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

The Swedish International Development Co-operation Agency
Employment creation is the present focus of The Swedish International
Development Co-operation Agency (SIDA) when utilising its development aid in
the economic sphere, assisting in the creation and augmentation of small and
medium scale enterprises in Sri Lanka. SIDA believes that microfinance is a
source of access to entrepreneurial finance as often ‘poor’ entrepreneurs are
unable to access through formal financial institutions.
Groups such as youth, women from low income families, the broad
entrepreneurial community in the North and East region and members of the
military services that leave or are de-mobilised from the armed forces being
primary targets for access to financial and non-financial services.
For the past two years, 2000 and 2001, SIDA has concentrated on a single
economic project, ‘Start and Improve Your Business’ (SIYB) project with the
International Labour Office (ILO) as the implementing partner. The ILO has
successfully implemented the SIYB project in many developing countries and
SIDA is confident of its success and impact on the enterprises and micro
economies in the selected areas of Sri Lanka. Although the SIDA staff has only
‘on the job’ knowledge of microfinance, specialist consultants are employed to
assess proposals prior to acceptance.
SIYB trains business development service (BDS) providers, who in turn select
and train entrepreneurs who require services such as business and financial
information, IT systems and technology inputs to help them improve the
profitability of their enterprises. BDS providers are reached through
comprehensive campaigns that utilise workshops, the media and direct mailing.
The manuals for the programme are available only in Sinhala at present, however
manuals in Tamil are being prepared and should be available by the end of 2002.
A pilot scheme based in Matara was initiated for the years 2000 and 2001 with
grant in aid funding of US$ 1M. Monitoring and evaluation of the project is
undertaken on a quarterly basis using a Logical Framework Matrix in the English
language, this is backed by half yearly steering committee meetings, a mid term
evaluation and impact analysis. The scheme has been adjudged a success and a
further US$ 1M has been granted to the project for the period 2002 to 2005 for
expansion throughout the country excluding the North and East region.
Prior to 2000 SIDA had funded two projects the Matara Integrated Rural
Development Project (MIRDP) and the North Central Province Participatory
Rural Development Project (NCPPRDP) both of which were implemented
through the government. One of the successes of the MIRDP was its assistance in
establishing the Enterprise Development Service Centre (EDSC) in Matara and it
can be seen that the SIYB is an expansion and augmentation of the EDSC and its
delivery of non-financial services for entrepreneurs.
There were microfinance segments in both the NCPPRDP and the MIRDP and
although these were successful in terms of social and economic mobilisation;
providing much needed credit for disadvantaged groups such as youth and women
from low-income families, the sustainability of the schemes was suspect.
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