COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW...

AID EFFECTIVENESS INITIATIVE

COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW

(CLEAR)

SRI LANKA

February 2006

Eric Duflos (CGAP)Joanna Ledgerwood (CGAP Consultant)

Brigit Helms (CGAP)Manuel Moyart (CGAP Consultant)

TABLE OF CONTENTS

LIST OF ACRONYMS ................................................................................................................. iv

ACKNOWLEDGMENTS ............................................................................................................... v

MAP OF SRI LANKA ................................................................................................................. vi

EXECUTIVE SUMMARY ............................................................................................................. 1

I. BACKGROUND .................................................................................................................. 3

II. OVERVIEW OF MICROFINANCE IN SRI LANKA ................................................................. 5

Economic, Political and Social Context ......................................................................................... 5Evolution of the Financial System ................................................................................................. 6Microfinance Stakeholders ............................................................................................................ 6Microfinance Funders .................................................................................................................... 8Recent Trends in Microfinance ..................................................................................................... 8

III. ANALYTICAL FRAMEWORK ............................................................................................. 12

IV. DONORS SYSTEMS .......................................................................................................... 14Strengths and Weaknesses of Donor Systems in Sri Lanka ......................................................... 14Consequences of Tsunami Support on Aid Effectiveness in Microfinance .................................. 16Recommendations on Donor Systems in Sri Lanka ...................................................................... 17

V. GAP ANALYSIS IN THE SRI LANKAN FINANCIAL SYSTEMS ............................................. 19

Micro Level (retail financial service providers) ............................................................................ 19Meso Level (support services, apexes, networks).......................................................................... 21Macro Level (policies, laws, regulation and supervision) ............................................................ 25

ANNEXES ................................................................................................................................. 28

Annex 1—Summary Matrix of Donor Recommendations ............................................................ 28Annex 2—List of Donor Projects .................................................................................................. 29Annex 3—Donor Instruments ........................................................................................................ 31Annex 4—Donor Funding in Microfinance ................................................................................... 32Annex 5—Microfinance Providers ................................................................................................ 33Annex 6—Geographical coverage of Microfinance Providers ..................................................... 34Annex 7—Population per Point of Service ................................................................................... 35Annex 8—List of Documents Consulted ....................................................................................... 36Annex 9—List of Persons Consulted ............................................................................................. 41

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LIST OF ACRONYMS

ACCDC All Ceylon Community Development CouncilADB Asian Development BankBMZ Bundesministerium für wirtschaftliche Zusammenarbeit und EntwicklungCIDA Canadian International Development AgencyCGAP Consultative Group to Assist the Poor CLEAR Country-level Effectiveness and Accountability ReviewCRB Cooperative Rural BankEC European CommissionFSAP Financial Sector Assessment ProgramGDP Gross Domestic ProductGSL Government of Sri LankaGTZ Gesellschaft für Technische ZusammenarbeitHNB Hatton National Bank IFAD International Fund for Agricultural Development IFC International Financial CorporationIFI International Finance InstitutionIMF International Monetary FundINGO International NGOJBIC Japan Bank for International CooperationJVP Janatha Vimukthi PeramunaKfW Kreditanstalt für WiederaufbauLKR Sri Lankan RupeeLTTE Liberation Tigers of Tamil EelamMDG Millennium Development Goals MFI Microfinance InstitutionMIS Management Information SystemMPCS Multi-Purpose Cooperative SocietyNGO Non Governmental OrganizationNPL Non-Performing Loan NTDF National Development Trust FundPAMF Poverty Alleviation Microfinance Project—IsuruPAR Portfolio at RiskRADA Reconstruction and Development AgencyRFSDA Rural Financial Services Development AgencyRDB Regional Development Banks SIDA Swedish International Development AgencySDC Swiss Agency for Development and CooperationTAFREN Task Force to Rebuild the Nation (now RADA)TCCS Thrift and Credit Cooperative Society UNF United National FrontUNDP United Nations Development ProgrammeUPFA United People’s Freedom Alliance USAID United States Agency for International DevelopmentWB World BankWDFH Women Development Fund Hambantota

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ACKNOWLEDGMENTS

The CLEAR team wishes to thank all the people who participated in this review. We especiallyappreciate their willingness to meet with us, often more than once, and to travel in some cases fromthe North East and other regions of Sri Lanka to enable the team to gain a broad perspective in alimited amount of time. We especially thank Dr. Dirk Steinwand from Gesellschaft für TechnischeZusammenarbeit, Ms. Sriyani Hulugalle from the World Bank, and Mr. Nimal Martinus from theStromme Foundation who championed this CLEAR before, during, and after its implementation. Weare grateful to the Asian Development Bank for its feedback on our initial findings. We also thankMr. Anura Atapattu (consultant), for his support in preparing and coordinating the mission, and Mr.Dinesh Kanagarathnam from the Stromme Foundation, for accompanying us to the Tsunami-affectedareas. We thank Ms. Aude de Montesquiou (CGAP) for her assistance in preparing the CLEAR andin finalizing the report. Finally, we are grateful to Ms. Alexia Latortue (CGAP) for her significantinputs into the final draft. We hope this review will contribute to the efforts of the institutions andpeople working hard to expand permanent access to financial services to the poor in Sri Lanka.

February 2006

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MAP OF SRI LANKA

Source: CIA, The World Fact Book (McLean, VA: CIA, 2005),www.odci.gov/cia/publications/factbook/geos/ce.html

Exchange rate in January 2006: 1 US Dollar (US$ 1) = 102 Sri Lanka Rupee (LKR 102)

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EXECUTIVE SUMMARY

A Country-Level Effectiveness and Accountability Review (CLEAR) took place in Sri Lanka inOctober 2005. CLEARs are part of the Consultative Group to Assist the Poor (CGAP) AidEffectiveness Initiative, which was launched in 2002 with a series of 17 Microfinance Donor PeerReviews. CLEARs help funders adapt their internal systems to design, implement, and monitor betterprograms. They also help funders identify key gaps in the financial system that inhibit the provisionof permanent financial services to poor people. The three levels of the financial system are the microlevel (e.g., retail institutions), the meso level (e.g., apex, technical service providers), and the macrolevel (e.g., regulations and policies). While in Sri Lanka, the review team interviewed more than 220stakeholders, including government officials, practitioners, donor staff, and microfinance clients.

The overall context in which the CLEAR took place presents opportunities and challenges.Despite achievements in social development, poverty reduction has been relatively slow in Sri Lanka.The country has been suffering from a conflict that erupted in 1983 and from a recent tsunami thatdevastated a large part of the coast and destroyed the lives and livelihoods of thousands of people.Although the financial sector has undergone significant reforms in the 1990s, several public financialinstitutions remain weak.

The microfinance landscape is composed of many actors that range from ministries tocommercial banks, specialized banks, registered finance companies, cooperatives, wholesalefacilities, and informal lenders. Many funders support improving poor people’s access to financialservices; however, the government of Sri Lanka is the major provider of financial services through itssocial welfare organizations (Samhurdis) and state-owned regional development banks. According toa CGAP survey (and based on self-reported data), microfinance has achieved impressive outreach,with more than 15 million deposit accounts and 2 million outstanding microloans in 2004, from apopulation of 20 million people.

Notwithstanding this achievement, several challenges hinder the development of permanentinclusive financial services. At the micro level, a handful of promising institutions that offer a widerange of services has emerged. However, many microfinance providers are not committed totransparency, thereby contributing to the fragile nature of the sector and weaknesses, such assubstandard portfolio management and financial sustainability, the poor level of microfinancespecialization, and widespread public-sector involvement in credit delivery.

At the meso level, a promising financial infrastructure offers opportunities for microfinancewith fast-maturing capital markets, more training facilities, and more microfinance institutions (MFIs)that report their financial results. Despite this progress, Sri Lanka has no formal association of MFIs;microfinance training is insufficient; there is mismatch between demand and supply of apex funds;transparency services, such as audits and management information systems (MIS), are limited; and thepotential of technology has not yet been widely tapped.

At the macro level, the government is committed to maintaining a stable financial sector andrecognizes the need to protect poor depositors, but supervision of deposits is inadequate (especiallyfor the Samurdhis and the cooperative rural banks). Credit is too often politicized through interest ratesubsidies, there is a lack of leadership by the ministry of finance for microfinance, and severalinterviewees raise questions on the Rural Finance Sector Development Act.

More than 30 international agencies support microfinance in Sri Lanka, with about US$ 200million committed. Some funders are starting to consider microfinance an integral part of thefinancial sector and are trying to better organize their assistance, especially after the tsunami.However, overall aid effectiveness is relatively weak with (i) many funders confusing social transferswith financial services; (ii) few aid agencies possessing local expertise in microfinance; (iii) most

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donors not having proper monitoring and evaluation tools; (iv) large imbalances between the supplyof capital funds and capacity building funding; (vi) over-funding of poor-performing creditcomponents; (vii) over-reliance on the government to provide financial services; and (viii) littleoperational coordination among donors.

Post-tsunami aid has exacerbated donor bad practice by mixing grants with debts, imposinginterest rate ceilings that hamper MFIs’ efforts to become sustainable, and escalating disbursementpressure.

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Recommendations for Funders Supporting Microfinance in Sri Lanka

MICRO LEVEL

Short term: Take stock and focus on immediate prioritiesl Assess the quantity and quality of financial services available by funding a comprehensive inventoryl Define minimum conditions for donor fundingl Determine the right balance between funds for capital (loan portfolio) and capacity buildingMedium term: Manage funding based on performancel Focus support on existing promising institutions (not projects or credit components)l Provide performance-based assistance in a transparent mannerLong term: Consolidate and scale upl Facilitate MFI consolidation and linkagesl Emphasize private institutions for credit delivery

MESO LEVEL

Short term: Capitalize on existing experience and infrastructurel Phase out interest rate ceilingsl Remove restrictive conditions of apex fundingl Analyze lessons learned from tsunami apex funding l Identify and use existing technical service providers and training resourcesl Organize technical assistance for key needsMedium term: Build domestic capacityl Increase funding for locally available capacity buildingl Encourage (but do not take over) the development of a microfinance associationl Invest in technology (information systems, delivery technologies)l Support audits and ratings for increased transparency of MFIsl Explore commercial refinancing

MACRO LEVEL

l Encourage the creation of a financial sector task force housed in the Ministry of Finance and Planning l Advocate for the liberalization of interest ratesl Streamline funding through recognized government entry point—Development Finance Department of the

Ministry of Finance and Planningl Review and help improve the legal, regulatory, and supervisory framework

FUNDERS’ INTERNAL SYSTEMS

l Create a microfinance working group of all funders that could:- establish a common vision and ground rules for microfinance- provide information on new and existing programs- increase transparency on donor performance- share lessons learned about the impact of tsunami funding

l Increase staff technical capacityl Define and act on comparative advantage—depending on their strength in the elements of aid effectiveness,

funders could choose from:- expanding their microfinance operations- consolidating existing programs- delegating to funding agencies with strong on-the-ground expertise- withdrawing from microfinance and concentrating on other needed development areas

I. BACKGROUND

In early 2002, the Consultative Group to Assistthe Poor (CGAP) and a group of leading donoragencies launched an Aid EffectivenessInitiative, using microfinance as a test case.In its first stage, between April 2002 andNovember 2003, the initiative sponsoredMicrofinance Donor Peer Reviews of 17bilateral and multilateral development agencies.The peer reviews helped donors look them-selves in the mirror and focus on what theycould most directly influence: their own proce-dures, processes, practices, and systems. Topmanagement and staff of the participatingagencies appreciated the frank and actionablerecommendations of the review teams. Allagencies are currently implementing recom-mendations, with promising results.1

The peer review exercise culminated in ahigh-level meeting in February 2004 called“Leveraging Our Comparative Advantage toImprove Aid Effectiveness.” At that meeting,lessons learned from the reviews were synthe-sized and steps for further collective action werediscussed. Following the meeting, the 17 agen-cies issued a joint memorandum that endorsedfive core elements of donor aid effectiveness inmicrofinance (the “aid effectiveness star”): (1)strategic clarity, (2) staff capacity, (3) account-ability for results, (4) relevant knowledge man-agement, and (5) appropriate instruments. Theagencies also committed to a four-step workprogram, including a mandate to expand the aideffectiveness work to the field.

CGAP member agencies jointly designed theCountry-level Effectiveness and AccountabilityReviews (CLEARs).2 CLEARs focus on strate-gic issues relevant to donor effectiveness. Theyare not comprehensive sector studies that deeplyanalyze financial systems development as do theFinancial Sector Assessment Programs. Rather,

CLEARs rely on an interview-based methodol-ogy and literature review to measure develop-ment agency systems and practices against theconcrete and specific challenges of building aninclusive financial system in a particular coun-try. CLEARs strive to help funding agenciesidentify gaps in financial systems and to designinterventions that build on their respective com-parative advantage. CLEARs also aspire tomotivate donors to improve their internal proce-dures and systems so they can work more effec-tively with others in the field, thus bettercontributing to poverty reduction and to theMillennium Development Goals (MDGs).

The vision of an inclusive financial system isclient centered. It is based on the assumptionthat financial services play a critical role inreducing poverty by enabling poor people toaccumulate and manage assets, conduct finan-cial transactions, manage cash flows, invest intheir businesses, and reduce their vulnerabilityto external shocks.

Five CLEARs will have been conducted fromOctober 2004 through December 2006. The firstCLEARs took place in Cambodia in October2004,3 in Nicaragua in February 2005, and inMadagascar in May 2005.

The fourth CLEAR was conducted in Sri Lankaon 8–28 October, 2005. The review team wascomprised of Eric Duflos and Brigit Helms(both of CGAP) and Joanna Ledgerwood andManuel Moyart (CGAP consultants). The teamspent a total of 10 person-weeks in the country.Sri Lanka was chosen for three main reasons: (i)presence of a large number of funders (includ-ing international nongovernment organizations[INGOs]) that support microfinance; (ii) strongdemand for the CLEAR from several funders;and (iii) concern of some about how effectivelythey could manage the increasing flows of aid ina post-tsunami environment.

The team interviewed more than 220 peoplerepresenting a broad cross-section of stake-holders, from government officials to MFI man-agers and staff to representatives of donoragencies, investors, and microfinance projects.The team also collected information through


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__________________________1 For more information on Microfinance Donor PeerReviews, visit www.cgap.org/projects/donor_peer_reviews.html.2 Seventeen agencies, including Agence Francaise deDéveloppement, African Development Bank, AsianDevelopment Bank, the European Commission, Finland,GTZ, ILO, the Netherlands, Sida, and USAID, took part indrafting the Terms of Reference.

__________________________3 For more information on CLEARs, visit www.cgap.org/clear.

questionnaires, reports, and literature on the SriLankan financial sector and facilitated threefocus groups with representatives from govern-ment, North East microfinance NGOs, andmicrofinance NGOs from other areas of SriLanka.4 Team members traveled to tsunami-affected districts to meet with MFI managers,staff, and clients. At the end of the reviewperiod, the team organized two meetings inColombo and briefed about 80 participants onits initial findings and recommendations. Thereview was also covered by several key newspa-pers and television stations.5

This report is addressed to all funders thatsupport microfinance in Sri Lanka. It providesexamples of good practice from among thedifferent funders in the country, but does notseek to assess the work of individual fundingagencies. Instead, the report provides a snapshotof key issues facing the development communi-ty engaged in microfinance and offers concreterecommendations on how to tackle them.Selected funding agencies will receive an indi-vidual assessment that focuses on specific issuespertaining to their own effectiveness.

