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

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Microfinance Clients and Beneficiaries Microfinance is both a traditional community savings tool used by local community organisations and a ‘tool’ for economic development. As such, the clientele or beneficiaries, depending on the organisational culture, are primarily, but by no means exclusively, the poor. Poverty, however, is not homogenous. Remenyi (1991), for example, has categorised five levels of poor into a ‘poverty pyramid’. These are: the ultra poor, the labouring poor, the self-employed poor, the entrepreneurial poor and the near poor At the bottom layer of the pyramid are the ultra poor that depend on the earnings of others. Above them are the labouring poor are employed in low-paid, unskilled labour positions. The top three levels consist of the self-employed poor who work for themselves and may employ up to five others, the entrepreneurial poor whose enterprises employ more than five people and the near poor who have stable, albeit low wage employment. This model provides another heuristic when considering different microfinance activity and approaches. In practice, however, Sri Lankan household economic livelihoods are complex and there is often overlap between categories. It is also necessary to consider the poor in the context of the North & East. A more detailed discussion of this is included in Part C. Different Kinds of Microfinance Activity Microfinance is a multiple purpose tool, used in Sri Lanka by different actors, for different purposes. This includes the use of microfinance: as a government policy tool for poverty alleviation, as a commercial activity, as a ‘not-for-profit’ social or cultural development tool and as an intervention tool in areas affected by conflict. Table 2 Classification of Microfinance Activity Microfinance Purpose Government policy tool for poverty alleviation at the national, regional and local level. Commercial for-profit activity. Not-for-profit social or cultural development tool Intervention tool in areas affected by conflict. Organisation CBSL, Ministry of Planning, Samurdhi, NDTF, Multilateral and Bilateral Agencies, Ministry Of Regional Development And Plan Implementation, Ministry of External Resources. Bank of Ceylon, DFCC, Hatton National Bank, National Development Bank, National Savings Bank, Peoples Bank, Seylan Bank, small private organisations. National, Regional & Local NGOs -such as SEEDS, Agromart, Social Mobilisation Foundation, CRBs, TCCS, Multilateral agencies and INGOs Multilateral and Bilateral Agencies, INGOs, GoSL, local and regional NGOs. ____________________________________________ 41
Different Types of Microfinance Actor Issues of regulation aside, there are broadly four different types of microfinance actor in Sri Lanka, namely: funders, practitioners, those who do both and facilitators that provide services to the microfinance sector. 9 Table 3 Typology of Microfinance Actor Actor Type 1. Funding Organisations Organisations In Sri Lanka a) Granters AusAID, CIDA, DFID, HIVOS, ICCO, NORAD, SIDA, SLCDF, UNICEF, UNHCR & USAID. b) Lenders DFCC & NDTF. c) Granters-Lender ADB, JBIC, NOVIB & World Bank 2. Funder-Practitioners a) Granter-Practitioners -International -National CARE, DRC, FORUT, GTZ, Oxfam, SCN, UNDP, WVL & ZOA Ministry of Plan Implementation b) Lender-Practitioners CBSL, RDBs, SANASA, commercial banks 3. Practitioners a) National Level Practitioners b) Regional Level Practitioners c) Local Level Practitioners 4. Facilitators Samurdhi, SANASA, SEEDS Agromart, Arthachariya Foundation, Samastha Lanka Praja Sanwardena Mandalaya, Sarvodaya, Sewa Lanka, South Asia Partnership. CRBs, CBOs, TCCSs, Local NGOs, GoSL, Private Companies. a) National Level Facilitators The Microfinance Network, ICRTL. b) Local Level Facilitators Microfinance Coordination Groups 9 JBIC funds microfinance activity directly through GoSL partnering with CBSL; IFAD and WFP no longer fund microfinance projects; none of the embassies of presently funding microfinance projects, although they have done so occasionally in the past; ECHO and the EU do not specifically fund microfinance, although some of their funding may by used for income generation schemes. Commercial banks are considered separately in Part B of this study (refer to main introduction for more details). The National Development Bank funds enterprise development projects that are classed as small and medium and have been omitted from this study. 42
Page 1: National Microfinance Study of Sri
Page 4 and 5: (b) Lenders .......................
