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

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The project’s overall approach reflects GTZ’s Development Orientated Emergency Aid concept that is using the rehabilitation process to lay the foundations for sustainable long-term development activity through practices that stimulate the population’s self-help capacity (GTZ/JRP, 2001). The present GTZ/JRP strategy of identifying ‘cluster groups’ of people affected by the conflict and assisting them by introducing ‘key’ rehabilitation projects through a process of people cantered participation, has produced clear and positive results. The concept has in the main worked well and with its outreach to over 100,000 families is without doubt the broadest and most comprehensive single agency programme in the Jaffna Peninsula. Many of the rehabilitation project ‘target groups’ have joined with the other members of the village community to form larger and more cohesive ‘community groups’. This building of community groups is in the main cantered on the planning and construction of community buildings. To enlarge and modify the community buildings savings schemes were started to encourage community participation and on completion of the community building the savings schemes continued and began to include giving credits for both consumption and production. In some cases there has been a move towards integrating the community groups with local CBOs & NGOs. A brief appraisal of these organisations showed that most, affected by the prolonged conflict, have weak structures and an impoverishment in skills, knowledge and experience that requires a planned rebuilding of capacities before they can become sustainable partners. This process, demand driven by the communities themselves, was in many cases in need of guidance as there is little knowledge and much less experience in operating financial schemes in a manner that is sustainable. However there are some community groups and NGOs operating sustainable schemes and these stood out as ‘bench mark’ schemes for the other groups. Over time the CBOs’ looking to leverage larger loans for their members and to ensure their own sustainability begin to link or merge with larger local Non Governmental Organisations (NGOs) and Co-operative Societies. GTZ/JRP decided to adopt a strategy that introduced an assisted process of economic mobilisation for the community groups and gave access in place of subsidy, interdependence rather than dependency and the attainment of sustainable livelihoods for a community affected by conflict (Gant, 2001). The Process is graduated through four stages: Stage I The ‘target groups’ are encouraged to enlarge their membership to include the community as a whole through joint self – help effort in the planning and construction of the community building. This could also be the start point of a savings scheme that is utilized to modify the basic design and size of the community building. Stage II The community groups, (CBOs.) start a formalized savings & credit scheme with training from the GTZ/JRP microfinance unit and credit plus inputs from national and international service providers. Credit would be given here mainly for consumption & income generating projects at the subsistence level. 75
Stage III Stage IV The CBOs link, and/or merge with NGO or Co-operative Society in the locality that have received capacity building on NGO & business management and management of a microfinance scheme. Loan levels begin increasing over time to include some micro enterprise ‘start-up’ and expansion. Selected NGOs brought into a Loan Guarantee Fund (LGF) scheme allowing access to loans from a formal financial institution for entrepreneurial members to ‘start up’ and expand micro enterprises. The Loan Guarantee Fund (LGF) The LGF is a financial instrument that will bridge the present gap between Microfinance Intermediaries and the Commercial Banking Sector allowing entrepreneurs to access suitable financial services for the start up and expansion of their enterprises. This in turn will assist the revival of the micro economy and create sustainable livelihoods for the community as a whole. The LGF is a mechanism that has, in this case, five constituent parts that together enable financial access to entrepreneurs without complete collateral, from the commercial banking sector. The model utilized is one that presents a reasonable level of risk to all the stakeholders thereby making the mechanism workable in the present economic environment of the Jaffna Peninsula. Of the NGOs appraised the SDF was found to be both operationally and financially sustainable with sound microfinance practice and chosen as the MFI for the model. 76
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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
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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 74 and 75: Each CBO determines the level of in
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
Page 124 and 125: 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
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Remenyi, J (1991). Where Credit is
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Technical Appendix
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