CGAP, as a convener of 33 funding agencies, ofwhich 12 are currently supporting microfinancein Sri Lanka, is available to discuss this report inmore detail. CGAP also can help funding agen-cies implement recommendations. Support isenvisioned at the country level for joint initia-tives and individual agency actions and at theheadquarters level to further support and rein-force changes suggested by the peer reviews,when applicable.6

This report begins with a brief overview ofmicrofinance in Sri Lanka (Section II). SectionIII presents the analytical framework for thereview. In Section IV, the report examines thestrengths and weaknesses of donors’ systemsrelative to their microfinance operations andoffers concrete recommendations. This sectionalso specifically tackles the challenges posed byincreased flows of aid following the tsunami—these flows exacerbated existing problems inhow donors work. Finally, Section V presents adiagnosis of the three levels of the financial sys-tem—micro, meso, and macro—and providesrecommendations for donors to help build aninclusive financial system.

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__________________________4 See list of participants in annexes.5 See www.cgap.org/clear/Sri_Lanka for news articles.

__________________________6 See Microfinance Donor Peer Reviews documents: GlobalResults: Analysis and Lessons, CGAP, 2004 (www.cgap.org/direct/docs/HLM_Global%20Results_ reprint.pdf) andJoint Memorandum, CGAP, 2004 (www.cgap.org/hlm/docs/hlm_jointmemo.pdf).

II. OVERVIEW OF MICROFINANCE

IN SRI LANKA

Economic, Political, and Social Context

Approximately 20 million people live in theDemocratic Socialist Republic of Sri Lanka (SriLanka), with an average per capita income ofUS$ 1030 in 2004. Per capita Gross DomesticProduct (GDP) is the highest in South Asia7

(Maldives excluded). The government of SriLanka (GSL) places a high premium on socialdevelopment, and the country has made sub-stantial gains in reaching several of the MDGs,including achievements in education, genderequality, and safe water and sanitation facilities.Yet, poverty reduction has been slow, with onlya 3 percent reduction between 1991 and 2002. Inaddition, there is increasing inequality betweenthe poor and the rest of the population, andbetween urban and rural areas. The Westernprovince (Colombo, in particular) and otherurban areas are faring much better than ruralareas, where 88 percent of the poor live. Only 40percent of rural areas have access to basic infra-structure, such as electricity and roads.8 There arealso sectoral growth disparities among industry(26 percent of GDP), agriculture (19 percent ofGDP), and services (55 percent of GDP).

Two factors have contributed to a relativelyslow growth in Sri Lanka, especially whencompared to the Asian Tigers: the 20-yearconflict that erupted in 1983 and the substantialinvolvement of government in the economy.

In addition to causing tragic loss of human lives,the conflict has reduced economic growth bytwo to three percentage points and has divertedpublic resources away from economic reform.9

Despite the 2002 ceasefire between the govern-ment and the Liberation Tigers of Tamil Eelam,political uncertainty has persisted. In the last

four years, there have been three generalelections in Sri Lanka. In November 2005, theUnited People’s Freedom Alliance candidatewas elected as the new president of Sri Lanka.

The government has a strong role in several keysectors of the economy. Although the privatesector appears to be growing, the state is stillheavily present in power, transport, banking,agricultural inputs, and labor. For example, 14percent of the labor force is employed by gov-ernment, representing almost half of formalemployment. Although the exceptionally highpresence of the government can be positive insome spheres, it can have disadvantages wherethe private sector is usually more efficient, as isthe case with the financial sector.

The government has recently made attempts atreform. It published a paper, “Creating OurFuture, Building Our Nation,” that suggests aless interventionist role for the government andincludes a focus on reducing poverty throughrural economic development, promoting smalland medium enterprise, restructuring state-owned enterprises, having a smaller budgetdeficit, and promoting better civil services.10

Some indicators are positive: economic growthincreased and inflation fell from 14.2 percent in2001 to 6.3 percent in 2003. In 2004, investmentaccounted for 25 percent of GDP, and thenational savings rate was stable at 20 percentof GDP.11

Most recent figures, however, show a trend ofincreasing inflation and budget deficits thatcould hamper macroeconomic stability. In late2004, money supply growth accelerated andbroad money expanded, reflecting creditexpansion (mainly to government) and pushinginflation to 7.6 percent in December 2004 and to12.6 percent in June 2005. Government debt is105.9 percent of GDP.

Sri Lanka has been reeling from the conse-quences of the tsunami that hit the country on26 December 2004. The tsunami affected a


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__________________________7 Asian Development Bank, “Country Strategy andProgram (2004-- 2008),” Sri Lanka, Manila: ADB, 2003.8 Sharma, A., A. Qadir, C. V. Vo, and M. Ozaki, “RuralFinance Sector Development Program, Report andRecommendations of the President to the Board of Directorson Proposed Loan to the Democratic Socialist Republic ofSri Lanka,” Manila: ADB, 2003.9 World Bank, “Development Policy Review,” Washington,D.C.: World Bank, 2004.

__________________________10 Ministry of Finance and Planning, “Economic PolicyFramework of the Government of Sri Lanka: Creating OurFuture, Building Our Nation,” Colombo, Sri Lanka:Ministry of Finance and Planning, 2004.11 World Bank, “Sri Lanka Development Forum, theEconomy, the Tsunami, and Poverty Reduction,” 2004.

relatively thin but long (1,000 km) stretch ofSri Lanka’s coastline from Jaffna in the North tothe entire eastern and southern coasts and part ofthe West coast. Sri Lankans living in these areashave been devastated. More than 42,000 peopledied, with more than 200,000 householdsaffected. About 443,000 people were displaced,and the overall affected population is estimatedat 1 million.

The global response to the natural disaster wasunprecedented. Many people gave their timeand money to those affected by the tsunami. Theresponse of international funders, NGOs, localassociations, and the government was immedi-ate and generous. They have significantlycontributed to helping people affected by thetsunami through grants, in-kind support, andfood-for-work programs. Donor commitmentsfor post-tsunami aid are estimated at US$ 2billion (with US$ 784 million from bilateraldonors, US$ 646 million from multilateralagencies, and US$ 720 million from NGOs andthe private sector).12

Evolution of the Financial System

Sri Lanka’s modern financial sector has under-gone significant reforms since the early 1990s,mostly to reduce the government’s role as adirect provider. A wide range of institutionsoffer financial services, including public andprivate banks, specialized financial institutions,MFIs, leasing companies, and insurance compa-nies. There is also a growing stock exchange.The government is working to strengthen theinstitutional and regulatory framework forfinancial services. A remarkable recent evolu-tion is the reform and reorganization of theCentral Bank of Sri Lanka (CBSL), which isnow nearly complete. CBSL plans to concen-trate on monetary policy and banking supervi-sion and divest itself from lending and loanguarantees.

Though some trends are positive, importantchallenges remain. The banks have seriousrisk management problems that result in highlevels of nonperforming loans (NPLs). Despitea decade of financial-sector restructuring,

politicization has weakened commercial banksand rural finance institutions. For example, thepublic People’s Bank had loan loss provisionsthat covered only 60 percent of its NPLs in2003.13 Provisioning has improved significantlyin the last two years. Two major private banks,Hatton National Bank (HNB) and Seylan, havenet NPLs well in excess of their total capitalbase.14 Several institutions have weak infra-structure. For example, both state banks(People’s Bank and Bank of Ceylon) do nothave proper management information systems(MIS), although both have been recapitalizedrecently (the People’s Bank is regularly recapi-talized). There is also excessive concentrationof bank loans to the public sector. Finally, thestate-owned banks are not due to be privatized,although they will soon have to operate undera strictly commercial basis under the auspicesof the newly created Strategic EnterpriseManagement Agency.

The legal and judiciary framework needsreform to establish more autonomy for thesupervisory authorities. There also are questionsabout the standards of accounting and reporting,particularly in the state-owned banks.

Microfinance Stakeholders

Policy makers and supervisorsCBSL is in charge of supervising the formalbanking sector, which includes providers ofmicrofinance services. Other institutions alsoare involved in supervising microfinance, suchas the Ministry of Cooperatives, which super-vises all the Cooperative Rural Banks (CRBs),and the Ministry of Samurdhis, which super-vises the Samurdhi Bank Societies.

Although many ministries are currentlyinvolved in microfinance, there is a plan to con-solidate some responsibility for microfinanceunder a new agency—the Rural Finance SectorDevelopment Agency (RFSDA)—that is beingestablished with support from the ADB RuralFinance Sector Development project. All MFIswith a deposit base greater than LKR 2 million

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__________________________12 Ibid.

__________________________13 Asian Development Bank, Rural Finance SectorDevelopment Program, project proposal, 2003.14 ADB, 2005.

will be required to apply for a license fromRFSDA, which will be responsible for super-vising them. RFSDA will be located at theMinistry of Rural Economy.

The Ministry of Finance and Planning tracksdonor money through the External Resourcesand the Foreign Aid and Budget Monitoringdepartments. Although it does not provide fundsitself, it is involved in allocating funds to vari-ous ministries (Cooperatives, Samurdhi, RuralDevelopment, Agriculture, Fisheries, etc.)through the newly created DevelopmentFinance Department. This department seeks toidentify and flag credit components in multi-sector development projects.

Financial service providersA multitude of actors provide financial services.A majority of them are not specialized infinancial services, but rather combine micro-finance with other development or welfareprograms, including community building, socialtransfers, solid waste management, education,and so forth.15

l Government. GSL plays a significant role in financial services delivery. GSL providescredit and savings services directly throughthe Samurdhi Banks and Gamiediriya. Bothprograms are administered under theSamurdhi Authority. In December 2004,there were 1,036 Samurdhi Banks across thecountry, with more than 5 million deposi-tors16 and almost 500,000 borrowers.

l Commercial banks. Some commercial banks provide financial services to poorpeople. Of the 22 licensed banks regulatedand supervised by CSBL, fewer than sixprovide services to the low-income and poormarket segment. HNB has gone the furthest,serving approximately 12,500 microfinanceborrowers in June 2005.

l Specialized banks. There are 14 licensedspecialized banks supervised by CBSL,

including six regional development banksowned by the government (Kandurata,Rajarata, Rhuhna, Sabaragamuwa, Uva, andWayamba), a public savings bank (NationalSavings Bank), other state-owned special-ized banks (Housing Development FinanceCorporation Bank of Sri Lanka, NDBHousing Bank Ltd, SME Bank Ltd., and theState Mortgage and Investment Bank), andvarious private banks (Ceylinco SavingsBank Ltd., DFCC bank, and SanasaDevelopment Bank).

l Registered finance companies. There are 28 registered finance companies in SriLanka, of which at least one (Lanka ORIXFINANCE Co, Ltd.) provides some finan-cial services to the poor and low-incomepopulation. Finance companies are super-vised by CBSL.

l Cooperatives. The Ministry of Cooperativesregulates the large number of cooperativesin the country. The cooperative sectorincludes 1,539 CRB branches that areassociated with Multi-Purpose CooperativeSocieties, more than 7,400 Thrift CreditCooperative Societies (TCCSs) set up bythe SANASA group, and various localcooperatives offering credit and savingsservices. By law, cooperatives in Sri Lankacan provide only credit to their members,but can take savings from the public.

l Unregulated providers. Institutions that areneither licensed nor regulated by CBSL orthe Ministry of Cooperatives are generallyregistered as societies, companies, orNGOs. Of the more than 3,400 unregulatedcooperatives operating in Sri Lanka,approximately 250 provide financial serv-ices (note, however, that this is not based onstatistical data). As is the case in most othercountries, Sri Lanka also has moneylenders, who provide credit services atusurary rates (usually more than 20 percentper month), and pawnshops.

Wholesale facilities (apexes) There are three main wholesale facilities in SriLanka, all of which are governed by GSL andfunded by donors: National Development Trust


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__________________________15 See summary table of the various providers of micro-finance services in Sri Lanka in annexes.16 Based on CGAP survey 2005. Although the review teamasked for number of depositors, it is possible that some insti-tutions might have given their number of accounts instead.

Fund (NDTF), Susahana, and the Isuru Fund.NDTF was created by the World Bank in 1992and is currently mainly funded by the ADB,with a total of US$ 17 million. NDTF17 providesfunding to more than 300 MFIs, includingCRBs, TCCSs, RDBs, other banks, and NGOs.CBSL manages the Susahana wholesale facilitythat was created after the tsunami with fundingfrom JBIC, UNDP, and GSL, with a total ofUS$ 81 million. Finally, the Isuru PovertyAlleviation Microfinance Project is supportedby JBIC through CBSL, with a total of US$ 12million.

Microfinance Funders

A remarkably high number of funding agen-cies support microfinance in Sri Lanka. Morethan 40 organizations, ranging from publicdonors, international NGOs, and privateinvestors, are active in microfinance. Domesticfunders include six ministries and at least twolocal private investors. International fundersinclude more than 15 international NGOs, fourmultilateral agencies, eight bilateral agencies,and six international investors (see Box 1). Thefive largest international funders for microfi-nance are ADB, JBIC, the World Bank,USAID, and BMZ, working through KfW andGTZ.

Recent Trends in Microfinance

Because of the lack of available recent perform-ance information on microfinance providers inSri Lanka, the review team conducted a rapidsurvey among the largest providers of micro-finance. Information gathered was self-reported.The key results of the survey are summarizedbelow.

OutreachSignificant outreach has been achieved in SriLanka. Based on the CGAP survey, the numberof deposit accounts grew from just under 10million in 2000 to more than 15 million in 2004(51 percent growth).18 Although there may be

Box 1. Organizations that fund microfinance inSri Lanka

International NGOs

Multilateral Agencies

Bilateral Agencies

International Private Investors

Local Private InvestorsCeylinco GroupCeylon Chamber of Commerce

GovernmentCBSLNDTFLine Ministries (e.g.; Samurdhi, GemidiriyaFoundation, Mahaweli and River BasinManagement, SME Development, Agriculture,Irrigation and Livestock)._________________________________________The total microfinance budget of bi- and multilateralagencies and international NGOs for 1999–2005 wasnearly US$ 200 million. Commitments for 2005 andbeyond exceed US$ 85 million (self-reported).

CARECCACCFConcernFORUTGrameen FoundationMercy CorpsOXFAMNOVIB

PLANPlanet FinanceRelief InternationalSave the ChildrenStromme FoundationTrickle upWOCCUWWBWorld Vision

ADBEC

UNDPWB

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__________________________17 Out of the US$ 10 million already disbursed by ADB,US$ 7 million were allocated specifically to emergencymicrocredit in the tsunami-stuck areas, with a lower interestrate ceiling for clients.

__________________________18 Data set includes data from seven development banks,including all six RDBs plus Sanasa Development Bank; 11NGOs/companies (does not include Ceylinco Grameen andAgro Micro Finance); consolidated data for the CRBs(1539) from the Economics Indicators Division of theDepartment of Statistics at the Central Bank, plus self-reported data from Women’s Development Services Co-opSociety, Samurdhi (a government program), and commer-cial bank HNB. Data are self-reported and unverified (andin some cases incomplete) and do not represent all themicrofinance providers in Sri Lanka. They include onlythose who were willing or able to share their data with thereview team in October 2005. Data for 2005 are incompletebecause many organizations sent data only up to 2004.

BMZ (KfW & GTZ) CIDADANIDAJBIC

NORADSIDAUSAID

German Savings Bank Foundation

Gates FoundationRabobank

ETIMOSHSBCCitigroup

more deposit accounts than depositors, the totalnumber of deposit accounts is nonethelessremarkable given that the population of SriLanka is 20 million. The survey results alsoshow that the volume of deposits more thandoubled from 2000 to 2004 to a total out-standing deposit balance of LKR 48 billion.This indicates that the volume of depositsincreased over the period more than the numberof accounts.

