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Prioritize Progress NOT Profits

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By Rienzie Wijetilleke

(rienzietwij@gmail.com)

Rural development and self-employment are the most critical issues faced by developing countries. In Sri Lanka, over 80% of the population is considered to be ‘rural’ and significantly, the majority of this population consists of youth. The lives of rural Sri Lankans have not improved or evolved substantially and opportunities for economic advancement are few and far between. Sri Lanka can never attain sustainable development until it improves key indicators amongst its rural population. Crucially, the gap between the richest and the poorest is ever expanding. Rapid and geographically-concentrated urbanization necessarily leads to a polarization of a populace, eventually each segment becomes suspicious of the other, unable to reconcile the values of their counterparts. Many in the working poor and underclass have already begun to notice that the upper middle class might spend more in a night at a restaurant than they may earn as monthly wages. As urban city-centres become beacons of opportunity, the rural countryside slips further into stagnation.

US President JFK wrote that “if the free society cannot help the many who are poor, it cannot save the few who are rich”. This quote was part of my introductory message to the “Gami Pubuduwa” scheme which was launched by our team at HNB all the way back in May 1989 with the explicit purpose of providing the rural community with at least part of the multitude of banking facilities available to the urban community. Our idea at HNB was to complement the uplifting of those living in rural areas, areas that are in dire need of accessible roads, formal education and health services. Credit is perhaps considered a villain in the context of the 2008 financial crisis and the numerous cases of fraud and delinquency. Yet without credit, many of the economic success stories of the past several decades would not have been possible. Upward social mobilization, home-ownership, and entrepreneurship are just some facets of human development that simply would not exist if it were not for the concept of credit.

Throughout history, the rural population of Sri Lanka did not have access to credit or other banking facilities, they were denied opportunities for social advancement. “Gami Pubuduwa” was meant to be a tool to enhance the financial inclusivity of the rural population and to harness the innate talents of the farmers and those with an entrepreneurial mindset. As someone born in a small fishing village close to Hikkaduwa, I understood the challenges: the scheme would need to operate within the cultural and social constraints of the village. To achieve this, the “Gami Pubuduwa” scheme could not be successfully managed as a centralized operation, it required an understanding of the economic and social dynamics at the grassroots level. We invested heavily in field officers who were dubbed “Gami Pubudu Upadeshakas” (GPUs). The GPU would become an integral part of this system and would counteract many of the issues that have been known to plague micro-credit schemes. The GPU would necessarily be involved in social, cultural, religious and educational activities and develop close interpersonal ties with the village. The GPU must be able to identify the entrepreneurial spirit and meet their needs by advising the project, drawing up project proposals and fulfilling the documentation. I wrote in 1995 that the GPU is a multifaceted role; a friend, financier and advisor all in one. During this period the recovery rate of the “Gami Pubuduwa” scheme was 97%.

Some of the criticisms or draw backs of micro-credit are certainly legitimate. A poor household can very easily fall into a debt trap, especially since they may not possess sound financial management skills. Some try to hide expenses and borrow funds for consumption purposes. Some schemes are simply “gini poli” loans window dressed as microfinance schemes, charging exorbitant interest rates that necessarily encourage debt traps. Then there is the phenomenon of the informal intermediary who is usually also from the village but with significantly more access to funds. This intermediary, who will easily qualify for a loan will then redistribute the funds to villagers who are unable to qualify, but do so at high interest rates and thus become the ultimate beneficiary.

The GPU, as part of the “Gami Pubuduwa” scheme, becomes essential to the system for many of the above critiques. The GPU will have knowledge of the local industries in the respective village, thus all facilities will only be approved for projects deemed viable. Whether it is farming or agricultural enterprise or small industry, the feasibility of the project is the foremost consideration. The GPU’s constant presence in the village will also deter the intermediaries. In terms of interest rates, our scheme at HNB always applied an interest rate ceiling to ensure that the loans were not exploitative in anyway. Another important issue is that as these borrowers are outside the traditional credit system, they were not supposed to be entered into the CRIB, which makes it challenging to deter a borrower drawing funds from multiple schemes from different institutions. Once again it is the GPU that must be alive to the situation and as an added protection, borrowers are requested to sign a disclaimer that any additional borrowings will only be initiated following discussions with the GPU. For some of the above restrictions to be lifted, we were lucky to have some broad minded individuals at the regulator who supported this vision. The former Governors of the CBSL; late Neville Karunathilake and A.S. Jayawardena saw the benefits such a scheme would bring to our nation’s economy.

