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

In December 2001 a new UNDP Programme for the North and East region was
initiated – the ‘Umbrella Project for the Conflict-Affected Areas’. This project
was designed to be implemented directly by UNDP through local non government
organisations with assistance from certain government technical and extension
departments and services.
The development objective of the new programme is to create an enabling and
sustainable environment for livelihoods in the conflict affected areas, and to lay
the foundations for accelerated recovery in a post conflict period.
A key element of the project strategy is to operates at the district level in
consultation with all stakeholders in that locality. It was decided that Jaffna and
Vavuniya would be the first two areas of programme implementation. The project
is now expanding and an office was opened in May 2002. The project plans to
open offices in Ampara, Batticaloa, Mallavi, Mullaitivu and Mannar later in 2002.
In March 2001 an evaluation of the impact of the JRRP microfinance schemes
managed by the MPCSs was completed and overall on the principles of do no
harm – no harm was done. There was an approximate 60/40 divide between
positive impact and no impact, but there was limited incidence of negative impact
on the lives of the schemes clients.
It was found that those clients who were on subsistence level with an average size
loan had a greater long-term impact for them than those who received the same
sized loan but who were a middle-income household. Also those with experience
and skills made greater use of the loans than those who were new in business or
who had no non-financial services support.
Taking this into consideration, for expansion under the new project it was decided
that the income and a broad assessment of every client be undertaken. This would
assist in the decision concerning loan size and the support necessary from the start
of loan take-up. This assessment would also form the baseline for ongoing
monitoring, evaluation and impact assessment.
It was decided to expand the number of MPCSs involved in microfinance in
Jaffna by another seven making a total of seventeen in all. The MPCSs have
been chosen and all have agreed to at least match the funding of UNDP with their
own funds. It can be seen by the table below that the MPCSs have confidence in
the scheme that has been gained through the success of the first ten societies and
that a sustainable microfinance scheme is possible even in conflict affected areas.
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