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

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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. 43
Table 4 AusAID - ACAS Funding 2000-2001 Project Organisation Sector Province Amount (AUS$) IGP for Women KOINONIA MF East 27,403 Training & Gender Project Voice of Women Skills Dev. Island wide 12,518 Project for Slums Women Samata Sarana Skills dev. Island wide 20,575 Rural Economic Dev. Pro. RLTF Agri. NCP 16,935 AIDS Prevention Pro. INDECOS Health South 15,223 Cattle Bank Project Human Dev. Org. MF CP 12,735 Coastal Planting Project Mandru Env. East 24,663 Micro Projects for Women Wilgamuwa WDF MF CP 13,548 Child Dev. Project Children's Reso. C Skills Dev. IWP 8,129 Gender Equity Project Hudef Skills Dev. CP 8,651 Women Farmers Project Abhimana MF NCP 30,726 Microfinance for Women Wilpotha WSE Mf. NWP 19,690 Microproject-Rural Women Shrama Shakthie MF NCP 12,171 IGP for Muslim IDPs CTF MF NWP 40,325 Econ. Improvement Pro. SLPSM MF Uva 18,826 Reawakening Poor Families SLJSSP MF WP 27,250 Livestock Dev. Project TDDA Agri. East 20,484 Dev. of Women Mf Projects Nation Builders MF Training CP 20,322 IGP for Poor Families SWOD MF East 20,322 Skills Dev. & IGP IHO Skills Dev. NWP 20,322 Forest Garden Project CCDP Env. Uva 34,823 Distance Edu. Program in Mental Health Health CP 6,000 IPM in Three Provinces FAO Agri/Env SP,NCP/NWP 63,369 TOTAL 535,742 _______________________________ A completion report and a financial acquittal within four months of completion of the project are required. In addition, progress reports (monthly during the first three months, and quarterly thereafter) are also required for each activity. The monthly and quarterly reports are expected to be of not more than 1-2 pages in length. During the period 2000/01 a sum of Aus$495,010 was released to 23 partner organisations in order for them to implement community development projects. Of these, 12 projects were for microfinance utilising some A$263,802 or 53% of the funding for the year. The Canadian International Development Agency The Canadian International Development Agency (CIDA) sees microfinance as a tool for poverty alleviation and as source of access to entrepreneurial finance. 44
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 42 and 43: Microfinance Clients and Beneficiar
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
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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
Page 108 and 109:
In the initial years they did not f
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Table 18 SPRDP- Loans 1993 to 1999
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(c)Lender-Practitioners The Central
Page 114 and 115:
Society members have access to cred
Page 116 and 117:
The RDBs were re-structured in 1998
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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
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The Arthacharya Foundation practice
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The program was assisted by some li
Page 132 and 133:
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
Page 154 and 155:
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
Page 162 and 163:
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
Page 168 and 169:
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
Page 178 and 179:
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
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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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