The number of loans grew by 37 percent from2000 to 2004 (1.5 million to 2.2 million), withthe loan portfolio outstanding more thandoubling during the same period. (SeeTable 1.)

Geographical Coverage. Every district in SriLanka has access to financial services, with arange of financial service providers present inmost districts. Virtually all rural areas haveaccess to financial services. The CLEAR teamcounted more than 14,000 points of service—defined as a bank or cooperative branch or asociety where clients can deposit savings andwithdraw loans—throughout the country (seemap in Annex 6). On average, there is one pointof service per 1,300 inhabitants. This coverageis significantly greater than in most otherdeveloping countries. For example, in Mexicothere is one point of service for every 10,000inhabitants.

Density of Coverage. Results from the studyshow that districts with the highest coverage(fewer than 1,000 inhabitants per point ofservice) are Vavuniva, Jaffna, Matal,

Hambantota, Mongeragal, and Ampara.Districts with the lowest point-of-servicedensity (more than 2,000 people per point ofservice) are Barricaloa, Kurunegala, Ratnapura,Trincomalee, Colombo, Gampaha, and NuwaraEliva. More densely populated areas (e.g.,Colombo and Gampaha) appear to have lesscoverage; however, distances between points ofservice are likely quite small.19

Market Share by Institutional TypeShare of government loans and deposits. Thegovernment share of loans and deposits (bothnumber of accounts and volumes) has increasedsteadily from 2000 to 2004. In 2004, govern-ment organizations (Samurdhis and RDBs) heldapproximately 50 percent of loan and depositaccounts. With regard to volumes of loansand deposits, the government held 56 and 45percent, respectively. (See Table 2.)

Number and volume of loans and depositaccounts, by institutional type. The proportion-ate amount of loans and deposits by institution-al type has not changed dramatically over thefour years, with the exception of the CRBs.CRBs have reduced their market share in num-ber of deposit accounts and loans and volume ofdeposits and loans. This loss of market sharehas been captured primarily by the Samurdhiprogram and the RDBs. Combined, these insti-tutions account for about half of the micro-finance market, with CRBs being the thirdlargest. (See figures 1 and 2.)


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__________________________19 See maps in Annex.

Table 2. Share of Government Loans and Deposits

# Deposit Accounts

(%)

Amount of Deposits

(%)

# of Loans

(%)

LoansO/S(%)

2000 38.6 29.9 44.8 46.8

2001 40.4 29.6 50.2 50.7

2002 44.5 37.5 52.6 56.5

2003 48.0 42.4 51.8 56.9

2004 49.4 45.2 52.4 55.6

Source: CGAP survey 2005.

Table 1. Outreach

# of Deposit

Accounts

Volume of Deposits

# of Loans

LoanPortfolio

Outstanding*

2000 9,983 23,250,725 1,626 16,468,843

2001 10,984 26,337,688 1,878 14,777,004

2002 12,408 33,710,950 1,846 16,524,745

2003 13,587 39,678,554 2,042 21,556,401

2004 15,102 48,672,310 2,234 29,876,496

*In ‘000 and ‘000 LKRSource: CGAP survey, October 2005.

As seen in Table 3, in 2004, NGOs held 8percent of the deposit accounts of all institutionsresponding to the survey and 4 percent of thedeposit volume. NGOs held 17 percent of thenumber of loans in 2004, but only 7 percent ofthe volume of loans outstanding. Similarly,Samurdhis held 34 percent of deposit accountsand 21 percent of loan accounts, with 24 percentand 13 percent, respectively, of volumes.Conversely, the development banks (RDBs andSanasa) held 16 percent of deposit accounts and26 percent of deposit volumes in 2004, and 34percent of number of loans and 52 percent ofvolume of loans.

Liquidity by Institutional TypeThe data show excess liquidity in the systemoverall (the volume of deposits is generallyabout double the volume of loans in each year),but not with all institutional types. RDBs aregenerally short of liquidity (20 percent greatervolume of loans than deposits), while NGOsand SDB are flat, and the CRBs and Samurdhihave a significantly greater number of depositsthan loans. (See Table 4.)

Portfolio QualityData collected by the CGAP survey indicatethat portfolio quality among microfinanceproviders is quite weak. RDBs report an averageportfolio at risk (PAR) greater than 30 daysranging from 6 percent to 9 percent, while theNGOs report PAR greater than 30 days rangingfrom 5 percent to 25 percent, with most closer to25 percent. The Samurdhi program did notprovide PAR data. In general, it appears mostMFIs either are not familiar with the conceptof PAR or are unable to calculate it with their(often manual) systems.

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Figure 1. Number of Loans in 2004

Figure 2. Number of Deposits and Accounts in 2004

CGAP survey 2005.

RDBs

CRBs

NGOs

Samurdhi

RDBs

CRBs

NGOs

Samurdhi

Table 3. 2004 Volume and Number of Loans/Deposits, by Institutional Type

# of Deposit

Accounts(%)

Volume of Deposits

(%)

# of Loans

(%)

LoanPortfolio

Outstanding(%)

DevelopmentBanks 16 26 34 52

CRBs 42 46 27 28

NGOs 8 4 17 7

Samurdhi 34 24 21 13

Source: CGAP survey 2005.

Table 4. Liquidity by Institutional Type

Amount of Deposits

Loan Portfolio Outstanding*

RDBs 10,240,920 12,909,525

Sanasa Dev Bank 2,309,506 2,069,080

CRBs 22,276,954 8,144,916

NGOs/Companies 2,083,931 2,139,695

Samurdhi 11,761,000 3,692,000

*In ‘000 LKRSource: CGAP survey 2005.

Loan SizeGenerally, the average loan size of banks islarger than those of NGOs and Samurdhi. HNBreports an average disbursed loan size of almostLKR 80,000 (US$ 800) and the RDBs approxi-mately LKR 20,000–30,000 (US$ 200–300).20

The NGOs/companies report average loan sizeof around LKR 5,000–10,000 (US$ 50–100),with the exception of two NGOs that reportdisbursed loan amounts closer to LKR 25,000(US$ 250). Samurdhi and the cooperativesreport loans sizes averaging LKR 10,000---14,000 (US$ 100–140). The NGOs andSamurdhi appear to cater to lower incomeclients than the RDBs (consistent over the four-year period).

Impact of the Tsunami on MFIsThe tsunami has had negative impact on manyMFIs that operate in affected coastline areas.Many MFIs lost staff and clients. They alsosuffered materials losses, such as clients’records. Right after the disaster, some MFIsplayed a supportive role by providing short-term emergency help to their clients in the formof food and other relief items. Several clientsinterviewed in affected areas mentioned thatthey approached MFIs because moneylendersdid not want to lend to them because they lackedphysical collateral. One of the most importantpositive actions taken by MFIs was to resched-ule affected people’s loans, thus giving themtime to rebuild their ability to generate income.Some MFIs also helped their clients by settlinginsurance claims and allowing them to with-draw their savings.


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__________________________20 It is likely that some MFIs reported average loan out-standing not average disbursed loan amount thus, these dataare not definitive.

III. ANALYTICAL FRAMEWORK

Microfinance is a rapidly changing field.International microfinance donors recentlyendorsed a new set of good practice guidelinesthat will be revised periodically as the fieldof microfinance continues to evolve andinnovate.21 The guidelines envision the integra-tion of microfinance into the formal financialsystem as a means to achieve massive outreachand maximum impact.

Integrating microfinance fully into the formalfinancial system requires working at threelevels: micro, meso, and macro. (See Box 2.)Although retail institutions (the micro level)are the backbone of the financial system, theyneed support services (the meso level) to traintheir staff, improve their systems, refinancethemselves, and become more transparent.Institutions evolve well in a conducive environ-ment (the macro level), where policies, regula-tions, and supervision set appropriate rules ofthe game and create incentives for increasedaccess. A financial systems approach requireswork at all three levels to ensure permanentaccess to financial services. From the perspec-tive of poor clients, sustainability is key toensuring they have access to financial services(such as savings, loans, payment systems,insurances) on a permanent basis, to help themtake advantage of opportunities and managerisks.

Mixing Social Welfare and FinancialServices—A Recurring Theme

GSL has a deep commitment to social develop-ment. This commitment has been translatedinto action through various government poli-cies. As a result, the country has a vibrantnetwork of public and private organizationsthat provide social services. One example is theSamurdhi programs, which are present through-out the country. Achievements in social devel-opment are inspiring, especially in educationand health.

Unfortunately, the focus on social developmenthas sometimes led to confusion with regard tofinancial systems development. The differencebetween financial services and social transfers isoften misunderstood by a broad range of actorsfrom the development community and GSL.This lack of clarity often means that expecta-tions of financial service provision are notalways compatible with accepted good practicefor microfinance, and especially the importanceof sustainability. Naturally, social transfers areappropriate in some situations. Although socialtransfers require ongoing subsidy, financialservices—when done well—can be provided ona commercial basis, independent of donor orgovernment support.

Recent donor and government support to thetsunami have exacerbated the long-standingconfusion. Following the tsunami, credit wasoften hastily included in multisector programs.Such proliferation of credit programs has hadsome negative effects at all three levels of thefinancial system. At the micro level, it hasencouraged the emergence of multipurposeorganizations with little specialized expertise infinancial management. Programs run by theseorganizations have little chance of ensuring per-manent access to financial services beyond thelife of the project. At the meso level, the socialimperative has led to refinancing conditions formicrofinance, such as interest rate caps andminimal monitoring, that can weaken the finan-cial sustainability of microfinance providers. Atthe macro level, some politicians and donorshave fueled the confusion by using credit as asocial welfare instrument.

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Box 2. Three Levels of the Financial System

Micro: Retail financial service institutions (e.g.,NGOs, finance companies, banks, financial cooper-atives, and other suppliers, such as moneylenders,agricultural traders, etc.)

Meso: Service providers and industry infrastructure(e.g., networks, trainers, auditors, information tech-nology providers, wholesale financing facilities,credit bureaus)

Macro: Policy, laws, and the regulation and super-vision framework (e.g., banking regulations andinterest rate policy)

__________________________21 For more information on the Donor Guidelines on GoodPractice in Microfinance, visit www.cgap.org/donorguidelines.

Although some actors in Sri Lanka claim thatthe blurring of social development and financialservices is specific to the post-tsunami emer-gency period and thus temporary, it is uncertainthat this is the case. The review team believesthat short-term measures can have deeper,

longer-term consequences that must be betterunderstood and mitigated. The rest of this reportaddresses more specifically some of the nega-tive implications of confusing financial serviceswith social welfare and resource transfers.


13

IV. DONOR SYSTEMS

Based on the results of the 17 MicrofinanceDonor Peer Reviews and the three previousCLEARs, CGAP believes that aid effectivenessin microfinance can be defined by five coreelements depicted as the Aid Effectiveness Star(Figure 3) and defined in Box 3.

Figure 3. Aid Effectiveness Star

Another element especially relevant at the coun-try level is “commitment to collaboration” thatCGAP defines as “the systems and incentives inplace to engage in operational collaborationwith others.”

Strengths and Weaknesses of DonorSystems in Sri Lanka

Using the Aid Effectiveness Star as a frame-work, this section treats the systems of thedonor community as a whole and analyzeswhether it is set up to ensure effective support to

microfinance. Individual agencies may farebetter or worse than this common description ofthe donor community as a group. Selected agen-cies will receive individual, confidential lettersthat highlight their strengths and weakness morespecifically. In this section, specific agenciesare mentioned by name only to provide exam-ples of strengths.

Strategic Clarity

Strengths

There is an increasing awareness of goodpractice, and some donors and a few interna-tional NGOs are taking a “financial systemsapproach” that treats microfinance as an inte-gral part of the financial sector. The recentproject documents of the ADB Rural FinanceSector Development Program and of theGTZ/KfW/SIDA PROMIS program reflect thistrend.

Weaknesses

The general confusion between social transfersand financial services is reflected in the wayfunders approach microfinance. Few fundersseem to understand the connection betweentheir credit components or support to villagesavings schemes with the overall financialsystem. Moreover, most funders do not appearto prioritize the importance of sustainabilityfor MFIs. This lack of strategic clarity hasresulted in uneven quality of microfinanceprograms.

Staff Capacity

Weaknesses

There are few locally based (international ornational) microfinance experts relative to thesignificant amount of donor funding beinginvested in microfinance. The presence of local-ly based donor staff with microfinance expertiseappears to be the exception rather than the rule.CGAP’s work on aid effectiveness in micro-finance has demonstrated that internal technicalcapacity is key for designing and managingeffective microfinance programs. Having tech-nical staff on the ground not only enables bettermonitoring, but also allows for greater exchangeand collaboration among donors and otherstakeholders.

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Box 3. Elements of Aid Effectiveness

l Strategic Clarity: Coherence of agency's visionof microfinance. Vision is in line with acceptedgood practices.

l Staff Capacity: Staff with technical capacity.Appropriate systems to select and monitor out-sourced expertise and implementing partners.

l Accountability: Knowledge of the microfinanceportfolio. Transparency of portfolio performance.

l Knowledge Management: Knowledge gainedfrom agency's own and other's experience.

l Instruments: Ability to work directly with the pri-vate sector. Wide range of flexible instruments.

Strategic Clarity

Accountability forResults

Relevant KnowledgeManagement

AppropriateInstruments

Staff Capacity

Effectiveness

Accountability for Results

Weaknesses

In general, donors do not seem to have propermonitoring and evaluation systems for micro-finance. Inadequate monitoring and evaluationsystems prevent funders from managing theirprograms based on performance indicators andresults in a lack of transparency and learning.Rather than focus on a few, key performanceindicators, some donors request the names ofindividual clients as a means of monitoring loandisbursement. This level of detailed informationis not necessary for donors to gather, and oftenplaces undue burden on MFIs that must hireextra staff simply to provide this reporting.Moreover, it appears that most donors do notconduct systematic evaluations of their micro-finance programs. During its visit, the reviewteam was unable to find any evaluation reportsof donor projects.

Relevant Knowledge Management

Strengths

In part because of the tsunami, funders haverecently attempted to better share informationon microfinance investments: the People’s Bankof Sri Lanka and GTZ are jointly sponsoring theRural Banking Innovations Project, whichcreated a Web site (www.microfinance.lk).Another example is the Task Force to Rebuildthe Nation’s (TAFREN)22 work to build a data-base of donor projects. Some internationalfunders are bringing in experiences from otherparts of the world: PLAN International hopes toadapt its successful programs in the Philippinesto the Sri Lankan context.

Appropriate Instruments

Weaknesses

Microfinance typically requires small flexiblefunding instruments donors can use directlywith private institutions serving the poor.Funders in Sri Lanka face three main issues withregard to their deployment of instruments:

l Imbalance between the large supply of loancapitalization funds and minimal supply offunding for capacity building. Given thehighly liquid Sri Lankan financial market,the flood of loan capital funds may not beneeded as much as investments in buildingcapacity are. There are questions about theabsorptive capacity of qualified micro-finance providers. The modalities of emer-gency funding after the tsunami also posechallenges for microfinance. For example,one donor requires its loans to MFIs to berepaid within nine months of disbursement,when in fact MFIs provide loans to clientsfor 12 months.

l Inclusion of credit components in multi-sector programs. The widespread confusionbetween microfinance and social servicesleads funders to design multisector programsthat include credit components. Globally,credit components in multisector programsgenerally have yielded poor results becausethey are, for the most part, designed bypeople with little or no financial expertise. Arecent review of credit lines from the WorldBank shows that credit components as partof a project had a weak performance com-pared with stand-alone projects.23

l Government involvement in credit delivery.Funding through the government is wide-spread in Sri Lanka. Loans or credit linesoperated through state-owned institutionstend to politicize credit decisions (i.e.,directed credit) and distort financial man-agement principles (i.e., interest rate caps).The resulting distortion may prevent MFImanagers from operating in a sustainablemanner and may lead to decapitalizationand low rates of repayments if clients per-ceive the credit as a gift.

