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

1. Funders of Microfinance in Sri Lanka
Actors currently funding microfinance activities in Sri Lanka fall into three main
categories, namely, whether the actor is a Granter, a Lender or both.
(a) Granters
The Australian Agency for International Development
The Australian Agency for International Development (AusAID) is one of the
largest and most proactive funders of microfinance in the country. It is committed
to the use of microfinance as a tool for poverty alleviation. AusAID funds
microfinance activity through the Australian Community Assistance Scheme
(ACAS) and the Australian Community Resettlement Program (ACRP) that
provide assistance for initiatives where other support is either not available or
inadequate to meet essential needs (AusAID, 2001).
Intended as quick disbursement mechanisms for development activities. The goal
is to assist community-based poverty alleviation projects that originate with the
communities and are implemented in partnership with them. Income generation
and microfinance activities are among the sectors that receive priority for funding.
Preference is given to projects that focus on poverty alleviation and the reduction
of suffering of all communities. Self-help is a guiding factor in the assessment of
proposals, with applicants required to demonstrate inclusive community
participation in activity development, planned community cost-sharing input and
equitable ownership of outcomes. Government agencies, quasi-government
agencies, NGOs and CBOs are all eligible for grants. AusAID is committed to
principles of good governance and has issued guiding principles for
implementation (AusAID, 2000a).
The competence of the proposing organisations to implement planned activities
and satisfactorily account for funds is a key factor in the selection of proposals for
funding. The funding allocated for ACAS activities is decided each financial
year. Assistance is provided on an ‘accountable’ grant basis (AusAID, 2000b;
2000c).
Project proposals are funded up to AUS$ 80,000 (SLR 6,680,000) and do not
normally exceed 12 months in duration. For approved projects, funding can be
provided in instalments, depending on project size and the nature of the project.
In those cases second and later instalments are provided on receipt of satisfactory
reports on physical progress and a financial acquittal of the previous instalments.
Funding proposals have to be submitted in accordance with the summary format
and budget and declaration, as specified in the “Project Submission Format”
available at the Australian High Commission in Colombo. Subject to availability
of funds, ACAS projects are managed in ‘rounds’, which commence in July,
October and February of each year. Proposals can be submitted to AusAID by
July 31 st , November 21 st and February 28 th .
Submissions are initially appraised and a shortlist of 10-15 projects produced, a
committee that selects the 5-10 projects approved for funding for any given
present 'round' considers this shortlist.
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