Page 6 and 7: Introduction into the pawning busin
Page 8 and 9: Microfinance Overview .............
Page 10 and 11: Savings ...........................
Page 12 and 13: List of Tables Table 1 Microfinance
Page 14 and 15: Table 70 Ratnapura District Microfi
Page 16 and 17: JBIC MFI MFN MIS MPCS MSME NCPPDP N
Page 18 and 19: Figure 1 Map of per Capita Value of
Page 20 and 21: Figure 3 Map of per Capita Value of
Page 22 and 23: Executive Summary This report provi
Page 24 and 25: Practitioner Microfinance Activity
Page 26 and 27: As a result the banks are moving aw
Page 28 and 29: The operating conditions of the con
Page 30 and 31: Donor Strategies There should be a
Page 32 and 33: Introduction to the Study The objec
Page 34 and 35: The survey does not claim to repres
Page 36 and 37: Introduction Socio-Economic Overvie
Page 38 and 39: These five years saw a spate of new
Page 40 and 41: The 'Economic Stream' Employment is
Page 44 and 45: 1. Funders of Microfinance in Sri L
Page 46 and 47: CIDA believes that microfinance act
Page 48 and 49: The Department For International De
Page 50 and 51: NOVIB Partnerships tend to be long
Page 52 and 53: HIVOS The HIVOS Desk concentrates o
Page 54 and 55: Over time SIDA noted that the loan
Page 56 and 57: Comment freely given from one of th
Page 58 and 59: the time period of the project, wit
Page 60 and 61: Only a very small part of the US 50
Page 62 and 63: The demand for loans from this fund
Page 64 and 65: Without permanent access to institu
Page 66 and 67: This broad strategy means that the
Page 68 and 69: Beneficiary targeting was generally
Page 70 and 71: The FCSs were developed the followi
Page 72 and 73: CARE's new strategy commits the org
Page 74 and 75: Each CBO determines the level of in
Page 76 and 77: The project’s overall approach re
Page 78 and 79: Figure 6 GTZ/JRP - Project Interact
Page 80 and 81: The Social Development Foundation F
Page 82 and 83: There are no sector-based quotas ap
Page 84 and 85: Over the past five years SCN has as
Page 86 and 87: UNDP in the North & East - The Jaff
Page 88 and 89: In December 2001 a new UNDP Program
Page 90 and 91: From previous experience and lesson
Page 92 and 93:
World Vision Lanka WVL believes tha
Page 94 and 95:
Membership Development 3500 3000 25
Page 96 and 97:
Table 14 World Vision - Gramashakth
Page 98 and 99:
ZOA works with community groups in
Page 100 and 101:
At the village society and bank lev
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In Wayamba the sustainability of th
Page 104 and 105:
Table 15 Badulla IRDP - Summary Dat
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DZPDP/WHRDA credit operations comme
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In the initial years they did not f
Page 110 and 111:
Table 18 SPRDP- Loans 1993 to 1999
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(c)Lender-Practitioners The Central
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Society members have access to cred
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The RDBs were re-structured in 1998
Page 118 and 119:
Table 25 Value of Loans Disbursed b
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The total savings and credit issued
Page 122 and 123:
Table 29 Samurdhi - Loans by Distri
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In 1998 SEEDS converted to a separa
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Within the loans from SEEDS funds t
Page 128 and 129:
The Arthacharya Foundation practice
Page 130 and 131:
The program was assisted by some li
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However in general the majority of
Page 134 and 135:
Table 33 Growth of MPCS CRBs -1990
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As at the end of December, 2000 a s
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Some 1,176 of the 1,476 Co-operativ
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A total of 74 NGOs were identified
Page 142 and 143:
Finally only a small proportion of
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Table 38 TCCS Active Societies and
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District Unions - National Federati