Commitment to CollaborationStrengthsIn response to the tsunami, some efforts ofincreased collaboration occurred. Specifically,


15

__________________________22 TAFREN, recently renamed Reconstruction andDevelopment Agency (RADA), is an agency created afterthe tsunami to plan, coordinate, and administer therebuilding effort.

__________________________23 Rosenberg, Richard, “Aid Effectiveness in Microfinance:Evaluating Microcredit Projects of the World Bank and theUnited Nations Development Program,” Focus Note 35,Washington, D.C.: CGAP, forthcoming 2006.

funders asked GTZ to take the lead in coordi-nating funding activities for microfinance.Together with PLAN International andStromme Foundation, GTZ organized a work-shop open to all stakeholders to discuss strate-gies for maintaining portfolio quality. SIDA,KfW, and GTZ (with BMZ funding) alsolaunched a joint program (PROMIS), exempli-fying strong donor collaboration. The activeparticipation of all the key donors at the CLEARdebriefing in October 2005 also demonstratesdonors’ heightened interest in collaborating onmicrofinance.24

Weaknesses

In spite of some recent promising efforts, SriLankan microfinance stakeholders widelyacknowledged that there is little operationalcoordination among donors, internationalNGOs, practitioners, and the government. Theuncoordinated actions of many donors havenegative consequences, such as duplication ofprograms or, even worse, promotion of pro-grams that contradict each other (sometimeseven from the same funding source). Improvingcoordination is particularly vital given the largeamounts of money committed to microfinance.

Consequences of Tsunami Support onAid Effectiveness in Microfinance

Donations that poured into tsunami-affectedareas helped meet the most urgent and primaryneeds of the population. However, donorresponse to the tsunami also had the negativeconsequence of exacerbating some pre-existingsubstandard practices in microfinance. In fact,many people interviewed by the review teamexpressed the sentiment that “post-tsunamiaid is harming sustainable microfinance.” Thereasons are as follows.

Mixing grants with loans. Some affectedpeople received grants, others received loans,and still others received a mix of both, causing

misunderstandings and frustration and raisingequity issues. There were no clearly definedcriteria for making those decisions. The confu-sion between resource transfers and microcreditmay harm the credit culture in the medium term.For example, in some districts people receivedboats partly as a grant and partly as a subsidizedloan. It would not be surprising for recipients toconfuse the two and, thus, not reimburse theloan portion.

Creating a culture of dependency. Somepersons affected by the tsunami are flooded withmore grants from donors than they can useeffectively. The careless use of grants can createa “dependency syndrome.” Grants certainlyhave a role to play, but funders do not seem tosystematically plan for a transition to more sus-tainable, long-term approaches.

Imposing interest rate ceilings. Several donor-funded programs impose ceilings on the interestrate MFIs can charge clients, thus threateningMFIs’ ability to cover their costs and undermin-ing their sustainability. Artificially low interestrates also create unrealistic price expectationsfor clients. For example, Susahana and NDTFimpose a 6 percent and 8 percent ceiling, respec-tively, while sustainable rates are estimated atapproximately 24–28 percent. When and if thesubsidy ends, clients may find it difficult to paymuch more (up to four times in this example)for the same service. Drop-out rates at MFIsmay then increase dramatically. Also, becauseno MFI in Sri Lanka is able to recover its costswith the imposed low interest rates, it is likelythat the ceiling is slowing the expansion ofmuch needed credit services for the poor. Theinterest rate ceiling is also reducing the trans-parency of some MFIs that add various fees tothe interest rate, making it harder for clients tounderstand the full price of the service.25

Putting pressure to make disbursements.Many donors seek to disburse large amounts ofmoney quickly because of public pressure to usedonated funds to help tsunami victims. In gener-al, there is too much money devoted to micro-finance relative to MFIs’ absorptive capacity.

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__________________________24 Increased commitment to collaboration also exists in otherdevelopment sectors as illustrated by the number of multi-donor assessments, such as the “Joint Donor Fact FindingMission to Jaffna” in 2005 conducted by USAID and DFIDand the one in the LTTE-controlled area organized byAusAid, the EC, and the Netherlands Cooperation.

__________________________25 For more information on interest rate ceilings and micro-finance visit www.cgap.org/docs/OccasionalPaper_9.pdf.

Weak institutions may receive more funds thanthey can effectively manage and, in the worstcase scenario, new programs with little chanceof becoming sustainable are launched. Toincrease its disbursement of funds in tsunami-affected areas, NDTF started providing fundingto cover operating losses of MFIs in addition toloan capital funds.

Recommendations on Donor Systems inSri Lanka

The following recommendations address thechallenges identified above in donor systems inSri Lanka. They also take into account specificissues raised by donor response to the tsunami.Many of these issues existed before the tsunami,but the natural disaster made them more acute.

Create a microfinance working group of allfunders. Building on recent efforts to improvecollaboration, donors (including internationalNGOs) should form a microfinance workinggroup. The mission of the group should be toaddress funders’ long-term contributions tobuilding microfinance, and not simply to focuson the short-term response to the tsunami. Thegroup could be used to share information anddevelop common projects. It could be lead bylocally based staff from GTZ, ADB, and aninternational NGO that specializes in micro-finance. Specific ideas for the working groupare as follows:

Establish a common vision and ground rules formicrofinance. The working group’s first taskshould be to establish a common vision formicrofinance in Sri Lanka, including howdonors can best contribute to achieving thevision. As part of the vision, the group shouldaddress the questions: How do microfinance andlivelihood development fit into the larger finan-cial system? What are the roles of the private andpublic sectors in financial services? Given thecomplexity of the political landscape, donorsshould agree on how to engage the governmentin this vision. The group could adopt a code ofconduct and develop ground rules that allow fordiversity but include good practice (e.g., PinkBook,26 Donor Group Guidelines in Uganda).

Provide information on new and existing pro-grams. Part of the working group’s mandatecould be to create a database of all microfinanceprojects and components and to collect informa-tion on lessons learned from various donor andNGO projects. This work could build on existingWeb sites (www.microfinancelk.org) and theTAFREN/RADA database. Given the unusuallylarge number of funders involved in microfi-nance, providing information on the activities ofspecific projects could avoid redundancies. Thegroup might even create a “newsflash” to be cir-culated through a listserve each time a new funderproject with some microfinance is in the pipeline.

Increase transparency on donor performance.The database of projects described above wouldprovide a first step toward increased trans-parency. Working group members also shouldintroduce performance-based contracts withtheir partners and adopt common monitoringmechanisms to ensure more visibility on theirperformance. The CGAP Donor Guidelinesprovide useful standard indicators to monitormicrofinance performance.27 Funders shouldsystematically evaluate their programs and,ideally, share these evaluations with otherdonors to maximize lessons learned from goodand bad experiences. To this end, donors couldorganize joint evaluations or field visits.

Share lessons learned about the impact oftsunami funding. Given all the money spent onmicrofinance post-tsunami and the high likeli-hood of natural disasters occurring in otherplaces, funders should evaluate the impact oftheir programs on local financial markets andlivelihoods. The study on the impact of thetsunami by the ADB Institute28 could be expand-ed to include this evaluation. The Foundationfor Development Cooperation funded by theCitigroup Foundation might provide the fundsfor this work. The results of this evaluationcould be shared with all staff of funding agen-cies to help them better plan for post-disastersituations.


17

__________________________26 See www.cgap.org/donorguidelines.

__________________________27 For more information, see www.cgap.org/donorguidelines, p. 32–33.28 ADBI’s objectives, as defined under its statute, are toidentify effective development strategies and capacityimprovement for sound development management indeveloping member countries.

Increase staff technical capacity. Ideally,donors that are the most engaged in micro-finance in Sri Lanka should have in-countrynational or international staff with microfinanceexpertise to support their programs. Havingstaff on the ground will enable donors to betterassess local demand and exchange with therest of the donor community. Although not allfunders will be able to have a microfinancespecialist in-country, they do need staff with aminimum level of “microfinance literacy” tomanage their portfolios responsibly. Trainingfor donor staff is available from several sources,including Boulder/Turin, EDA Rural Systems inIndia, UNCDF distant learning course, and theCGAP Donor Training, among others.29

Information resources on microfinance tailoredspecifically for funders are available at theCGAP Donor Information Resource Centre(DIRECT).30

Define and act on comparative advantage.One of the key lessons of CGAP’s work on aideffectiveness is that all development agenciesdo not have the same capacity to fund micro-finance. Funders could do a better job by pro-viding support based on their comparativeadvantage and leveraging each others’ strengthsand resources.31 For example, agencies withlarge budgets but little capacity could delegatetheir funding to highly specialized agencies.

Agencies with influence and easy access togovernment should focus their efforts at thepolicy level. With nearly US$ 200 millioncommitted, at least 36 international funders,minimal technical capacity in microfinance, andweak systems, funding agencies in Sri Lankawould do well to divide tasks according to theirrespective strengths.

To this end, each donor should examine its exist-ing programs and consider its strength on thefive elements of the Aid Effectiveness Star todecide, in coordination with the working group,what its future involvement in microfinance willbe. Based on this analysis, funders will need todecide if they will (i) expand, (ii) consolidateexisting programs, (iii) delegate to a fundingagency that has strong on-the-ground expertise,or (iv) withdraw from microfinance and concen-trate on other needed development areas.32

Both consolidation and delegation are needed.Delegation is a real possibility given the exis-tence of strong multidonor programs, such asPROMIS, with its good technical expertise in-country. Close cooperation also should beestablished with the ADB RFSD program,which often fields highly competent technicalexperts and remains the largest program thatsupports inclusive financial services for the poorin Sri Lanka.

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__________________________29 For more information on CGAP DIRECT Training, visitwww.cgap.org/direct/training/training.php.30 For more information on the CGAP Donor InformationResource Center, visit www.cgap.org/direct.31 Helms, Brigit, and Alexia Latortue, “Elements of DonorEffectiveness in Microfinance: Policy Implications,”Washington, D.C.: CGAP, 2004. www.cgap.org/docs/PeerReview_policy_070604.pdf.

__________________________32 For more discussions on the implications of these fourscenarios, see www.cgap.org/direct/docs/ HLM_Global%20Results_reprint.pdf, p. 16.

V. GAP ANALYSIS IN THE SRI

LANKAN FINANCIAL SYSTEMS

MICRO LEVEL (retail financial serviceproviders)

Only strong and efficient financial institutionscan provide poor people with permanent accessto the financial services they need. In Sri Lanka,despite the apparent success of microfinancein terms of outreach, sustainability remainselusive. The existence of hundreds of microfi-nance providers, many of which also providecommunity development services or socialwelfare, diverts resources away from sustain-able microfinance. Donors are partially respon-sible for the multiplication of small and weakproviders because they fund too many less-than-promising microfinance initiatives and imposeinappropriate conditions and requirements onMFIs.

Strengths at the Micro Level

Diverse institutions and services. Sri Lankahas a long tradition of informal savings andcredit, especially through grassroots initiatives.This tradition is reflected in the numerousand diverse institutions that provide financialservices to the poor, including commercialbanks, licensed specialized banks, cooperativesand CRBs, thrift and credit cooperative societies(SANASA), societies, companies, and NGOs.

These institutions offer an unusually widevariety of financial services and provide poorpeople with more options than found in manyother countries. Services include short- andmedium-term loans, savings, insurance, andpawning. The flexibility of loan terms, forexample, is important to letting clients managetheir resources effectively. Loan terms rangefrom the one-month term pawn loan to loanswith a three-year tenure. Some loans aredesigned specifically for use on agriculture orhousing. Sri Lankan institutions provide avariety of savings products, including demandand time deposits, with fixed deposit termsranging from one to five years.

Significant savings culture. Whereas, in manycountries, savings is considered the “forgotten

half” of microfinance, this is not the case inSri Lanka. The review team estimated that thereare more than 15 million savings accounts. Someproviders serve more than 1 million depositors(e.g., SEEDs with 1.1 million, Samurdhis with5.5 million, and CRB with 6 million).

Challenges at the Micro Level

Lack of transparency. The review team haddifficulty obtaining basic market information onmicrofinance portfolios, outreach, and per-formance. For this reason, the review teamconducted its own survey with the generousparticipation of key practitioners. Several rea-sons help explain the lack of critical information.First, supervisory responsibilities are unclear—particularly the supervision of the Samurdhis,which are the country’s main deposits holders.CRBs are supervised by provincial-level cooper-ative commissioners and district officers, not allof whom are trained as auditors. Second, severalof the largest institutions do not receive regular,professional audits, as is the case of theSamurdhis and CRBs. Finally, most funders con-tribute to the lack of transparency because theydo not systematically request portfolio qualityand outreach information.

When information was available, it often was ofrelatively low quality and comparability. Thereappears to be different understandings of defini-tions for sustainability and portfolio qualityamong institutions and donors. The lack oftransparency is especially worrisome given thelarge volumes of deposits collected. The lack oftransparency represents a threat to poor people’ssavings and, possibly, the integrity of the entirefinancial sector.

Fragile institutions. Although there are a fewstrong MFIs, a large majority are fragile andseem far from reaching sustainability.33 Asillustrated by CGAP’s survey, the quality of theloan portfolio is low. Many institutions do nottrack the quality of the portfolio using the bestindicator—PAR. Rather, they focus on recoveryor repayment rates that provide useful historical


19

__________________________33 Financially sustainable institutions are those that fullycover all their costs (operational costs, inflation, cost offunds, and provisioning) with their revenues.

information, but do not adequately track the fullamount of assets at risk. Poor computerizationexacerbates the issue of poor portfolio man-agement. The availability of large amounts ofsubsidized funding creates a disincentive forinstitutions to focus on reaching financial sus-tainability and improving their systems to do so.Finally, many Sri Lankan cooperatives facesignificant governance issues.

Widespread involvement of public sector.The CGAP survey suggests that approximatelyhalf the microfinance clients are served bygovernment-owned institutions, with theSamurdhis having significant outreach to poorpeople. However, they are also the largestproviders of welfare services, and they oftenmix welfare services and financial services inquestionable ways. For example, poor peoplereceiving social welfare grants are forced to setaside a percentage of the grant in inflexiblesavings accounts. Many people complain that itis virtually impossible to withdraw from theseaccounts. The Samurdhis are considered bymany to be a politicized organization. Althoughsome of the RDBs seem less politicized, severalstakeholders questioned their efficiency. With afew exceptions, worldwide experience showsthat governments have little success in deliver-ing credit to the poor through state-owned finan-cial institutions.34

Lack of specialization in financial services.Although some institutions attempt to separatesocial services from financial services (e.g.,SEEDs), many institutions continue to providefinancial services in an integrated way. Forexample, CRBs are generally created withinmultipurpose cooperatives. This may result ina lack of adequate governance and confusionof purpose between social empowerment andthe provision of permanent financial services.The risk of having the same institution managemicrocredit and social services is that creditmanagement will not receive sufficient

technical attention or staffing. As a result, thedelivery of credit services cannot becomesustainable. Although, in theory, an integratedapproach takes into account all dimensions ofpoverty, in practice, it is difficult for NGOsand other institutions to have the requiredexpertise to implement multiple objectiveswell.35

Donor Recommendations at theMicro Level

The following recommendations are addressedto the community of donors working on micro-finance in Sri Lanka. The list is long, butgrouped according to short, medium, and longterm to provide a sense of actions that can betaken immediately to achieve quick results andlay out reforms that require fundamental, andsometimes difficult, changes.

