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

CIDA believes that microfinance activity should be complimented by enterprise
development services to assist in the creation of micro and small-scale enterprises
in Sri Lanka. CIDA’s funding is country wide and targeted mainly to low income
groups through partner organisations.
CIDA believes that groups such as youth and women from the ‘poorest of the
poor’ and the internally displaced from low income families are not yet being
reached completely and efforts should be made to reach these highly vulnerable
groups through local NGOs’ and co-operatives.
The CIDA country development programme framework is being reviewed and
until this has been completed there is no present window for new microfinance
project assistance.
Microfinance specialists assess proposals that are required to be in the English
language prior to acceptance for funding assistance. Some staff members have ‘on
the job’ knowledge of microfinance schemes as well as previous experience of
funding schemes.
The CIDA Programme Support Unit (PSU) advisor regularly attends the UNDP
Microfinance Network meetings and utilises available advisory services. CIDA
believes that there is a need to upgrade the microfinance knowledge and skills of
all those working with microfinance in partner organisations and internal staff
through formal training and advisory services.
For the past five years CIDA has concentrated on a single microfinance project in
partnership with Sarvodaya Economic Enterprises Development Services
(Guarantee) Ltd. (SEEDS) who supply credit plus services across 18 districts of
Sri Lanka.
This project is known as the ‘SEEDS Rural Credit Project’ and is an extension of
the Small Farmers and Landless Credit Project (SFLC), a previous joint
CIDA/IFAD funded project. The project has two components, a credit component
comprising a revolving loan fund and a gender component. The credit component
consists of CAN$ 1,000,000 that is used as a revolving loan fund for rural
communities over 200 village societies involved with SEEDS ‘credit plus’
activities.
CIDA has also financed CARE International’s ‘Food Security Project’ (FSP) that
had a large segment of microfinance intervention incorporated into the project.
From late 1997 and up to December 2001, the FSP provided funding for
microfinance services through 10 NGOs, 27 Fishing Co-operative Societies
(FCSs) and 28 Savings and Credit (S&C) groups with grants totalling
approximately SLR 20,000,000.
These two projects are very different in their focus and methodology. The SEEDS
project operates outside the areas affected by conflict, with a focus on the
development of the rural economy of Sri Lanka. By contrast, the CARE FSP
project Jaffna, Batticaloa and the Wanni, with a focus on relief for the
communities that have been resettled and relocated after internal displacement.
This is where the issue of sustainability comes to the fore, as for example the
present SEEDS repayment rates on loans averages ninety-seven percent while the
relief based project is reporting repayment rates of fifty percent on loans.
However, these cannot be compared directly as one scheme is founded on a stable
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