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

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Each CBO determines the level of interest they will charge, and the method and manner in which it is collected. Interest rates vary, but currently range between twenty-four and thirty-six percent that is at and above market rates. The project currently has an outreach to 1,580 active members out of its overall project target of 1,700 and expects to attain the target outreach by June 2002. On an average each group has gained twenty new members since the start up of their savings and credit activities and this is expected to increase over time as the benefits of joining the groups is appreciated by other members of the 'host' communities. CARE has the most extensive network of partner organisations undertaking microfinance in the North and East region and it has recently appointed the Project Director of the CAB J Project as the microfinance specialist to replace the previous specialist who left CARE in 2001. Danish Refugee Council The DRC commenced project operations in Sri Lanka in the year 2000, prior to that it was establishing a base in Anuradhapura and a consultant undertook a review of the areas affected by conflict to prepare a country strategy for the organisation (DRC, 2000). The DRC decided to concentrate on rehabilitation work in areas of relative stability with a special focus on questions of displacement and resettlement. The overall goal of DRC is to secure durable solutions to the many problems faced by the internally displaced people (IDPs) in the wake of war. A component of the programme is to undertake economic mobilisation through savings and credit activity implemented through local NGO partners. The DRC has employed an international microfinance specialist since the year 2000 who has the remit of designing and initiating microfinance schemes and training the staff of DRC and the partner organisations in the implementation and monitoring of microfinance. DRC’s partner organisations working in microfinance are: 1. Rural Development Foundation (RDF) in Vavuniya and Mannar 2. Social Economical and Environmental Developers (SEED) in Vavuniya 3. Mannar Association of Rehabilitation and Resettlement (MARR) 4. Sewa Lanka foundation in Anuradhapura DRC are considering the expansion of its programme throughout the North and East region and with the advent of a negotiated ceasefire it is expected that this will be initiated in the year 2002. FORUT FORUT started operation in Sri Lanka in 1967 with a fishing project based in Jaffna that was focused on the transfer of technology in fishing – boats and fishing gear. In parallel with this, a range of social initiatives were undertaken mainly based in the Jaffna Peninsula. Since 1981 FORUT and its Swedish sister organisation, IOGT, have further developed their concept of community development with a distinct profile on temperance and organisation. 73
The mobilisation of human and local resources in partnership is the governing idea in FORUT’s projects. FORUT regards the women’s groups, savings and credit groups and youth clubs as examples of partners that have great potential. Assisting the development of civil society is the focus of FORUT through community partnerships contributing to the partners’ organisational development. During 2000 FORUT implemented a pre-project on analysing the civil society in Sri Lanka, in order to identify civil society organisations and the needs for strengthening the civil society from a post conflict perspective. FORUT is continuing to emphasise the civil society component in all of its project locations throughout Sri Lanka as it believes that when civil society activities go hand in hand with traditional organisational and economic activities the long term impact of FORUT’s intervention will become more sustainable. FORUT believes that the economic empowerment of the most marginal poor especially its focus groups of women and children facilitates growth through building village based growth with equity and the effective utilisation of available resources (FORUT, 2000) By the provision of access to credit facilities through group organised sustainable CBOs and combining this with training and expertise promotes selfempowerment and respect. This in turn assists these communities to break out of the poverty trap of chronic indebtedness and become an effective voice in the building of a responsive and respected civil society. FORUT is presently in the process of reviewing its mission, policy, plan and strategy concerning its microfinance operations. The review recommends that there is a move away from the previous subsidised model towards commercialisation and the operational and financial sustainability of the village based CBOs (FORUT, 2002). The need and role of microfinance is to be assessed more thoroughly through baseline surveys and microfinance operations will be integrated with access to non-financial services such as training, business linkages and information. Monitoring is to be undertaken by both the field offices and the Colombo HQ, and evaluation of the microfinance operations will be undertaken by external resources as was started in the year 2000. FORUT have received approximately AUS$ 30,000 from AusAID for the period 1999 to 2000 for their resettlement programme. GTZ – Jaffna Rehabilitation Project – Economic Mobilisation Process The GTZ Jaffna Rehabilitation Project (GTZ/JRP) was established in 1996 to assist with the reconstruction of the Jaffna Peninsula and Islands as refugees began to return to the area. Assistance focuses on the rebuilding of schools and houses and the rehabilitation of rural and urban water supply systems. GTZ in Jaffna works against a background of on-going tension and conflict, physical isolation from the rest of the country and security restrictions on the movement of materials and personnel. 74
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National Microfinance Study of Sri
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(b) Lenders .......................
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Introduction into the pawning busin
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Microfinance Overview .............
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Savings ...........................
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List of Tables Table 1 Microfinance
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Table 70 Ratnapura District Microfi
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JBIC MFI MFN MIS MPCS MSME NCPPDP N
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Figure 1 Map of per Capita Value of
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Figure 3 Map of per Capita Value of
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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 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 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
Page 102 and 103: In Wayamba the sustainability of th
Page 104 and 105: Table 15 Badulla IRDP - Summary Dat
Page 106 and 107: 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
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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
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However in general the majority of
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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
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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
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International Centre for the Traini
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Funder-Practitioner Microfinance Ac
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As practitioner experience increase
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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
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The Seylan Bank The Seylan Bank ent
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Figure 9 Linking of the RBIP Tools
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People's Fast reduces loan processi
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In addition, RBIP monitors the impl
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The Hatton National Bank Case Study
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Seylan Bank Case Study The Seylan B
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Until 1961 private pawnbrokers were
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Bank officials stated that PSC staf
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The urban PSCs have on average more
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The lack of flexibility has induced
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From the borrowers perspective not
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The Peoples Bank, on the other hand
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Introduction and Approach Internati
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Displaced populations are dependent
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Large tracts of land have become to
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Public markets, shops, guest houses
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The previous thriving local economy
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The Wanni Access to the area known
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Remembering that these intervention
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This type of situation is seen thro
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People IDPs in welfare centres, sho
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World Vision has been working in al
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small entrepreneurs have received t
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The exception to this is a governme
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There has been some continued acces
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Introduction and Approach A distric
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The MPCSs were equally disrupted an
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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
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Local NGOs 1 NGO was identified in
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Local NGOs 2 NGOs were identified i
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Local NGOs No NGOs were identified
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Gampaha District Microfinance Overv
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Hambantota District Microfinance Ov
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Jaffna District Microfinance Overvi
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Staring in 1998 each DS received SL
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Matale District Microfinance Overvi
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Matara District Microfinance Overvi
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Moneragala District Microfinance Ov
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Nuwara Eliya District Microfinance
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Polonnaruwa District Microfinance O
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Puttalam District Microfinance Over
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Ratnapura District Microfinance Ove
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Trincomalee District Microfinance O
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Vavuniya district Microfinance Over
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The Wanni Area Microfinance Overvie
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Summary Microfinance Activity by Ac
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The NGO questionnaire survey identi
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World Vision Lanka works in 5 distr
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Given that these figures do not inc
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Overall, 13 of districts had levels
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Averages Value of Loans Table 78 Av
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Volume and Number of Loans The surv
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Findings The key and main findings
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Service Providers The service provi
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those incapacitated by conflict, wi
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Cultures of Dependency in Microfina
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Strategic Recommendations The key s
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Conclusion The study found that the
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Charitoneko, S. and D de Silva (200
Page 292 and 293:
Remenyi, J (1991). Where Credit is
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Technical Appendix
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