Short Term: Take Stock and Focus onImmediate PrioritiesAssess the quantity and quality of financialservices available. To introduce more coher-ence and transparency among funders support-ing microfinance, there is an urgent need todevelop an inventory of all microfinanceproviders and to assess their performance. Theinventory should include outreach (number ofclients and depth of outreach); performancedata (financial sustainability, efficiency, andportfolio quality); and qualitative informationon governance, management capacity, andfuture planning. Because GTZ already hasstarted to do this, and CBSL also has launched areview of all providers, this recommendationshould be relatively easy to implement.

Define minimum conditions for donorfunding. Given the multitude of weak financialservice providers, donors should carefully selectthose that merit continued assistance. Based ondata collected in the inventory of providers,donors, international NGOs, and other fundersshould jointly define the minimum conditionsMFIs should meet to merit support. Theminimum conditions could include evidence of

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__________________________34 See CGAP, “Microfinance Key Principles,” Washington,D.C.: CGAP, 2004, www.cgap.org/docs/KeyPrincMicro-finance_CG_eng.pdf, and Duflos, Eric, and KathrynImboden, “The Role of Government,” CGAP Donor Brief19, Washington, D.C.: CGAP, June 2004. www.cgap.org/docs/DonorBrief_19.pdf.

__________________________35 See Clark, Heather, and CGAP staff, “Credit Components,”Donor Brief 10, Washington, D.C.: CGAP, 2003,www.cgap.org/ docs/DonorBrief_10.pdf.

good management, focus on poor populations,transparency, growth potential, size, level ofspecialization in microfinance, staff capacity,and vision.

Determine the right balance between fundsfor capital (loan portfolio) and capacitybuilding. For institutions that meet the mini-mum conditions for funding, donors shouldcarefully assess their funding needs. Overall,funders in Sri Lanka have not been able toachieve an appropriate balance between capaci-ty building and loan/capital funds, given thefragile state of institutions in the country. SriLankan institutions require increased capacityin areas such as portfolio management, treasurymanagement, product development, delin-quency management, and MIS. In craftingcapacity-building plans, donors should empha-size knowledge and skills transfer. They shoulduse performance-based contracts with technicalservice providers hired to work with MFIs,including some measure of skills transfer as akey performance indicator.

Medium Term: Manage Funding Based onPerformanceFocus support on existing promising institu-tions (not projects). Given the plethora ofexisting institutions, funders should refrain fromsupporting start-ups. All funding agenciesshould avoid supporting institutions that havepoor and/or highly politicized governance struc-tures. They also should cease support to projectcomponents that do not have a clear path forinstitutionalization.

Provide performance-based assistance in atransparent manner. Once an institution isselected, funders should use performance-based contracts with funding tied to concretetargets of (i) growth and outreach, (ii) portfolioquality, and (iii) progress toward self-suffi-ciency. As a condition for support, fundersshould ask partner MFIs to submit a businessplan with clear quantifiable targets, including,at a minimum, outreach and financial perform-ance. The plan also should include an indica-tion of the poverty mission of the institutions.Even smaller MFIs can provide business plansbecause the plans can be simple and short.

Long Term: Consolidate and Scale Up

Facilitate MFI consolidation and linkages. Itis unlikely that there is enough demand in SriLanka to sustain the financial viability of hun-dreds of MFIs. To achieve economies of scaleand to become sustainable, organizations needto merge or risk disappearing. Organizationswith multiple activities may have to focus ontheir nonfinancial activities. Donors should notperpetuate the existence of nonviable institu-tions. Rather, they should provide technicalassistance to help facilitate mergers and consol-idations (for example of NGOs and societies).They should consider funding feasibility studieson linkages between institutions (e.g., NGOsand banks) and bring in examples of successfullinkages from other countries.

Emphasize private institutions for creditdelivery. Although many public institutions areinvolved today in providing credit services, overthe long run, donors should shift their funding todeveloping private microfinance providers forcredit.

MESO LEVEL (support services, apexes,networks)

The meso level of the financial system has animportant role in supporting the consolidationand expansion of retail providers and promotingtransparency. It is essential to address chal-lenges to sustainability that persist at the retaillevel. Improving governance, financial manage-ment, MIS, and the use of technology on a largescale requires local or regional solutions. Donorsupport should prioritize this level in the comingyears in Sri Lanka to build support services


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Box 4. Characteristics of Effective Donors atthe Micro Level

l Strategic commitment to financial systemsdevelopment

l Staff with microfinance expertise and capacity tocontract specialized consultants

l Instruments for investing or lending directly toprivate sector

l Agency capacity to add value as an MFI share-holder

l Performance-based project management

locally and to enable MFIs to refinance them-selves in a sustainable way, through banks andprivate investors.

Strengths at the Meso Level

Promising financial infrastructure. Sri Lankahas a well-developed financial sector, in gener-al, with a fast-maturing capital market thatincludes a stock exchange and a private debtmarket. There is a credit bureau that includesloans as small as LKR 100,000 (US$ 1,000).The Big Four audit firms or their affiliates arerepresented in Colombo. Act 15 of 1995 intro-duced International Accounting Standards in SriLanka. Ratings also can be obtained locally forcommercial banks through recognized firms,such as Fitch IBCA, and a large pool of char-tered accountants. The use of technology in thefinancial sector is increasingly current, withsome automated teller machines (ATMs) avail-able even in rural areas.

Emerging availability of finance/micro-finance training. There are several trainingfacilities, such as the Centre for BankingStudies (under CBSL), the Bankers TrainingInstitute (which is part of Institute of Bankersand provides a two-month course on micro-finance annually), and the Distance LearningCenter (which offers the UNCDF CD-ROMcourse). Sri Lanka has good universities thatoffer master’s degrees in business adminis-tration, sometimes in cooperation with interna-tional universities. Several leading practitionersare establishing specialized microfinancetraining centers, such as Sanasa and SEEDs.The availability of high-quality managementand financial training locally is a key ingredientto reducing MFIs’ fragility as highlighted in themicro section of this report.

Increasing transparency among a group ofleading MFIs. Eight Sri Lankan institutionsreport to the Microfinance InformationeXchange (MIX):36 All Ceylon Community

Development Council, Arthatcharya Foundation,Lakjaya, Ruhna (RDB), Sabaragamuwa (RDB),SEEDs, Wilgamuwa (RDB), and WomenDevelopment Fund Hambantota. Overall, theydisplay a good level of transparency, as evi-denced by the level of disclosure (diamonds)awarded by the MIX, and fairly good perform-ance. Transparency helps protect poor people’ssavings, enables better management, facilitatesaccess to private debt and equity, and promotesstability and safety in the financial system.

Challenges at the Meso Level

Lack of formal microfinance association.Despite the on-going initiative pioneered bySEEDS and six other MFIs and a UNDP-sponsored attempt a few years ago, MFIs do notyet have a formal, functioning association. Thelack of an association hampers the effectiveexchange of information, advocacy on keypolicy issues, and joint projects, for example,to increase economies of scale for training.

Insufficient specialized microfinance training.Despite some interesting offerings, the supplyof locally available specialized microfinancetraining is insufficient to meet high demandfrom Sri Lankan MFIs. There are only a few SriLankan microfinance consultants. Many MFIsare forced to rely on training abroad, such as inBangladesh, or on using foreign experts. Suchoptions increase training costs, are not alwayswell-accepted locally, make follow-up difficult,and often reach only the first layer of staff at theexpense of mid-level and field staff.

Mismatch between demand and supply ofapex funds. All three state-owned wholesalefacilities (NDTF, Susahana, and Isuru) haveencountered difficulties in disbursing funds.Slow disbursement is partly explained by limit-ed interest from MFIs. They often find that theconditions offered do not match their needs. Forexample, the Isuru fund imposes a group lend-ing methodology and compulsory savings,whereas Susahana mandates a maximum loansize of LKR 50,000 (US$ 500), and NDTFenforces restrictions on lending interest rates toclients affected by the tsunami. Although theinterest rate ceiling is said to be temporary,several MFI managers interviewed complained

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__________________________36 The MIX is a global information service for the microfi-nance industry to help build the microfinance market infra-structure. It can be used as a monitoring tool for donors andas an investment forum for MFIs and investors. For moreinformation on the MIX, visit www.themix.org/en/index.html.

that the rate imposed by the three main funds(6 percent for NDTF and Susahana and 18–24percent for Isuru) did not enable them to fullycover their costs.

Minimal specialized transparency services(audit and information systems). Those inter-viewed during the CLEAR frequently men-tioned that auditors prepare financial statementswithout sufficient assessment of the portfolios.Without a good understanding of the portfolios,audits are not meaningful. With regard to infor-mation systems, most MFIs work with paperdata and have poorly developed MIS. Forexample, several RDBs do not even have com-puterized systems. Only a few MFIs use special-ized software programs, such as MicroBanker,developed by FAO/GTZ. After-sale support islimited, with no MIS provider specialized inmicrofinance in-country.

Limited application of delivery technologiesin microfinance. Delivery technologies, such asATMs, point-of-sale network (devices in retailoutlets that use debit/credit cards to facilitateelectronic payments and transactions), andmobile phone banking, have the potential toreduce transaction costs. These technologies areincreasingly being used by large MFIs andbanks in other countries, such as India, thePhilippines, and Brazil. In Sri Lanka, althoughtechnology is widely used in the formal financialsector, MFIs have not accessed its potential yet.

Lack of credit information sharing. As men-tioned, the Sri Lankan credit bureau reportsloans as low as LKR 100,000 (US$ 1,000), butaverage microfinance loans are below thisamount. There is no bad-debtor listing or anycredit information sharing for microfinance.This lack of information combined with thelarge number of competing microfinanceproviders risks creating situations of over-indebtedness among poor clients, who may takeout multiple loans. This risk is especially acutein tsunami-affected areas, where MFIs are underpressure to disburse quickly. Over-indebtednessis dangerous for clients who may find them-selves in a vicious cycle and for institutions thatwill see defaults increasing. Conversely, goodcredit information helps MFIs reduce transac-tions costs and risks.

Donor Recommendations at theMeso Level

The challenges at the meso level reflect the lim-ited attention donors give to capacity building.Increased support to the meso level will helpprofessionalize Sri Lankan microfinance. Bybuilding capacity in financial and portfoliomanagement and by helping MFIs access morecommercial funding, funders could reduceexisting weaknesses and encourage progresstoward sustainability. The success of work atthe meso level is linked to the recommendationin the Donor Systems section to develop avision whereby microfinance is seen as an inte-gral part of the financial system, rather than anadd on to social services.

Short Term: Capitalize on ExistingExperience and InfrastructurePhase out interest rate ceilings imposed byapexes. Donors involved in funding the threeapexes should publicize the exit strategy forremoving interest rate ceilings (or if no strategyexists, develop one). The exit strategy shouldensure a transition to market conditions. Donorsshould share their plans and, ideally, coordinatethe phasing out of interest rate ceilings formaximum coherence.

Remove restrictive conditions of apex funding.MFIs are in a better position than apexes tounderstand client demand. Apex funding shouldbe conditioned on performance, not on creditmethodology, such as loan sizes, compulsorysavings, and so forth.

Analyze lessons learned from tsunami apexfunding. To better understand the performanceof tsunami-focused aid to microfinance, donorsshould conduct a joint survey involving inter-views with managers of the hundreds of MFIsthat have accessed these funds. The surveycould include questions on the impact of thefunding on core areas, such as (i) outreach (weremore poor people reached, and for how long?)and (ii) financial sustainability of institutions.The survey also should study the impact offunding on local markets and institutions thatdid not have access to tsunami funding. ADBhas already started to gather similar informationand could share its lessons with the rest of the


23

donor community. Lessons from Sri Lanka’sexperience also could be helpful for other coun-tries affected by disasters.

Identify and use existing technical serviceproviders and training resources. To comple-ment the assessment of MFIs, funders shouldmap out all the suppliers of capacity-buildingservices. The results could help identify wherethere are gaps in service provision, given thedemand seen at the micro level (audit, MIS,management training, etc.).

Organize technical assistance for key needs.Although donors should help build local capac-ity to provide much-needed support services,this takes time (see medium-term recommenda-tions). To meet institutions’ immediate andurgent need for capacity-building services thatwill help address the lack of sustainability,donors should fund technical assistance in prior-ity areas—portfolio, risk, and financial manage-ment. Technical assistance can take variousforms, from training events to on-site supportand advice and tool development. Wheneverpossible, donors should join their efforts.

Medium Term: Build Domestic CapacityIncrease funding for locally available capacitybuilding. Based on the mapping of supportservices providers and an understanding ofMFIs’ needs, funders should support both thedemand and supply side. On the demand side(MFIs), funders could provide scholarships orgrant funding for promising MFIs to purchasethe services they need. On the supply side (sup-port services providers), funders could organizetraining of trainers sessions, such as the sessionsoffered by CGAP, to build up local trainers.Funders could form a capacity-building sub-working group of the newly minted micro-finance working group (see recommendation inDonor Systems) to develop specific strategiesto build local capacity, reduce duplication, andachieve economies of scale through jointprograms. ADB and the multidonor PROMISprogram both strongly emphasize capacitybuilding and could provide the basis for some ofthe subworking group’s activities.

Encourage (but do not take over) the devel-opment of a microfinance association. There

is a need for an active microfinance practition-ers’ association that would include most, if notall, retail-level providers. Donors have a role toplay in supporting the association, but shouldensure the support is demand based and theagenda is set by practitioners. Funders shouldrefrain from having too much influence andoverfunding the association. Several donors inSri Lanka (e.g., USAID and GTZ) have a stronginternational track record in this area and shouldtake the lead. Specific areas for possible donorsupport include the following:

l Information collection on outreach andperformance (MFI inventory)

l Increased sharing of credit information(especially important given tsunami funds)

l Dissemination of good practicesl Advocacy (e.g., for future policies on

microfinance law, interest rate ceilings, etc.)

Invest in technology (information systems,delivery technologies). Funders could provideinformation on the types of information systemsavailable and their benefits. A strong MIS is thebackbone of good management and transparency.For institutions interested in making MISinvestments, funders could encourage MFIs touse the CGAP Information Systems Fund.37 Thisprovides funding for MFIs to access technicalassistance to determine information systemneeds. Donors in Sri Lanka could then help fundthe implementation of the recommendations.With regard to delivery technologies, donorscould promote innovations by funding pilots forthe most promising MFIs to introduce mobilephone technology, such as G Cash in the

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Box 5. Characteristics of Effective Donors atthe Meso Level


l Agency experience and specialized staff forsecond-tier funding

l Grants that directly support private-sectorservice providers

l Ability to work with the private sector

l Flexibility to co-fund and invest in multidonorprograms

__________________________37 For more information on the CGAP Information SystemsFund, visit www.cgap.org/landings/isfund.html.

Philippines, or new delivery mechanisms, such asthe point-of-sale devices (ICICI Bank in India).38

Support audits and ratings for increasedMFI transparency. To improve auditors’understanding of microfinance, donors couldfund training for Sri Lankan auditors.39 Fundersalso could promote the use of rating, perhaps asa condition of further funding, and link MFIs tothe CGAP–IDB–EC/ACP Rating Fund.40

Finally, funders could require that institutionsthey fund report to the MIX. Parallel training onhow to report to the MIX also would be useful.

Explore commercial refinancing. Donorscould help microfinance providers tap into localand international capital markets. One approachis to introduce guarantee mechanisms with theappropriate incentives. Another is to link bankswith excess liquidity to cash-strapped institu-tions (MFIs, NGOs, etc.) that have a strongtrack record in reaching poor people. Donorswith access to financial-sector expertise are bestsuited for this work.

