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

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World Vision Lanka WVL believes that the primary purpose of microfinance is to enable the entrepreneurial poor to access financial services and more broadly include the provision of enterprise development services as a means of creating sustainable income generation for the communities that it works with. Although microfinance was at first a segment of intervention programmes and projects for their partner organisations WVL is presently researching the possibility of assisting the development of a separate microfinance intermediary organisation. This MFI would have all the microfinance programmes of WVL under its management and would have a single integrated operational reporting practice but would allow the individual programmes to maintain the flexibility to suit local needs. It is planned that this MFI would continue as a sustainable organisation at the end of the ‘Area Development Programmes’ (ADP) that have a life span of between ten and fifteen years. Microfinance as it is operated today by WVL was instituted in 1998 and it utilizes methodologies that it believes cater best for the communities it works in taking into account the geographic area, programme sector and compatibility with local practices. There is a specific focus on women and the loan recipients are predominantly women. WVL is operating in fifteen locations; mainly rural areas, throughout the country including the North and East region. There are three distinct models in operation and in all three cases legally valid agreements are drawn up with the partner organisations/agencies who are all formally registered; involving: The utilisation of a partner agency – The Gramashakthi Bank in Anuradhapura. The formation of a separate organisation – The Wayamba Peoples Co. in Anamaduwa. Utilising a present formal financial institution such as the Peoples Bank as a ‘window’- in Batticaloa. In this model the WVL funding is used as collateral for loans of group members in the Area Development Programmes. WVL uses guidelines and standards that are in line with those developed by the Small Enterprise Education and Promotion (SEEP) network. Each programme has its own credit products but generally they are classified as either agricultural or non-agricultural loans. Funding and budgets vary and have no fixed limits and are based on the needs assessed for each of the areas. Funding is both from WVL's own sources overseas and international donor funding. Some WVL staff members that have been formally trained in microfinance practices and partner organisations are given training in microfinance as well as training in organisational management. Workshops and seminars on microfinance are organised by WVL for its partner organisations and others. WVL believes that there should be greater access to enterprise development services such as training, business information and technology for entrepreneurs especially those who come from the entrepreneurial poor. 91
Proposals are accepted in the English language and it is estimated that the demand is growing with WVL in Sri Lanka making approximately US$ 1,000,000 available for microfinance in the financial year 2003. There are four schemes that have been in operation for over three years at present but with the development of the MFI several other areas where WVL is working would start microfinance operations. Monitoring and evaluation is undertaken to standards set by the World Vision Partnership and also in line with the requirements of its Sri Lanka based international donors. There are regular visits and impact assessments are undertaken. Where a partner organisation is found to be in difficulties WVL offer assistance and support. WVL strongly believes in the commercialisation of microfinance and expects its partners to achieve operational sustainability within 4 years and financial sustainability by the completion of 7 years of operation. Case Study: The Gramashakthi Development Foundation Introduction In 1995 a small number of rural women got to gather to discuss the problems that they were under going economically and socially and saw the need to form a women’s society to find solutions. The government rural development officer in the area assisted them in initiating the Gramashakthi Development Women Foundation with the goal of the organisation is to create a sustainable and transformed society by empowering the rural population (especially women) economically, socially, politically, culturally and spiritually. WVL decided to assist in building the capacity of the Gramashakthi Women foundation and during the fiscal year 2001 a planned capacity building programme utilising training courses, workshops and seminars was conducted making it the strongest women’s organisation in the area. Among the major activities they are involved in are credit and savings programs, conducting preschools, women and family education programs, assisting children’s societies and agriculture development programmes. Membership In this organisation the membership is opened for all the women living in the Secretarial Division of Galenbindunuwewa and the membership fees are used as a fund to run the organisation. There are 3197 members and the following diagram shows growth in membership since 1995. 92
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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
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As a result the banks are moving aw
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The operating conditions of the con
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Donor Strategies There should be a
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Introduction to the Study The objec
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The survey does not claim to repres
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Introduction Socio-Economic Overvie
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These five years saw a spate of new
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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 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 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
Page 126 and 127: 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
Page 138 and 139: Some 1,176 of the 1,476 Co-operativ
Page 140 and 141: 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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