It is also critical to understand that agricultural projects and other pursuits of those in the village are unlikely to pay off immediately. It is not simply a case of ensuring monthly repayment, following up on recoveries and executing a mortgage or reclaiming an asset. In the case of an agricultural project, there could be drought or floods, there may be other external factors that reduce prices on the market or there may be some disease or germ which infects the crop. In such cases, the facility should be rolled over for the next harvest period and not simply classified as a statistic. Another issue for agri-businesses is the restrictive cost of transportation to market places and agri-centres which will then buy the produce from the farmer, often at wholesale prices, thus the farmer has virtually no margin when he deducts the cost of transportation. To counteract this, we tried to establish agricultural centres which would be in closer proximity to villages. These centres would act as collection and distribution hubs which, when scaled, would bring fresh produce to the market efficiently with a cost saving to the farmer.

All of the above challenges show that microfinance is no easy task, if it were, the capitalist model would have certainly ensured vast and rapid growth of microfinance around the world. However the opposite is true: microfinance is complicated, requires resources, patience and a willingness to forego short-term profitability. The various economic activities financed under the scheme aside from cultivation and agri-businesses include handicrafts, fisheries, light engineering, trading, construction material production, horticulture etc. The multiple avenues available provide a pathway to upward social mobilization for the villager as well as the village.

More than a lending scheme, microfinance can inculcate a savings habit and is especially crucial to the development of women in rural areas, to provide them with financial independence and allow them the resources to advance themselves and their families. At one point, we at HNB had gathered a comparatively larger deposit base from the villages than we had envisioned.

The main challenge we face in this journey to uplift rural Sri Lanka is the profit motive. As previously stated, real microfinance cannot be judged by its interest income or interest margin, it has to be judged by other, more qualitative factors. The real rewards are down the road: the inclusion of more Sri Lankans into the financial system creates a stronger and more robust economy. It is not much of a challenge nowadays for banks to lend to large corporates and mega government infrastructure projects. Interest and fee income from trade and working capital facilities are steady and require little grassroots interaction. Microfinance is not the same, it cannot be looked upon as simply ‘finance’. It runs deeper, it requires a more measured approach and the subordination of the profit motive for the sake of the greater good. This will be a major challenge for the private sector, but it is a challenge that if successfully met, can change our economic landscape and bring millions out of poverty and destitution, giving life to the hopes and dreams of the men and women that toil so hard for so little.



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From stabilisation to transformation without delay

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At a symposium on reconciliation organised by the National Peace Council last week, more than 250 religious clergy, civic activists and political representatives from different communities gathered to discuss the country’s future. Speaking at the event, Minister Bimal Rathnayake explained the government’s approach to national reconciliation. He said the government viewed the country’s recovery in terms of a three stage process. The first stage was stabilisation, the second was development and the third was transformation. Reconciliation, he implied, would come in that final stage. The participation of Opposition Leader Sajith Premadasa at the same symposium, and the constructive nature of his comments, strengthens that hope.

When the present NPP government took office in 2024, the country was emerging from one of the gravest crises in its post Independence history. The economic collapse of 2022 had led to shortages of fuel, food, medicines and electricity. Inflation soared, foreign reserves disappeared and long queues became part of daily life. The political upheaval that followed culminated in the resignation of former President Gotabaya Rajapaksa after mass public protests under the banner of the Aragalaya movement. The country was then governed by a leadership that spoke the language of reform and reconciliation but was widely perceived as lacking a direct popular mandate.

Sri Lanka’s past experience suggests that stabilisation and transformation cannot be treated as entirely separate stages. Postponing reconciliation until some future moment risks repeating the failures of the past. If transformation is endlessly delayed until a supposedly perfect moment arrives, there will always be new crises and new reasons for postponement. Minister Rathnayake’s contention that the government’s immediate priority has necessarily been stabilisation flows from the government’s awareness of the precarious situation the country is. Over the past two years, the government has succeeded to a significant extent in restoring economic and political stability. Inflation has reduced, shortages have ended and public institutions have regained a degree of functionality.

