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

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The Department For International Development The Department For International Development (DFID) is the British Government department responsible for promoting development and the reduction of poverty. DFID develops a countrywide strategy for intervention once every three years. The present strategy runs from 1999/00 to 2001/02. Between 1999/00 and 2001/02 DFID funded a total of approx. SLR 2.436 billion. 10 DFID are committed to interventions in the fields of education, relief and rehabilitation, environment, public sector reform, conflict related work and urban poverty (DFID, 1999). Detailed financial figures related to microfinance intervention activity were not forthcoming. However, DFID have recently funded projects with OXFAM and CARE including the successful CAB-J project in Jaffna. DFID are presently reviewing their strategy for the next few years. NORAD NORAD, the development assistance department of the Norwegian Embassy has been involved with development in Sri Lanka for over twenty-five years with their funding of the Integrated Rural Development Programmes in Hambantota (HIRDP) and Moneragala (MIRD) being the initial focus of their microfinance assistance. Both of these projects contained components of microfinance, with the HIRDP having ‘spun off’ the Social Mobilisation Foundation (SMF) that is now a major actor in microfinance in the Hambantota District, delivering microfinance products to over 23,000 families. NORAD believes that microfinance is a useful tool in tackling poverty alleviation and social rehabilitation. NORAD always treats microfinance as a segment of broader project and programme activity by and is an integrated component of many of the present projects. There is no specific sector focus and broad community targeting is preferred, with no outreach quotas being demanded. NORAD sees enterprise development services such as training, business information and technology as necessary services to compliment microfinance and is in favour of commercialisation of microfinance as a whole. There are presently fifteen active projects/programmes with microfinance segments implemented through local NGO partners. Unfortunately, NORAD was unable to break down the specific funding for microfinance. The staff of NORAD assess implementing partners both informally and formally, with some of their staff trained in microfinance and others learning through ‘on the job’ experience. Overall, NORAD has supported over twenty-five local NGOs throughout Sri Lanka over the past five years. NORAD enters into contracts that are legally binding on both parties when assisting organisations project and programme proposals. There are no specific guidelines or criteria for microfinance segment proposals. However NORAD does give advice and ‘guidelines’ should it be required by a partner organisation. 10 Figures are based on overall expenditure totals of £ 20.3 million converted at a rate of SLR 120 to the pound sterling. 47
The rural districts in the south have been NORAD’s primary geographic focus and projects span from one to three years but maintain an interest after the official termination of a project or programme. Proposals are in the English language and there are no minimum or maximum levels of assistance as a ‘needs-based’ approach is used. Monitoring and evaluation of the projects/programmes is undertaken through visits and a requirement for periodic progress reports linked to the disbursement of the funding assistance. NORAD states that it undertakes random reviews and impact assessments of all partner organisations and their projects/programmes. NORAD believes that the demand for assistance for microfinance projects is declining from the levels of proposals that it has received in the past two years. The Dutch Co-Financing Programme The Dutch funding organisations of HIVOS, NOVIB and ICCO integrate their respective microfinance funding through the Dutch Co-Financing Programme. ICCO are terminating their intervention in the country from 2002. A recent evaluation of the programme (Hospes et al., 2001) has been used for the following narrative to outline the funding agencies support for microfinance in Sri Lanka. The report traces the utilisation of grants by these agencies in funding microfinance through national and regional microfinance intermediaries. After evaluating the success and impact on poverty of savings and credits for the financially disadvantaged, the Dutch agencies began to question the provision of grants to their partner organisations. Still, in 1997 the Dutch Minister for Development Co-operation allowed the four agencies to spend 100 million Guilders on loans and guarantees to their southern partners for a three-year period. There are nine partners of the Dutch agencies – taking Metz (2000) as the point of reference. Six of these nine NGOs, IFFD, EHED, CWD, HPDF, Satyodaya and OFERR cannot be classified as microfinance agencies, as it is not their core business but a minor activity. The other three agencies; Sarvodaya Economic Enterprise Development Services Ltd. (SEEDS), the Federation of Thrift and Cooperative Credit Societies (SANASA) and Agromart, have organised the provision of financial services as a distinctive programme or as a legally defined and separate entity. NOVIB and ICCO both support SEEDS whereas HIVOS supports SANASA. Each of the Dutch CFAs have ‘front desks’ based outside of Sri Lanka that make the decisions on partners and the proposal applications with a microfinance component. NOVIB NOVIB is technically a Lender-Granter rather than a granter, but for the sake of continuity they have been included here. The NOVIB Desk programme officer for Sri Lanka chooses microfinance as one of the primary areas of funding assistance and NOVIB has a policy whereby some 60% of its annual budget of 4 million Guilders is directed at poverty alleviation. 5 of the 14 partner organisations supported by NOVIB as per December 2000 operate microfinance schemes. 48
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 44 and 45: 1. Funders of Microfinance in Sri L
Page 46 and 47: CIDA believes that microfinance act
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
Page 108 and 109:
In the initial years they did not f
Page 110 and 111:
Table 18 SPRDP- Loans 1993 to 1999
Page 112 and 113:
(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
Page 118 and 119:
Table 25 Value of Loans Disbursed b
Page 120 and 121:
The total savings and credit issued
Page 122 and 123:
Table 29 Samurdhi - Loans by Distri
Page 124 and 125:
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
Page 132 and 133:
However in general the majority of
Page 134 and 135:
Table 33 Growth of MPCS CRBs -1990
Page 136 and 137:
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
Page 144 and 145:
Table 38 TCCS Active Societies and
Page 146 and 147:
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
Page 160 and 161:
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
Page 214 and 215:
The MPCSs were equally disrupted an
Page 216 and 217:
The main body of the survey is pres
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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
Page 230 and 231:
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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