Kanchana Ambagahawita

Central Bank of Sri Lanka

Regional expert consultation on connecting Asia Pacific’s Digital Society for building resilience – 6th September 2012, Colombo.

2

3

Figures rounded off to the nearest ‘00

Policy Framework for economic growth

“The Mahinda Chintana Goal (MCG) is

to increase the GDP to provide benefits to every segment of society in a

justifiable manner. The creation of prosperity to the majority of the people

who cannot purely rely on market based solutions requires connectivity

through roads, electricity, telecommunications, information technology,

education and health services. Hence, the development strategy relies not

only on promoting investments on infrastructure based on commercial

and economic returns but also on the creation of equitable access to

such infrastructure development to enable people to engage in gainful

economic activities.” – Mahinda Chinthana, 2010

Access to information

- asymmetries in information lead to sub-optimal business decisions

- most often the poor are excluded from markets due to the lack of

information

Geographical barriers and reduced physical access to resources

and markets

Insufficient institutional support

Access to finance and efficient payment systems (financial

infrastructure)

6

Access to information and geographical barriers

e.g.

E-Society and Reaching the Rural Poor through Tele/Knowledge Centres – Nenasalas

Local radio broadcasts of market prices and crop/agricultural

information to farmers,

E-health/telemedicine facilities to rural patients,

Improving computer literacy

E- development society

Obtaining satellite information on fish movements over the Internet and sending longitudinal and latitude co-ordinates via sms to fishermen;

Training for SMEs (Small and Medium Enterprises) open source accounting packages;

English language learning via Satellite;

- Price information of key agriculture economic centres via sms

Strengthening Institutional services

Good institutions need to increase the ease of doing business and create a conducive environment for enterprises to thrive

New initiatives that will increase institutional support:

- E-Government - Bringing Government Services Closer to the People

- Launch of Lanka Gate

World Bank Group’s Doing

Business Survey

98

118

126

139134

89

122

129132

136

80

90

100

110

120

130

140

150

Sri Lanka Bangladesh Indonesia India Philippines

2011

2012

Ranks economies from 1 – 183, No. 1 being the best

Enhancement of financial infrastructure and services to achieve inclusiveness

Financial inclusiveness is where people of working age have access to a variety of quality financial services:

– at affordable prices, in a convenient manner,with dignity

- Increasing access to the formal financial system

Expanding bank branch network

Increasing ATM network / Tele Banking/ Mobile Banking etc

Increasing access to finance through credit schemes

- Enhancing payments and settlements methods

Cards, electronic payments, telephone , mobile and internet banking, e-money

In 2008, banks were required to open two branches outside the Western Province when opening a branch in the Western Province.

Bank branches and extension offices (number as at end period)

Bank Branches 2008 2009 2010 2011 Jun-12

Growth

2008/201

2

Western 708 721 746 780 784 11%

Southern 207 219 228 245 246 19%

Sabaragamuwa 140 141 150 159 161 15%

Central 181 184 194 211 215 19%

Uva 109 111 117 122 123 13%

Eastern 88 101 120 155 159 81%

North Western 164 167 178 191 192 17%

North Central 109 112 120 131 132 21%

Northern 68 80 111 129 132 94%

Total 1774 1836 1964 2123 2144 21%

Eos 761 869 975 1070 1094 44%

Total Branches and Eos 2535 2705 2939 3193 3238 28%

Source: Central Bank of Sri Lanka

14

16

14

11

11

28

14

13

13

15

11 14

12

13

15

15

15

12 14

16 17

8

18

8

Banking Density by District - 2011

132

132

123

215

192

161

246

784

159

Bank Branch Network by Mid

2012

Electronic Payment Systems - 2011

and 2012

Description 2010 2011 Change 2011 Q1 2012 Q1 % Change

%

2011

Q1

2012

Q1

Tele Banking / Mobile Banking

No of financial transactions ('000)

229

198

(13.5)

48

47

(28.6)

(1.8)

Value of transactions (Rs Bn)

5

5

-

1

1

2.3

(8.6)

Internet Banking

No of financial Transactions ('000)

4,319

5,461

26.4

1,202

1,474

14.4 22.6

Value of Transactions (Rs Bn)

269

321

19.3

64

108

4.2 68.2

Source: Central Bank of Sri Lanka

Source: Central Bank of Sri Lanka Annual Report 2011

Growth of Telecommunication services

Item 2011 Growth

Fixed access Services (No. 000) 3609 2.1

Cellular Phones (No.000) 18,319 6.1

Telephone Density (per 100

persons) 105.1 4.4

Public Pay phones 6,458 -7.2

Internet & Email (No. '000) 844 68.1

ATM Terminals

Description 2010 2011

%

Change 2011 Q1 2012 Q1 % Change

2011 Q1

2012

Q1

Total number of ATM machines

2,221

2,607

17.4 2281

2,665

13.1

16.8

Total volume of financial transactions

(in '000)

98,483

118,909

20.7

28,063

32,422

22.9

15.5

Total value of transactions (Rs Mn)

612,669

801,289

30.8

185,086

229,126

36.4

23.8

ATMs 2008 2011

Growth

2008/2011

Western 911 1136 25%

Southern 146 210 44%

Sabaragamuwa 91 130 43%

Central 122 165 35%

Uva 152 215 41%

Eastern 71 86 21%

North Western 63 95 51%

North Central 58 103 78%

Northern 40 116 190%

Total 1654 2256 36%

Source: Central Bank of Sri Lanka

Source: Central Bank of Sri Lanka

In 2011, Central Bank’s regional development initiative implemented 11 programmes targeting Micro, small and medium sector enterprise (MSME) development. In 2011, Rs 1,531 million was disbursed among 3,509 recipients under the MSME scheme.