MACRO LEVEL (policies, laws,regulations, and supervision)

In Sri Lanka, as in other countries, the govern-ment has an important role to play in developingsustainable microfinance. For example, the gov-ernment can foster macroeconomic stability andensure appropriate regulation and supervision toprotect depositors and maintain the integrity ofthe financial sector. The government also canpromote transparency and competition by keep-ing interest rates market based. By encouragingthe government to act as an enabler, rather thanas a provider, of credit, funders can significant-ly help expand microfinance. To help the gov-ernment withdraw from less constructive roles,some funders may have to rethink how theychannel funds and negotiate with the government.

Strengths at the Macro Level

Commitment to financial-sector stability. Thegovernment seems committed to stability as isdemonstrated by CBSL’s application of Basel IIand the bank consolidation that is currently tak-ing place. In April 2005, the Monetary Board ofthe Central Bank encouraged consolidation byraising the minimum capital requirement fromLKR 500 million (US$ 5 million) to LKR 2,500million (US$ 25 million) for licensed commer-cial banks and from LKR 200 million (US$ 2million) to LKR 1,500 million (US$ 15 million)for licensed specialized banks. The banks haveuntil the end of 2007 to comply with this newrequirement.

The on-going reform of pro-poor institutions,such as the RDBs and the CRBs, also illustratesgovernment commitment to stability. For exam-ple, the separation between the ownership andthe supervision of RDBs through shifting own-ership from CBSL to the Ministry of Financeand Planning is good practice. The extraction ofCRBs from the multipurpose cooperatives soci-eties to become MFIs under the Ministry ofCooperatives also could be seen as a positivetrend, even though only a small percentage hasbeen extracted so far (17 Multipurpose CreditSocieties have agreed with the separation oftheir 35 CRBs41). CBSL provides good informa-tion on all its activities and some market infor-mation (www.lanka.net/centralbank).

Recognition of the need to protect poor depos-itors. There is an on-going proposal for an Act,sometimes called the MFI law, to supervise insti-tutions through a monitoring agency, the RuralFinancial Services Development Agency(RFSDA). The Act would classify different typesof microfinance providers; govern all MFIs,including existing licensed cooperatives or mem-ber-owned societies; and require all MFIs withmore than 2 million LKR (US$ 20,000) indeposits (or less if they have savings in excess ofoutstanding loans) to obtain a license. RFSDAwould become the central body for policy, super-vision, and coordination of microfinance.


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__________________________38 Ivatury, Gautam, and Nicole Pasricha, “FundingMicrofinance Technology,” CGAP Donor Brief 23,Washington, D.C.: CGAP, 2005 (www.cgap.org/docs/DonorBrief_23.pdf).39 CGAP, “External Audits of Microfinance Institutions; AHandbook,” Volume 1, Technical Tool Series No. 3.Washington, D.C.: CGAP, December 1998 (www.cgap.org/docs/TechnicalTool_03_v1.pdf).40 For more information on the Microfinance Rating andAssessment Fund, visit www.ratingfund.org.

__________________________41The separation of registration and financial statement isongoing. As of 2004, there were 311 CRBs, out of which306 were attached to the Multipurpose CooperativeSocieties, and five were independent (ADB).

Challenges at the Macro Level

Inadequate supervision of savings (Samurdhi,CRBs). The supervision of Samurdhi Banks andCRBs is questionable. The CRBs are supervisedby provincial-level commissioners and districtofficers who do not possess the specific skillsrequired for effective supervision. TheSamurdhis are not supervised externally at all.Since the CRBs and the Samurdhis, together,represent about 66 percent of all deposits, thislack of supervision poses great risk for thewhole financial system. This risk is notungrounded as highlighted by the collapse ofthe finance companies in the 1990s and recentconcern expressed by some about the safety ofthe banking sector.

Politicization of credit. The confusion betweenwelfare and financial services is illustrated bythe Samurdhis. The politicization of credit isalso evident in the historical pressure on interestrates, which has been exacerbated by thetsunami. Debt forgiveness has been used onseveral occasions by policy makers before andafter elections (such as in 1994 and 2000).Further, some of the persons interviewed by thereview team mentioned interest-free loans givenout by the government.

Lack of lead ministry for microfinance. Alarge number of ministries are involved inmicrofinance (ranging from the Samurdhi to theMinistry of Irrigation and Livestock; seeSection II for more details). Despite the recentcreation of a Development Finance Departmentat the Ministry of Finance and Planning, mostpeople interviewed do not sense strong leader-ship for microfinance within the government.The scattered responsibility for microfinancemakes it difficult for the government to pursue acommon vision on microfinance. It also meansthat funders do not have a single and clear coun-terpart on microfinance issues. There seem tobe limited incentives on the part of governmentto encourage donor coordination. Donors them-selves contribute to the fragmentation of aidby setting up credit components with variousministries.

Controversial RFSD Act. During the course ofthe review and the final debriefing with about

80 key microfinance stakeholders, severalinterviewees raised concerns about the limitedconsultation around the drafting of the Act.Though efforts to bring in opinions were madethrough different consultations, some peoplenonetheless felt that the process was insuffi-ciently participatory.

Donor Recommendations at theMacro Level

Encourage the creation of a financial-sectortaskforce, housed in the Ministry of Financeand Planning. A government taskforce wouldhelp bring coherence to the vision and approachfor further developing the financial system(including microfinance). A key objective ofthis taskforce would be to clearly define the roleof government in the financial sector, especiallyvis-à-vis the private sector. The taskforce couldbe chaired by a high-level technician from theMinistry of Finance and Planning, with itsmembership drawn from leading financial-sector experts within the government. The task-force could bring in other stakeholders, includ-ing practitioners and funders—represented bythe microfinance donor working group—asneeded. Examples of countries, such asCambodia and Uganda, that have successfullydefined the most appropriate roles of thepublic and private sectors in financial systemsdevelopment could serve as inspiration for thetaskforce.

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Box 6. Characteristics of Effective Donors atthe Macro Level


l Ability to engage financial-sector policy makersat the highest level

l In-country staff with financial-sector expertiseand strong communication and negotiation skills

l Grants for technical assistance to central banks

l Experience supporting policy reforms in finan-cial, economic, and legal sectors

l Willingness to cooperate with other donors onsectoral initiatives

l Agency and staff expertise in microfinance regu-lation and supervision

Advocate for liberalized interest rates. Usingacademic studies and examples of other coun-tries’ experiences, donors could advocate for thebenefits of liberalized interest rates in deepeningfinancial systems.42

Streamline funding through recognizedgovernment entry point—DevelopmentFinance Department of the Ministry ofFinance and Planning. For donor programsthat must go through the government, fundersshould negotiate all aspects of programmingwith counterparts that have the technical knowl-edge and responsibility for financial-sectorissues—the Ministry of Finance and Planning.Though microfinance has cross-cutting socialimpact, it is fundamentally part of the financialsector. Even credit components should thus beunder the aegis of the Ministry of Finance andPlanning. (As discussed, donor funding formicrofinance, especially at the micro and mesolevels, should be channeled as much as possibledirectly to private-sector actors.)

Review and help improve the legal, regulatory,and supervisory framework. Recent progresshas been made with regard to the legal andregulatory framework for microfinance large-ly because of ADB’s funding and technicalsupport. This work has resulted in the draftRural Finance Sector Development Act andthe Cooperative Act. As a next step, leadingdonors in microfinance with good conveningpower should help widen the consultativeprocess to ensure relevance and buy-in fromkey stakeholders, including practitioners.43

Donors with supervision expertise should helpshore up the capacity of CBSL and RFSDAto provide effective supervision, thus ensuringthe new legislation is meaningful. Donorsshould pay particular attention to findingcost-effective and rigorous ways to addressthe specific challenges of supervising theSamurdhis and CRBs.


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__________________________43 It would be useful if Donors presented the existingCGAP guidelines on regulation and supervision, whichsummarize international good practice in this area. SeePeck Christen, Robert, Timothy R. Lyman, and RichardRosenberg, “Guiding Principles on Regulation andSupervision of Microfinance Institutions,” MicrofinanceConsensus Guidelines, Washington, D.C.: CGAP, 2003(www.cgap.org/docs/Guideline_RegSup.pdf).

__________________________42 Helms, Brigit, and Xavier Reille, “Interest Rate Ceilingsand Microfinance: The Story So Far,” CGAP OccasionalPaper 9, Washington, D.C.: CGAP, September 2004.

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ANNEX 1—SUMMARY MATRIX OF DONOR RECOMMENDATIONS

LEVEL CHALLENGES DONOR RECOMMENDATIONS ESSENTIAL PREREQUISITES FOREFFECTIVE DONOR ACTION

MICRO

• Lack of transparency• Fragile institutions• Widespread involvement of public sector in

credit delivery• Lack of specialization in financial services

Short term: Take Stock and Focus on Immediate Priorities• Assess the quantity and quality of financial services available• Define minimum conditions for donor funding• Determine the right balance between funds for capital and capacity buildingMedium term: Manage Funding Based on Performance• Focus support on existing promising institutions (not projects)• Provide performance-based assistance in a transparent mannerLong term: Consolidate and Scale Up• Facilitate MFI consolidation and linkages• Emphasize private institutions for credit delivery

• Internal expertise in microfinance (in field)

• Performance-based project management • Experience in donor coordination in

microfinance• Vision of sustainability with skills

transfers and exit strategies• Private-sector development experience• Instruments to work directly with private

sector

MESO

• Lack of formal microfinance association• Insufficient specialized microfinance training• Mismatch between demand and supply of

apex funds• Minimal specialized transparency services

(audit and information systems)• Limited application of delivery technologies in

microfinance• Lack of credit information sharing

Short term: Capitalize on existing experience and infrastructure• Phase out interest rate ceilings• Remove apex’s restrictive conditions for use of funds• Analyze lessons learned from tsunami apex funding• Map and use existing technical service providers and training resources• Organize technical assistance for key needsMedium term: Build domestic capacity• Increase funding for locally available capacity building• Encourage the development of a microfinance association• Invest in technology (information systems, delivery technologies)• Support audits and ratings for increased transparency of MFIs• Explore commercial refinancing

• Financial systems development approach

• Deep financial-sector experience• Incentives and tools for knowledge

sharing• Knowledge of new technologies in

financial sector• Instruments to work directly with the

private sector• Ability to pool funds

MACRO

• Inadequate supervision of savings (Samurdhi, CRBs)

• Politicization of credit• Lack of lead ministry for microfinance• Controversial RFSD Act

• Encourage the creation of a financial sector taskforce • Advocate for the liberalization of interest rates• Streamline funding through recognized government entry point—Development Finance Department, Ministry of Finance and Planning• Review and help improve the legal, regulatory, and supervisory framework

• Vision of a market-based financial sector• Capacity to influence government• Experience in donor collaboration• Internal technical expertise in regulation

and supervision of microfinance

DONORSYSTEMS

• Confusion between social transfers and financial services

• Few locally based microfinance experts• Lack of proper monitoring and evaluation

systems for microfinance• Important supply of loan capitalization, credit

components in multisector programs, widespread funding through government

• Little operational coordination among donors, INGOs, practitioners, and the government

• Create a microfinance working group of all funders• Increase staff technical capacity• Define and act on comparative advantage

• Commitment to aid effectiveness

ANNEX 2—LIST OF DONOR PROJECTS

MICRO LEVEL

MFIs

l ADB provides credit lines through the National Development Trust Fund. l JBIC provides credit lines through the Poverty Alleviation Microfinance Project (aka ISURU) and to

the SUSAHANA post-tsunami credit fund.l STROMME Foundation supports Sareeram.l RELIEF International funds local MFIs (Agro Microfinance).l PLAN Sri Lanka funds SEEDS and Women Development Federation.l CONCERN WORLDWIDE supports the Women’s Development Federation.l CIDA supports SEEDS, SANASA, and other NGOs (Yatinuwara Praja).l NORAD supports Sareera.l OXFAM supports Sewalanka, Yatinuwara Praja.l UNDP Transition Program supports livelihood recovery programs (A Level Students’ Association).l USAID supports livelihood recovery programs (Ampara district).l WOCCU supports SANASA.l DANIDA supports the Tamil Rehabilitation Organization.l ECLOF funds village societies and NGOs Yatinuwara Praja.l Grameen Foundation supports Ceylinko Grameen.l WWB supports Janashakti.

Credit components of integrated development project support

l ADB provides microfinance funds in the Aquatic Resources Development Project, PlantationDevelopment Project, Skills Development Project, North East Coastal Communities DevelopmentProject, Southern Provincial Rural Economy Advancement Project, and Tsunami Affected AreasRehabilitation Project.

l JBIC provides microfinance funds in the Sri Lanka Tsunami Affected Areas Recovery and TakeoffProject and the Mahaweli System “C” Upgrading Project.

l WB provides microfinance funds in the North East Irrigated Agriculture Project, North East HousingReconstruction Program, North East Emergency Reconstruction Program, and Hambantota PoorWomen Empowerment Program.

l NORAD provides microfinance funds in the Maha Aragama Participatory Development Project andthe Sinhala Tamil Rural Women’s Network.

l EC provides microfinance funds to the Mahaweli Consolidation Project.l NOVIB supports SEEDS.

State banks

l GTZ supported (ended in 2004) the Rural Banking Innovations Project at the People’s Bank.l WB supports Gemidiriya (State Credit Program).

Commercial banks

l KfW supports NDB Bank and DFCC.l German Savings Bank supports Hatton National Bank.


29

Direct investment

l ETIMOS is planning an investment in a local MFI (possibly SANASA).

MESO LEVEL

Technical assistance and support

l PLAN Sri Lanka supports the creation of a microfinance network.l BMZ/GTZ and SIDA promote collaboration and knowledge management (ProMiS).l Stromme Foundation funds capacity-building initiatives.l ILO supports TAFREN.

MACRO LEVEL

l ADB supports policy reform with the Rural Finance Sector Development Project and NDTF (throughCBSL).

l BMZ/GTZ and SIDA support the MoF (ProMiS) and CSBF (NDTF).l NORAD supports the Social Mobilization Project.

Note that this list is not exhaustive.