Guaranteed Changes

On the other hand, the country’s development continues to face challenges due to adverse global conditions, including disruptions caused by conflict in the Middle East and extreme weather events that have affected tourism, trade and the cost of living. The danger is that reconciliation may be indefinitely postponed in the name of stabilisation. This danger can be reduced if the government works proactively with the opposition and civil society to commence practical measures of transformation now rather than later. The participation of Opposition Leader Sajith Premadasa at the symposium, and the constructive nature of his comments, has strengthened the sense that bipartisan engagement on reconciliation may now be possible.

The urgency of transformation came through strongly in the presentations made by representatives of the Sri Lanka Tamil and Malaiyaha Tamil communities. ITAK parliamentarian S.Shritharan spoke of the frustration caused by unresolved post war issues in the north and east. He referred to disputes regarding land occupied during the war years, including controversies linked to Buddhist temples and state sponsored settlement activity in areas claimed by local communities. He also pointed to the continuing large scale presence of the security forces in the north and east nearly two decades after the end of the war. These grievances have remained central to Tamil political discourse since the end of the armed conflict in 2009. Families displaced by war continue to seek the return of ancestral lands. Civil society organisations in the north have repeatedly called for greater civilian control over local administration and a reduction in military involvement in civilian life.

Academic research and practical work on the ground have shown that reconciliation cannot be separated from questions of dignity, equality and justice. Former minister Mano Ganesan, leader of the Democratic People’s Front, focused on the longstanding problems faced by the Malaiyaha Tamil community. He spoke passionately about continuing housing shortages, landlessness and economic marginalisation, issues that have persisted since Independence. He also highlighted the devastating impact of recent extreme weather events on estate communities that remain socially and economically vulnerable. The condition of the Malaiyaha Tamil community remains one of the enduring social justice issues in Sri Lanka.

After Independence in 1948, a large proportion of them were denied citizenship and voting rights through legislation that rendered them stateless. Though citizenship rights were eventually restored, the social and economic consequences of exclusion continue to be felt generations later.

Many families still lack secure housing and land ownership despite their immense contribution to the country’s plantation economy. Minister Rathnayake’s responses to both these concerns were politically significant. He argued that recent political developments, including the declining influence of narrow ethnic politics across communities, indicated a major shift in public attitudes. According to him, the political ground has changed in ways that make it increasingly difficult for politicians who rely primarily on ethnic division and communal insecurity to retain public support.

Inter-Connected

There is evidence to support the assessment about the changing political grounding which sees future prospects in the resolution of long standing problems. . The economic collapse of 2022 affected all communities alike and generated a new politics centred on governance, anti corruption, accountability and economic justice. The Aragalaya protests brought together Sinhalese, Tamils and Muslims in a common demand for political change. Although ethnic grievances have not disappeared, the crisis created space for a broader understanding that the country’s future depends on cooperation rather than division. Opposition Leader Premadasa’s comments at the symposium reflected this changing political climate. He emphasised that national reconciliation could not be separated from economic justice and the need to address disparities between regions and social classes.v He also mentioned the need for civil society organisations to take this message to the community. This wider understanding of reconciliation is important because ethnic inequality and economic inequality have often reinforced each other in Sri Lanka’s history.

Academic studies have identified the denial of citizenship rights after Independence as a historic injustice that set back the Malaiyaha community for decades. The challenge now is to ensure that transformation becomes part of the stabilisation and development process itself. Practical first steps are both possible and necessary. The release of civilian lands still under state control, greater devolution of administrative authority, reduction of military involvement in civilian affairs, language equality in public administration and accelerated housing and land ownership programmes in the plantation sector are all measures that can begin immediately without waiting for a final stage of transformation.

The government’s recent commitment that provincial council elections will finally be held this year is therefore significant. These elections have been repeatedly postponed by successive governments. Holding them would not solve the ethnic conflict by itself. But it would signal a willingness to restore democratic institutions and share power in a meaningful way.

Sri Lanka has repeatedly postponed difficult reforms in the hope that a more convenient political moment would eventually arrive. But opportunities are invariably created and fought for instead of being provided as a gift by a benevolent government.

The present moment, shaped by the economic crisis and public demand for accountable government, offers a rare opportunity to move simultaneously towards stability, development and reconciliation. Provincial council elections can be the first meaningful step. But they must not be the last.

by Jehan Perera

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Researchers to shape new environmental policy framework

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Some of the researchers at the meeting

In a significant move aimed at steering Sri Lanka’s environmental governance towards a more science-based and evidence-driven path, the Ministry of Environment has initiated a new collaborative mechanism to integrate leading researchers into national policy formulation and conservation planning.

