
scale enterprise development to be funded in the North and East region.
Broad based community targeting should be accompanied by the funding of
schemes that specifically target ‘special’ groups such as, demobilised soldiers,
those incapacitated by conflict, widows, female-headed house holds and
youth.
There are a number of key issues and themes that are central to the practice of
microfinance in Sri Lanka:
The long-term sustainability of present microfinance schemes is of the
greatest concern throughout the country as whole.
Issues of ‘political capture’ of microfinance services in Sri Lanka is
widespread, reaching through government managed programmes, the
cooperative movement and the state controlled commercial banking sector.
Most of the sector remains highly subsidised.
Most microfinance enterprise development schemes operate on too short a
time scale, are badly planned and have inadequate monitoring and evaluation,
and financial management systems.
There is a need for externally accredited microfinance training in Sri Lanka.
Targeting of women has been a key component of microfinance since its
inception and most microfinance schemes in Sri Lanka target women to a
significant degree.
6. Recommendations
The overarching recommendations of the study are that:
The sustainability of present microfinance schemes be ensured to protect the
current high levels of supply nation wide.
Economic recovery initiatives urgently be deployed in the North and East
region.
The recommendations section contains a series of additional recommendations
aimed at different aspects of the sector and its stakeholders. These are presented
both at a national level and with specific regard to the North and East region.
Recommended strategies to the donor community and the GoSL are summarised
below.
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