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30

ANNEX 3—DONOR INSTRUMENTS


31

ADB

WB

UNDP

SIDA

GTZ

KFW

JBIC

DANIDA

CIDA

NORAD

EC

ETIMOS

RELIEF

PLAN

CONCERN

STROMME

Grants to

Private retail institution x x x x x x

Government (incl. Project Implementation Units) x x x x

Networks x x

Apex/Wholesale facility x x x x

Umbrella project x x x x

Multidonor project x x x x x

Investment fund x x

Loans to

Private retail institution x x x x x x x

Government (incl. ProjectImplementation Units) x x x

Apex/Wholesale facility x x x

Multidonor project x

Investment fund x

Equity to

Private retail institution x

Government (incl. ProjectImplementation Units) x

Investment fund x

Guarantees to

Private retail institution x x

Government (incl. Project Implementation Units) x x

ANNEX 4—DONOR FUNDING IN MICROFINANCE

SRI LANKA

32

Microfinance funding per Donor*(Stand alone microfinance projects + microfinance components of integrated projects)

MF budgets 1999–2005

MF disbursements 2002–2004

MF remaining commitments(as of 2005)

ADB 94,100,000 1,860,000 47,010,000

CIDA 1,265,100 5,368,241

CONCERN 289,000 289,000(184,932 disbursed as of Oct. 2005)

ETIMOS 2,952,000 360,000(1,220,400 disbursed as of Oct. 2005)

EC 2,232,022

GTZ 14,400,000 1,800,000 120,000

JBIC 37,880,000 6,000,000 13,000,000

KFW 4,296,000 1,800,000 6,500,000

NORAD 1,776,100 824,956 121,000

PLAN 400,000 150,000 250,000(250,000 disbursed as of Oct.2005)

RELIEF 50,000 50,000(25,000 disbursed as of Oct. 2005)

STROMME 2,141,000 795,590 3,000,000(492,840 disbursed as of Oct. 2005)

UNDP 2,125,000 100,000

USAID 10,000,000

WB 20,200,000

Total 184,106,222 13,230,546 86,168,241( 2,173,172 disbursed as of October 2005)

*All data are self-reported

ANNEX 5—MICROFINANCE PROVIDERS

Supervisory Authority


33

Supervisory Authority

CBSL Department of Cooperatives

SamurdhiAuthority Company Registry NGO Secretariat

Commercial Banks

Hatton National Bank

NDB Bank

Peoples Bank

Bank of Ceylon

Seylan Bank

Commercial Bank of Ceylon

Sampath Bank

DFCC Vardhana Bank

22 institutions

Cooperatives

Women’s Dev Coop society

Sanasa TCCSs

7400+ institutions

Samurdhi Banks

1036 institutions

Societies (private & public)

SEEDS

LakJaya

Ceylinco Grameen

3700+ institutions

NGOs

WDF

ArthachariyaFoundation

Agro MF

Sewa Lanka

All Ceylon Comm. DevelopmentCouncil

CCF

Sareeram

Other finance NGOs (100s)

3432 institutions

Licensed Specialized Banks

Kandurata Dev Bank

Rajarata Development Bank

Ruhuna Development Bank

Sabaragamuwa Dev Bank

Uva Development Bank

Wayamba Dev Bank

Sanasa Development Bank

DFCC Bank

National Savings Bank

14 institutions

Cooperative Rural Banks

Approximately311 CRBs /1539 Points of Service

GamiBidiryi Companies (private & public)

Pawning centers

Finance Companies

LANKA Orix Finance Co Ltd.

28 institutions

= 50 Access Points

Sri Lanka

ANNEX 6—GEOGRAPHICAL COVERAGE OF MICROFINANCE PROVIDERS

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people peraccess point

< 1,0001,001 – 1,2501,251 – 1,5001,501 – 2,000> 2,000

Sri Lanka

ANNEX 7—POPULATION PER POINT OF SERVICE


35

ANNEX 8—LIST OF DOCUMENTS CONSULTED

Publications

Asian Development Bank. “Country Strategy and Program (2004–2008) Sri Lanka.” Manila: ADB,2003.

Asian Development Bank. “Technical Assistance to the Democratic Socialist Republic of Sri Lanka forSri Lanka Post-Tsunami Needs—Assessment and Preparation for Emergency AssistanceImplementation Strategies” Financed by the Poverty Reduction Cooperation Fund. Manila: ADB,2005.

Asian Development Bank, Japan Bank for International Cooperation, and World Bank. “2005 Post-Tsunami Recovery Program Preliminary Damage and Needs Assessment.” Colombo: ADB, JBIC,and World Bank, 2005.

BRAC. “BRAC Annual Report.” BRAC Centre, Bangladesh: BRAC, 2003.

Bruett, Tillman, et al. “Supporting Microfinance in Conflict-Affected Areas.” Donor Brief 21.Washington, D.C.: CGAP, December 2004.

Castro, Rocio, and Princess Ventura. “Sri Lanka Development Forum: The Economy, the Tsunami andPoverty Reduction.” Document prepared for conference on, Poverty Reduction and EconomicManagement Sector Unit, South Asia Region, May 16–17, 2005.

Central Bank of Sri Lanka. “The Consumer Finances and Socio Economic Survey Report, 2003/04, Part1.” Colombo: Central Bank of Sri Lanka, 2005.

Ceylon Asset Management. “Explanatory Memorandum Ceylon Index Fund.” Colombo: Ceylon IncomeFund, 2005.

CGAP. “Sustaining Microfinance in Post-Tsunami Asia.” Washington, D.C.: CGAP, February 2005.

CGAP. “Building Inclusive Financial Systems: Donor Guidelines on Good Practice Microfinance.”Washington, D.C.: CGAP, 2004.

CGAP. “External Audits of Microfinance Institutions; A Handbook, Volume 1.” Technical Tool Series3. Washington, D.C.: CGAP, December 1998.

CGAP. High Level Meeting, “Joint Memorandum, Leveraging Our Comparative Advantage to ImproveAid Effectiveness.” Washington, D.C.: CGAP, February 2004.

Charitonenko, Stephanie, and Dulan de Silva. “Commercialization of Microfinance—Sri Lanka.”Manila: ADB, 2002.

Clark, Heather, and CGAP staff. “Credit Components.” Donor Brief 10. Washington, D.C.: CGAP,February 2003.

DFCC Bank. “Annual Report, 2004/2005.” Sri Lanka: DFCC, 2005.

Duflos, Eric, and Kathryn Imboden. “The Role of Governments in Microfinance.” Donor Brief 19.Washington, D.C.: CGAP, June 2004.

Duflos, Eric, Brigit Helms, Alexia Latortue, and Hannah Siedek. “Global Results: Analysis andLessons.” Aid Effectiveness Initiative. Washington, D.C.: CGAP, 2004.

ECLOF. “Fair Credit to promote Human Development, Annual Report 2004.” Colombo: ECLOF, 2004.

Economist Intelligence Unit. “Sri Lanka-Country Report.” London: Economist Intelligence Unit, 2005.

ETIMOS. “Solidarity Finance in Global South.” Padova, Italy: Consorzio Etimos, 2004.

External Resources Department Ministry of Finance and Planning. “Partnership in Development 2004and Beyond.” Sri Lanka: Karunaratne & Sons Ltd. Homagama, 2004.

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Freedman, Paul L. “Designing Loan Guarantees to Spur Growth in Developing Countries.” Washington,D.C.: USAID, 2004.

Gant, Richard, Dulan de Silva, Anura Atapattu, and Steve Durrant. “National Microfinance Study ofSri Lanka: Survey of Practices and Policies.” Colombo: AusAID, 2002.

Government of Sri Lanka. “Regaining Sri Lanka: Vision and Strategy for Accelerated Development.”Colombo: Government of Sri Lanka, May 2003.

Gunatilaka, Ramani, and Tushara Williams. “The Integrated Rural Development Program in Sri Lanka:Lessons of Experience for Poverty Reduction.” Research Studies: Poverty & Income DistributionSeries No. 4. Colombo: Institute of Policy Studies, 1999.

Helms, Brigit, and Alexia Latortue. “Tackling Aid Effectiveness from the Top: Microfinance as a TestCase—Policy Implications of the Donor Peer Reviews.” Washington, D.C.: CGAP, 2003.

Helms, Brigit, and Xavier Reille. “Interest Rate Ceilings and Microfinance: The Story So Far.”Occasional Paper 9. Washington, D.C.: CGAP, September 2004.

ILO. “Needs Assessment Survey for Income Recovery (NASIR) in Tsunami-Affected Areas in SriLanka.” Geneva: ILO, 2005.

Institute for Participatory Interaction in Development. “Case Study of Yasiru’s Mutual ProvidentSociety.” Colombo: Institute for Participatory Interaction in Development, 2004.

Integrated Agricultural Development Program. “Microfinance Strategy Guidelines.” VillageOrganization Revolving Loan Funds, 2003.

Ivatury, Gautam, and Nicole Pasricha. “Funding Microfinance Technology.” Donor Brief 23.Washington, D.C.: CGAP, April 2005.

Kiriwandeniya, P. “Evolution of SANASA as a Co-operative Micro-Finance Movement. InternationalTraining Program on Co-operative Rural Banking and Micro-finance.” Colombo, 15–21 March2002.

Microfinance Information eXchange. “Performance and Transparency: A Survey of Microfinance inSouth Asia.” Washington, D.C.: MIX, January 2006.

Nishimizu, Mieko, Peter C. Harrold, Constance A. Bernard , Gajanand Pathmanathan, Dina Umali, andTerrence Abeysekera. Sri Lanka Promoting Agricultural and Rural Non-Farm Sector Growth,volumes 1 and 2. Colombo: The World Bank, 2003.

Nishimizu, Mieko, Peter C. Harrold, Deborah A. Bateman, Assad Jabre, Dimitris Tsitsiragos, and NeilGegor. “The World Bank Group Country Assistance Strategy for the Democratic Socialist Republicof Sri Lanka 2003–2006.” Colombo: The World Bank, 2003.

Nishimizu, Mieko, Peter C. Harrold, Deepal Fernando, and Agustin Litvak. “Sri Lanka CountryProcurement Assessment Report.” Colombo: The World Bank, 2004.

Nishimizu, Mieko, Peter C. Harrold, Julitta Rasiah, and V. Kanagasabapathy. “Country FinancialAccountability Assessment Study.” Colombo: The World Bank, June 2003.

Peck Christen, Robert, Timothy R. Lyman, and Richard Rosenberg. “Guiding Principles on Regulationand Supervision of Microfinance Institutions.” Microfinance Consensus Guidelines. Washington,D.C.: CGAP, 2003.

Rajarata Development Bank. “Annual Report 2004.” Anuradhapura, Sri Lanka: Rajarata DevelopmentBank, 2004.

Rosenberg, Richard. “Aid Effectiveness in Microfinance: Evaluating Microcredit Projects of the WorldBank and the United Nations Development Program.” Focus Note 35. Washington, D.C.: CGAP,forthcoming 2006.

Ruhuna Development Bank. “Annual Report 2002.” Matara, Sri Lanka: Ruhuna Development Bank,2002.


37

Sabaragamuwa Development Bank. “Annual Report 2002.” Ratnapura, Sri Lanka: SabaragamuwaDevelopment Bank, 2002.

Sanasa Development Bank Limited. “Annual Report 2002.” Colombo: Sanasa Development BankLimited, 2002.

Sanasa Development Bank Limited. “Annual Report 2003.” Colombo: Sanasa Development BankLimited, 2003.

Sharma, A., A. Qadir, C. V. Vo, and M. Ozaki. “Rural Finance Sector Development Program, Reportand Recommendations of the President to the Board of Directors on Proposed Loan to theDemocratic Socialist Republic of Sri Lanka.” Colombo, Sri Lanka: Asian Development Bank, 2003.

Sri Lanka Foundation Institute. “Final Report of the Workshop on Microfinance Promotion in Post-Tsunami Period.” Colombo: Sri Lanka Foundation Institute, March 2005.

Tilakaratna, Ganga M., Upali Wickramasinghe, and Tusitha Kumara. “Microfinance in Sri Lanka: AHousehold Level Analysis of Outreach and Impact on Poverty.” Colombo: Institute of Policy Studiesof Sri Lanka, 2005.

USAID. “Case Study on Profitability of Microfinance in Commercial Banks—Hatton National Bank.”Washington D.C.: USAID, 2005.

Uwa Development Bank. “Annual Report 2004.” Badulla, Sri Lanka: Uwa Development Bank, 2004.

World Bank. “Attaining the Millennium Development Goals in Sri Lanka.” Colombo: World Bank,March 2005.

World Bank. “Sri Lanka Country Assistance Strategy of the World Bank Group 2003–2006.” Colombo:World Bank, 2003.

World Bank. “Attaining the Millennium Development Goals in Sri Lanka.” Colombo: World Bank,2005.

World Bank. “Sri Lanka and the World Bank.” Colombo: World Bank, 2004.

World Bank. “Sri Lanka Country Procurement Assessment Report,” Volume 1, Main Report. Colombo:World Bank, 2003.

World Bank. “Country Financial Accountability Assessment Study.” Colombo: World Bank, 2003.

World Bank. “Development Policy Review.” Washington, D.C.: World Bank, 2004.

World Bank. “Sri Lanka Development Policy Review.” Washington, D.C.: World Bank, 2004.

World Bank. “Sri Lanka: Development Policy Review.” Colombo: World Bank, 2004.

Zaidi , S. Akbar. “Microcredit for Development Orangi Pilot Project.” Karachi: Orangi Charitable Trust,2003.

Laws

Central Bank of Sri Lanka. Banking Act, No. 30, 1988.

Central Bank of Sri Lanka. Monetary Law Act, 1998.

Ministry of Employment and Labor. The Draft National Productivity Policy of Sri Lanka, September2002.

Ministry of Finance and Planning. “Economic Policy Framework of the Government of Sri Lanka:Creating Our Future. Building Our Nation.” Colombo: Ministry of Finance and Planning, 2004.

National Planning Department Ministry of Finance and Planning. “Vision 2010 Sri Lanka Making It aReality.” Colombo: National Planning Department Ministry of Finance and Planning, 2005.

“The Rural Finance Sector Development Act.”Colombo, 2003, draft.

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Press Articles

Clinton, William “Six Months After.” The New York Times, June 22, 2005.

Nagarajan, Geetha. “Double Whammy by Tsunami and Conflicts: How Can Microfinance Help inSri Lanka?” Microfinance Matters, Issue 9, February 2005.

Other documents

Activities performed/ being performed in Tsunami affected areas, Sareeram Sri Lanka NationalFoundation, Inc., Colombo.

Analysis of Arthacharya Foundation post-Tsunami.

Articles of Association of Lanka Microfinance Network, 2004. Colombo.

Asian Development Bank, Rural Finance Sector Development Program, Project Proposal 2003, Manila.

Burah, Hathy, Chartered Accountants’ Company Profile (www.e-bdo.com/bdosrilanka).

Collection of various findings: “SME-Microfinance Coordination Report.”

Dahlstroem, Karin, Jochen Saletha, and Dirk Steinwand. “Promotion of the Microfinance Sector inSri Lanka.” Draft document on a mission from January 19 to February 02, 2004. Unpublisheddocument.

Design of New Financial Sector Program (PROMIS) in Sri Lanka. Slide presentation.

FIRST Initiative in Sri Lanka. (http://www.firstinitiative.org)

George, Christopher. “Status Report: Post-Tsunami Situation—Ampara District.” CIDA, February 14th,2005. Unpublished document.

GTZ Survey Report on Micro Finance Institutions Affected by Tsunami- post-Tsunami.

Hatton National Bank. “Case study on Profitability of Microfinance in commercial Banks.” USAID,January 2005, Unpublished document.

Henkelmann, Stefan, Michael Steidl, and Maria Abigail Carpio. “Sparkassen-Wiederaufbaufonds fürSüdasien—Bericht zur Fact Finding Mission nach Sri Lanka,” 2005. Unpublished document.

List of Post Tsunami Microfinance in Sri Lanka, April 2005.

Memorandum of Association of Lanka Micro Finance Network, 2004.

Millennium Challenge Account. Concept Paper. Unpublished document.

NDTF, List of Clients of National Development Trust Fund in Sri Lanka, 2005, Colombo.

Radke, Detlef, et al. “Report on the Appraisal Mission of Promotion of the Microfinance Sector in Sri Lanka(PROMIS),” 2004. Unpublished document (www.microfinance.lk/market_place/appraisal_mission.doc).

Rapid Assessment of Hatton National Bank—Gami Pubuduwa (Village Awakening) Scheme, 2005.

Report on Mission to Batticaloa—post-Tsunami, DANIDA, SIDA, 2005, Colombo Unpublisheddocument.

Report on Mission to Galle and Matara—post-Tsunami, USAID, Norwegian Embassy, 2005., ColomboUnpublished document.

Report on Mission to Hambantota—post-Tsunami, SIDA, DFID, GTZ, 2005, Colombo. Unpublisheddocument.

Report on Mission to Jaffna—post-Tsunami, DFID, USAID, 2005, Colombo,. Unpublished document.

Report on Mission to Mullaitivu—post-Tsunami, AusAID, EC, NL, 2005, Colombo. Unpublisheddocument.


39

Report on the Pilot Fact Finding Mission to Trincomalee, 2005, Colombo.