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4. Facilitators a) National Level F
Page 150 and 151:
International Centre for the Traini
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Funder-Practitioner Microfinance Ac
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As practitioner experience increase
Page 156 and 157:
Introduction and Approach The major
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State-Owned Banks The Bank of Ceylo
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Starting in 1994, the NCRCS is aime
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The Seylan Bank The Seylan Bank ent
Page 164 and 165:
Figure 9 Linking of the RBIP Tools
Page 166 and 167:
People's Fast reduces loan processi
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In addition, RBIP monitors the impl
Page 170 and 171:
The Hatton National Bank Case Study
Page 172 and 173:
Seylan Bank Case Study The Seylan B
Page 174 and 175:
Until 1961 private pawnbrokers were
Page 176 and 177:
Bank officials stated that PSC staf
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The urban PSCs have on average more
Page 180 and 181:
The lack of flexibility has induced
Page 182 and 183:
From the borrowers perspective not
Page 184 and 185:
The Peoples Bank, on the other hand
Page 186 and 187:
Introduction and Approach Internati
Page 188 and 189:
Displaced populations are dependent
Page 190 and 191:
Large tracts of land have become to
Page 192 and 193:
Public markets, shops, guest houses
Page 194 and 195:
The previous thriving local economy
Page 196 and 197:
The Wanni Access to the area known
Page 198 and 199:
Remembering that these intervention
Page 200 and 201:
This type of situation is seen thro
Page 202 and 203:
People IDPs in welfare centres, sho
Page 204 and 205:
World Vision has been working in al
Page 206 and 207:
small entrepreneurs have received t
Page 208 and 209:
The exception to this is a governme
Page 210 and 211:
There has been some continued acces
Page 212 and 213:
Introduction and Approach A distric
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The MPCSs were equally disrupted an
Page 216 and 217:
The main body of the survey is pres
Page 218 and 219:
Local NGOs 11 NGOs were identified
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Local NGOs 1 NGO was identified in
Page 222 and 223:
Local NGOs 1 NGO was identified in
Page 224 and 225:
Local NGOs 2 NGOs were identified i
Page 226 and 227:
Local NGOs No NGOs were identified
Page 228 and 229:
Gampaha District Microfinance Overv
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Hambantota District Microfinance Ov
Page 232 and 233:
Jaffna District Microfinance Overvi
Page 234 and 235:
Staring in 1998 each DS received SL
Page 236 and 237:
Page 238 and 239:
Page 240 and 241:
Page 242 and 243:
Page 244 and 245:
Matale District Microfinance Overvi
Page 246 and 247:
Matara District Microfinance Overvi
Page 248 and 249:
Moneragala District Microfinance Ov
Page 250 and 251:
Nuwara Eliya District Microfinance
Page 252 and 253:
Polonnaruwa District Microfinance O
Page 254 and 255:
Puttalam District Microfinance Over
Page 256 and 257:
Ratnapura District Microfinance Ove
Page 258 and 259:
Trincomalee District Microfinance O
Page 260 and 261:
Vavuniya district Microfinance Over
Page 262 and 263:
The Wanni Area Microfinance Overvie
Page 264 and 265:
Summary Microfinance Activity by Ac
Page 266 and 267:
The NGO questionnaire survey identi
Page 268 and 269:
World Vision Lanka works in 5 distr
Page 270 and 271:
Given that these figures do not inc
Page 272 and 273:
Overall, 13 of districts had levels
Page 274 and 275:
Averages Value of Loans Table 78 Av
Page 276 and 277:
Volume and Number of Loans The surv
Page 278 and 279:
Findings The key and main findings
Page 280 and 281:
Service Providers The service provi
Page 282 and 283:
those incapacitated by conflict, wi
Page 284 and 285:
Cultures of Dependency in Microfina
Page 286 and 287:
Strategic Recommendations The key s
Page 288 and 289:
Conclusion The study found that the
Page 290 and 291:
Charitoneko, S. and D de Silva (200
Page 292 and 293:
Remenyi, J (1991). Where Credit is
Page 294:
Technical Appendix
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