There were regionally specific schemes such as Uthuru Wasanthaya and Nagenahira Navodhaya programmes and also island-wide credit programmes schemes.

Province 2006 2007 2008 2009 2010 2011

Northern 2.8% 2.9% 3.2% 3.2% 3.4% 3.7%

Eastern 4.9% 5.2% 5.6% 5.8% 6.0% 5.7%

Western 50.1% 46.5% 45.4% 45.8% 44.8% 44.4%

All Other 42.2% 45.4% 45.8% 45.2% 45.6% 45.5%

Contribution to the GDP (%)

Northern and Eastern Provinces have Significant Potential

The contribution to GDP by the Northern Province increased to 3.7% in 2011

from 2.8% in 2006, with the Eastern Province also registering an increase to

5.7% in 2011 from 4.9% in 2006

The Northern Province recorded the highest nominal y-o-y growth rate among

all the provinces at 27.1% (2010 – 21.8%) driven by expansion in agriculture

sector, fish production and expansion of banking services

In 2011, the Eastern Province recorded a nominal y-o-y growth rate of 12.4%

following the previous years growth rate of 19.5%

Nominal GDP Growth - 2011

Source: CBSL

15.6%

21.4%

14.5%

21.9%

15.7%12.4% 12.4%

15.5%

27.1%

0%

5%

10%

15%

20%

25%

30%

West

ern

Souther

n

Cen

tral

Nor

th W

ester

n

Sabaraga

muw

a

Eastern

Nor

th C

entra

l

Uva

Nor

ther

n

(%)

Northern and Eastern Provinces Have Significant Potential

Strong Contribution to GDP from Northern and Eastern Provinces

Source: Central Bank of Sri Lanka

Key initiatives to Develop the Northern and Eastern Provinces

Source: Ministry of Finance and Planning

Source: Ministry of Finance and Planning

Total Investment Rs.294.9 bn

Investment Area Northern

Province Eastern

Province Total

National Roads 20,750 3,212 23,962

Provincial Roads 1,771 2,261 4,032

Rural Roads 4,489 4,056 8,545

Railway 14,500 1 14,501

Electricity 3,569 105 3,674

Ports - 3,548 3,548

Water 2,791 4,636 7,427

Housing 623 1,252 1,875

Irrigation 2,112 2,682 4,794

Agriculture 827 114 941

Health 1,233 203 1,436

Education 954 1,378 2,332

Sports 200 27 227

Tourism 268 53 321

Livelihood 7,712 358 8,070

Demining 262 - 262

Other 1,783 1,489 3,272

Total 63,843 25,375 89,219

5.1%

59.8%

9.9%

9.7%

15.5% Social Protection and Livelihood

Development

Improving Economic Infrastructure

Strengthening Social

Infrastructure and Fostering Social

ServicesRevitalization of Productive

sectors

Human Settlement Development

Programme

Expenditure

up to 2010

Expenditure

in 2011

(Est)

Expenditure

up to 2011

(Est)

Nagenahira Navodaya 116,080 26,611 142,691

Uthuru Wasanthaya 66,682 50,930 117,612

Total 260,303

Source: Ministry of Finance and Planning

North & East Investments up to 2011 (Rs. million)

Investment Programme of Northern & Eastern Provinces - 2012 (Rs.

million)

Northern Province Investment Plan: 2010-2013

Plans to develop Northern and Eastern provinces

Sri Lanka’s relentless efforts to alleviate poverty has brought further decline in poverty, surpassing targets set under MDGs by UNDP

– Poverty Head count Index decreased from 15.2% in 2006/07 to 8.9% in 2009/10

– Significant decline in poverty levels in estate and rural sectors

28.8%

22.7%

15.2%

8.9%

0%

10%

20%

30%

40%

1995/96 2002 2006/07 2009/10

Poverty Headcount Ratio (%)

Source: DCS.

Note: (1) Poverty Head Count Ratio (HCI) based on Household Income and Expenditure

Surveys.

Poverty HCI

Sectors 2006 / 2007 2009 / 2010

Sri Lanka 15.2 8.9

Urban 6.7 5.3

Rural 15.7 9.4

Estate 32.0 11.4

Rapidly Declining Poverty Level(1)

Declining Poverty Levels

Increasing awareness in digital payment systems

Improving confidence in alternative payment instruments as cash and cheques remain, most favoured

Creating demand so that more private sector initiatives will take place

Preparing for the next generation of IT specialist emerging from increased IT proficiency

IT/BPO 2010 2015

Revenue US$ 390mm US$ 1bn

Workforce 23,000 80,000

Information and Communication Technology

Business Process Outsourcing emerging as one of the top export earners – target to reach US$ 1bn by 2015

Colombo Lotus Tower Project – multifunctional TV and Telecommunication Tower to be built with capacity for 50 telecasting services, 10 telecommunication services and 50 radio broadcasting services

Increased quality and penetration of telecommunication services

IT park in Hambantota

Ranked 21st in the AT Kearney Global Services Location Index (GSLI) in 2011 Ranked number 5 in financial attractiveness, ahead of India,China and all of CEE

Sri Lanka emerging as a global sourcing destination

Gartner's 30 Leading Locations for Offshore Services (2010-2011) Included among the Top 9 in Asia pacific

12th in the top ranking destinations in IBM Global Location Trends Report

Ranked among the top 10 emerging global destinations by Global Services Magazine

Source: SLASSCOM

Knowledge

Hub

Ushering Sri

Lanka to the

Knowledge

Economy

Knowledge

innovation Technology based local

innovations & companies

Local Innovations