Report on Thomas Timberg Consultancy in Colombo, 2005.

Samurdhi. “Coping with Risk: Social Safety Nets.”

Terms of Reference for Evaluation of UNICEF Tsunami Response, 2005.

Timberg, Thomas, Proforma for SewaLanka.

Timberg, Thomas, Proforma for SEEDS.

UNDP, TOR for Aid Management Advisor—Post-Tsunami, 2005.

Wiedmaier-Pfister, Martina, and Ellis Wohlner. “Sector Study on Microinsurance in Sri Lanka.” GTZ,2004. Unpublished document.

Women’s Bank. “Women’s Bank as a Poverty reduction Initiative.” Women’s Bank, Unpublisheddocument.

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ANNEX 9—LIST OF PERSONS CONSULTED

Name Organization Title E-mail


41


Government

W. M. Karunarathne Central Bank of Sri Lanka Director—RegionalDevelopment Department [email protected]

K. P. N. S. Karunagoda Central Bank of Sri LankaDeputy Director—Regional Development Department

[email protected]

John Conroy Central Bank of Sri Lanka Rural Finance Development Project

Economist, Rural- and Micro-Finance Specialist [email protected]

H. M. R. B. Herath Co-operative Ministry Senior Assistant Secretary Not Available

M. Senevirathna Co-operative Ministry Director Planning Not Available

D. Amarasinghe Department for Census and Statistics Director [email protected]

N. Kumarasinghe Department for Census and Statistics Deputy Director [email protected]

B. C. Bandara Department for Census and Statistics Assistant Director [email protected]

J. H. J. JayamahaDepartment of External Resources Ministry of Finance

Additional Director General [email protected]

Hon. Minister Mr. Rohitha Bogollagama

Enterprise Development Science and Tech Minister [email protected]

Gamini Batuwitha Gami Diriya

Chief Executive Officer Community Development & Live hood Improvement Project

[email protected]

Noor Rizna Anees Ministry of Finance Deputy Director [email protected]

J. M. S. D. Rathnayake Ministry of Finance Deputy Director [email protected]

Dhammika Gunawardena Ministry of Finance

Project Coordinator/ Microfinance Specialist Rural Finance Sector Development Program

[email protected]

Hon. Minister Dr. Sarath Amunugama Ministry of Finance Minister of Finance and

Planning [email protected]

R. M. K. Rathnayake Ministry of Finance Additional Secretary [email protected]

H. M. Gunasekera Ministry of Finance Additional Director General [email protected]

Krishan Spenser National Development Trust Fund Deputy Managing Director [email protected]

Ravindra Hewawitharana Samurdhi Authority Director—GeneralManager [email protected]

Mahinda Senevirathna Samurdhi Authority Director—Banking and Finance [email protected]

SRI LANKA

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W. M. Jayarathna Samurdi Authority Manager—Banking and Financial Action Division [email protected]

Anura Bandara Samurdi Authority Manager—Banking and financial Action Division [email protected]

S. R. G. Premarathna Samurdi Authority Manager—HanwallaFederation Not Available

Sujeewa Gunarathna Samurdi Authority Manager—KaduwelaFederation Not Available

Rashni Gunasekara Samurdi Authority Manager—WattalaFederation Not Available

Funders (NGOs, Donors, Investment funds)

Ashok Sharma ADB

Director Governance, Finance and Trade Division, South Asia Department

[email protected]

Mayumi Osaki ADB Rural Finance and Microfinance Specialist [email protected]

Nimal Fernando ADB Lead Rural Finance Specialist [email protected]

Alessandro Pio ADB Country Director [email protected]

Hasitha Wichremasighe ADB Economist [email protected]

Yves-Alain Corporeau Ambassador de France au Sri Lanka et aux Maldives Consoler Cultural yves-alain.corporeau

@diplomatie.gouv.fr

Hubert ColarisAmbassade de France auSri Lanka et aux Maldives

Economic and Commercial Counselor [email protected]

Sathis De Mel Arthacharya Foundation Executive Director [email protected]

Mahinda Wickramasighe Arthacharya Foundation Manger Microfinance [email protected]

Dunstan Fernando AusAID–AHC Project Coordinator [email protected]

Shamsher Ali Khan BRAC–Sri Lanka Country Program Coordinator [email protected]

Roshan Jeevanand CARE International Area Representative & Project Director PRIDE [email protected]

K. M. Tilakaratna CARE InternationalProject Director Community Development Project

[email protected]

Susil Liyanarachchi Care International Director—DevelopmentProgram [email protected]

Susantha Suraweera Ceyelinco Grameen GroupDirector—Operations/GeneralManager

[email protected]

G. Victor Rathnayake Ceyelinco Grameen Group Deputy Chairman [email protected]

Jonathon Wheatcroft CIDA Head of Aid [email protected]

Roshan M Rajaratne CIDA Head of Finance Program Support Unit [email protected]


43


H. R. M. Shibly CIDA Development Officer [email protected]

Moinul Islam Concern World Wide Sri Lanka Program Advisor [email protected]

M. Rajan Danish Refugee Council Deputy CountryRepresentative [email protected] / [email protected]

S. Theepan Danish Refugee Council Field Officer Microfinance [email protected] / [email protected]

Sabarathnam Danish Refugee Council Head of Capacity Development [email protected] / [email protected]

J. Gamini Samarasinghe Ecumenical Loan Fund of Sri Lanka Program Manager [email protected]

Camel Goonetilleke Ecumenical Loan Fund of Sri Lanka Chairman [email protected]

Francesca Lore ETIMOS Area Manager Asia [email protected]

Julian Wilson European Union Head of Delegation / Ambassador [email protected]

Mariam Homayoun European Union Development Cooperation Advisor

[email protected]

Ruwan De Silva FORUT Director Administration & Finance [email protected]

R. P. Wijewardena FORUT Program Coordinator [email protected]

K. A. Jayasighe Perera Future in Our Hands Development Fund Program Officer [email protected]

Dirk Steinwand German Technical Co-operation Project Director [email protected]

Roland F.Steurer German Technical Co-operation Director [email protected]

Roel Hakaemulder ILO Chief Technical Advisor [email protected]

Atsushi Kaneka Japan Bank for International Cooperation Chief Representative [email protected]

Junko Fujiwasa Japan Bank for International Cooperation Consultant [email protected]

H. A. Karunasena Japan Bank for International Cooperation Senior Project Specialist [email protected]

Juichiro Sahara Japan Bank for International Cooperation Representative [email protected]

Juichiro Sahara Japan Bank for International Cooperation [email protected]

K. A. Basnayake Kadurata Community Development Foundation Chairman/Chief Executive [email protected]

Reinhard Dalchow KfW Director [email protected]

Reynout van Dijk Nederland Ambassador [email protected]

Vichithrani Gunawardane OXFAM Food Security & Livelihoods Coordinator [email protected]

S. M. A. Zubahidheen Peace Alliance President [email protected]

Michaela Kelly Plan International Program Director [email protected]

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Myrna Remata Evora Plan International Country Director [email protected]

Upali Wijetunga Plan International Microfinance Specialist [email protected]

Paul Lobo Plan International Microfinance Unit Director [email protected]

Ramesh Gautam Relief International Microfinance Officer [email protected]

David Dyer Revive Chief of Party [email protected]

Janis Sabetta RFSDP / ADB Microfinance Consultant [email protected]

Christian Fougner Royal Norwegian Embassy First Secretary [email protected]

Vidya Perera Royal Norwegian Embassy Senior Advisor Development Corporation [email protected]

A. Logesparan Sareeram Sri Lanka National Foundation Chairman [email protected]

Ponambalam Sareeram Sri Lanka National Foundation Director [email protected]

Sewalanka Foundation [email protected]

Mahinda De Silva Sewalanka Foundation Microfinance Program Manager [email protected]

Priyanka Janaki Kodithuwakku

Social Mobilization Foundation

Assistant General Manager [email protected]

P. S. Gajanayake Social Mobilization Foundation Project Director Not Available

S. Sutharsan SOND [email protected]

Nandasiri Gamage Sri Lanka Women Development Bank Society General Manager [email protected]

Nimal Martinus Stromme Foundation Regional Director [email protected]

Jerher Thunberg Swedish Embassy/ SIDA Charge d’affaires [email protected]

Asa Heijne Swedish International Development Agency

First Secretary—DeputyHead of Mission [email protected]

Annie Bertrand TAFREN / ILO Director Livelihood [email protected]

K. Balendra Tamil Rehabilitation organization Senior Consultant [email protected]

Heloise Ganesharuban Tamil Rehabilitation organization

Project Development Manager [email protected]

Arjuna Edirisingham Tamil Rehabilitation Organization [email protected]

Paul Greener Foundation for Development Cooperation Program Manager [email protected]

Peter Harrold The World Bank Country Director [email protected]

Sriyani Hulugalle The World Bank Senior Economist [email protected]

Nalin Perera The World Bank Junior ProfessionalAssociate [email protected]

Milan Vodopivec The World Bank Senior Social Protection Economist [email protected]

Stephan Rasmussen The World Bank Lead Specialist [email protected]


45


Dulan De Silva Tsunami Recovery Project in Southern Region Sri Lanka

Community Planning Specialist [email protected]

Abu.Y. M. Selim UNDP Country Director [email protected]

Janette Moritz UNDP Program Adviser [email protected]

Madhari Ariyabandu UNDP Project Manager [email protected]

Dharhsani De Soyasa USAID Project Management Specialist (economics) [email protected]

Lional Jayaratne USAID Senior Project Management Specialist [email protected]

Jeffrey H. Allen USAID Mission to Sri Lanka Director Office of Economic Growth [email protected]

Sriyani Mangalika Women Development Federation (Janashakthi) General Manager [email protected]

Gil Lacson Women World Banking Relationship Manager [email protected]

Stephen Rasmussen World Bank Lead Specialist [email protected]

Chamly Coonghe World Vision—Vision Fund Lanka Director—Microfinance [email protected]

Sextus Dayananda World Vision—Vision Fund Lanka Operation Manager [email protected]

Karin Billing WSP international Sweden AB

ProjectManager/Consultant [email protected]

Practitioners

Shakila Wijewardena SEEDS Managing Director [email protected]

Emil Anthony SEEDS Deputy Managing Director [email protected]

S. Razamanikkam SEEDS Finance Director Not Available

Sunila Adihetti SEEDS District Manager, Galle Not Available

Samadanie Kiriwandeniya SANASA Development Bank

Senior Manager International Relation [email protected]

P.A.Kiriwandeniya SANASA Development Bank Chairman [email protected]

Karapiti SANASA Development Bank Galle Deputy Manager [email protected]

Dasanayaka SANASA Federation General Manager [email protected]

Social Economic Development Bank [email protected]

B. Srikandarasa Social Economic Development Bank Manager [email protected]

Rohini Samarasekara Udapalatha Praja Shakthi Sanwardena padanama

Chairman/ChiefOrganization Coordinator Not Available

E. Karunarathne Uva Development Bank Chief Executive Officer/General Manager [email protected]

Gamini Abewardana Wayamba Development Bank Senior Manager Credit [email protected]

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Ranjith Abewaradena National Development Bank Senior Manager ranjith.abeywardena

@ndbbank.com

P. K. Somasiri National Savings Bank Deputy General Manager Not Available

Rathnasiri Siriwardene Rajarata DevelopmentBank General Manager (CEO) [email protected]

T. G. Wimalaratna Ruhuna Development Bank General Manager [email protected]

Hellarawa Kandurata Development Bank General Manager [email protected]

A. B. Ariyarathna SabaragamuwaDevelopment Bank General Manager [email protected]

Gamini Yapa Bandara Hatton National Bank Senior Manager [email protected]

Aruna Wijesekera Hatton National Bank Project Relationship Manager [email protected], [email protected]

Nina Nayar Consultant, Microfinance [email protected]

B. K. S. Rathnasekera A/L Students Association Chairman [email protected]

M. N. Faleel Capital Co-op Bank Society Limited Audit & System Manager Not Available

Susntha Thissakutti Capital Co-op Bank Society Limited General Manager Not Available

Pradeep HemanthaColombo District Business Development Co-opSociety

Director [email protected]

Piyal Ramawicrama Colombo District BusinessDevelopment Co-opSociety

President [email protected]

N. Sooriarachchi DFCC Assistant Vice President [email protected]

L. G. Perera DFCC Vardhana Bank Ltd Managing Director/CEO [email protected]

Ganga Tilakaratna Institute of Policy Studies Research [email protected]

Lasantha Mendis Lakjaya Thrift & Credit Foundation Ltd Managing Director/CEO [email protected]

Brindley De Zylva LOLC CEO/Managing Director [email protected]

K. V. Muthaliyar LOLC Manager—Pawning & Micro Finance [email protected]

Buddhika Pathirraja LOLC Assistant Manager—Pawning & Micro Finance [email protected]

S. Senanayake Matara TCCS General Manager [email protected]

Sampath Bandara Matara TCCS Project Manager [email protected]

Indrajith Wijesiriwardean Rural Sector Project Project Director [email protected]

Sunil Silva YASIRU and Samastha Lanka Praja Sanwardena Mandalaya

Chairman [email protected]

Sunil Bandara Mahalekam Yatinuwara Praja Shakthi Sanwardena Padanama Chairman Not Available


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Services Providers (meso)

L.T. Kamalasiri Agro Micro Finance Manager [email protected]

Saman Sri Lal BDO Burah Hathy Audit Manager [email protected] /[email protected]

M. S. E. Raymond BDO Burah Hathy Partner [email protected]

Lal De Silva Centre for Banking Studies Senior Economist [email protected]

Indrajith Fernanado Charted Institute/Bartleet TransCapital Limited Director/CEO, Chairman [email protected]

Nishantha Kamaladasa Distance Learning Centre Ltd. Chief Executive Officer [email protected]

Shakila Subasinghe Distance Learning Centre Ltd.

Learning & Development Manager [email protected]

Buwanesh Wijesuriya Ernst & Young Director Cooperate Assurance Services [email protected]

Ruwan Fernando Ernst & Young Partner [email protected] / [email protected]

Alastair Corera Fitch Ratings Lanka Ltd Vice President [email protected]

Dinesh Warusawithana Fitch Ratings Lanka Ltd Assistant Vice President [email protected]

Azmi Thassim Hambantota District Chamber of Commerce Director General [email protected]

Aruna Jayasekara Human Resource Development Co-op Chairman Not Available

Gamini Sarath Institute of Bankers of Sri Lanaka Director General / CEO [email protected]

R. Villavarajah Institute of Bankers of Sri Lanaka Director—Studies [email protected]

Yasapal Rathnayake Institute of Bankers of Sri Lanaka Director Training [email protected]

Kapila Atukorala Kreston MNS & Co. Partner [email protected]

Charitha Ratwatte Sri Lanka Business Development Centre Managing Director [email protected]

Sirimevan S. Colombage Open University of Sri Lanka

Professor of Social Studies [email protected]

A. S. Chandrabose Open University of Sri Lanka

Senior Lecturer of Social Studies [email protected]

Others

M. I. Jahabtheen SIM Sri Lanka [email protected]

Gamini Batuwitha [email protected]

P. Kandasamy Tricomale District Development Association Not Available

All data in these annexes are self-reported.

The Consultative Group to Assist the Poor1818 H Street, NW, MSN P3-300, Washington, DC 20433 USA

Tel: 202 475 9594 Fax: 202 522 03744

Paris Office66, Avenue d’Iena

75116 ParisTel: 33 (0) 1 40 69 32 73 Fax: 33 (0) 1 40 69 32 76

www.cgap.org

For more information on CLEARs contact: Eric Duflos ([email protected]) or Alexia Latortue ([email protected])

[email protected]

COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW...

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