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

It is important that future microfinance interventions take place within a broader
framework of economic development activity that includes a range of enterprise
development and business information services. The capacity of local extension
services needs to be increased and there is a clear need for better training facilities
and the coordination of economic development activities at a national and
regional level. Such activity should be devolved wherever possible and local
organisations should be encouraged to form business networks and knowledge
brokering activities.
7. Conclusion
In conclusion, the study found that there is a broad base of microfinance activity
and that relative to the population savings mobilisation and micro credit activity
are high. In recent years the Southern Province has caught up with and in some
cases overtaken districts that were previously regarded as leaders in microfinance.
Historically microfinance activity was heavily subsidised but now appears to be
largely collateralised by savings. Apart from the North and East region the issue
of most concern is the sustainability of the present high levels of microfinance.
The belief that poverty targeting and financial sustainability are not compatible
within microfinance schemes unfortunately persists. Microfinance has reached a
stage of maturity where competition and business like practices are necessary if
the long-term interests of microfinance clients are to be effectively served.
Increased commercialisation, regulatory reform and widespread capacity building
of existing schemes is essential.
The authors believe that if urgent action is not taken to restructure these
organisations, train staff and put in place proper financial accounting practices, in
the medium term the present access to microfinance will be reduced at the
expense of the loss of savings of the communities involved and the waste of past
assistance so freely given by the international community.
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