The initiative was discussed at a high-level meeting chaired by Dr. Dammika Patabendi at the Ministry of Environment on Tuesday, where top environmental scientists, wildlife experts and researchers were invited to contribute towards what officials described as a “strategic transition” in the country’s environmental management framework.

The discussions focused on strengthening the scientific basis of environmental conservation programmes and national policy decisions while creating a more research-friendly environment for academics and field scientists engaged in biodiversity and ecological studies.

Particular attention was paid to long-standing concerns raised by researchers regarding procedural and operational difficulties encountered when conducting studies in collaboration with the Department of Wildlife Conservation and the Forest Department.

Minister Patabendi stressed the need for environmental policies to be guided by credible scientific data rather than ad hoc administrative decisions, ministry sources said.

Among the key proposals discussed was the establishment of a streamlined mechanism that would reduce bureaucratic obstacles faced by researchers in obtaining approvals, accessing field sites and sharing scientific findings with state institutions.

The Minister highlighted the importance of building stronger partnerships between policymakers and the scientific community at a time when Sri Lanka is grappling with escalating environmental challenges including deforestation, biodiversity loss, human-elephant conflict, climate-related disasters and ecosystem degradation.

Environmentalists attending the meeting had also highlighted the urgent necessity of incorporating empirical research into national decision-making processes to ensure long-term ecological sustainability and better resource management.

The meeting brought together several of Sri Lanka’s leading environmental researchers and academics including Rohan Pethiyagoda, Saminda Fernando, Sewwandi Jayakody, Samantha Gunasekara, Dinidu Devapura, Himesh Jayasinghe, Manoj Prasanna, Mendis Wickramasinghe and Suranjan Karunarathna.

Director General of Wildlife Conservation Ranjan Marasinghe also participated in the deliberations.

Officials said the proposed framework is expected to pave the way for a more transparent, data-oriented and scientifically credible environmental governance structure capable of addressing emerging conservation challenges more effectively.

The government expects the new mechanism to support the implementation of practical and scientifically robust programmes aimed at safeguarding Sri Lanka’s ecological future while enhancing cooperation between state agencies and the country’s growing community of environmental researchers.

 

By Ifham Nizam

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Back home … for a special occasion

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Seven Notes: Sri Lankans based in Dubai – with Niluk (second from left)

Niluk Uswaththa, of Seven Notes fame, based in Dubai, surprised many when he and his wife Apeksha, turned up in Colombo, last week … unannounced.

Yes, they had a purpose in their surprise visit … to wish Apeksha’s mum for her birthday, which was on Monday, 18th May, and what a surprise it turned out to be!

In an exclusive chit-chat with The Island, Niluk said that the scene in Dubai is improving and Seven Notes do have work coming their way.

Since the members of Seven Notes are all employed (doing day jobs), they operate only on Saturdays and Sundays.

Niluk: Didn’t come prepared to perform, but obliged
friends in Galle

In fact, to get to Colombo for the birthday surprise (on Monday, 18th May), the band had to skip their 17th May, Sunday gig.

“Although it’s a short vacation, my wife and I are enjoying the setup here,” said Niluk, adding that they spent two days in Galle and that their next destination is Anuradhapura.”

Niluk didn’t come prepared to perform, but he obliged the crowd present, at a friend’s birthday celebrations, in Galle, singing and playing guitar.

They are scheduled to leave for their home, in Dubai, in the first week of June.

Seven Notes is an outfit made up of Sri Lankans and the band has been around for almost nine years.

Niluk came into their scene nearly seven years ago.

“When I went to Dubai, I had offers coming my way but it was Seven Notes that impressed me because of their acoustic style.”

The Dubai’s entertainment scene is showing clear signs of bouncing back and even levelling up in the next few months.

Niluk and Apeksha: Enjoying their short vacation

After a slowdown earlier this year due to regional tensions, shows and festivals are back on the calendar, and organisers say late 2026 could be the busiest concert season in years.

Time Out Dubai says “the 2026 concert calendar is filling up nicely” and “the city is ready to party once again” after some reschedules.

Dubai Summer Surprises in July brings retail activations, comedy nights, and indoor art exhibitions.

Organisers point to a backlog of postponed events that are being rescheduled for late 2026 and early 2027.

Yes, Dubai is calm on the surface but on alert. Life is mostly normal in the city, but there’s a “balancing act” as people watch for escalation.

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