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ADB loan condition trumps consultation with communities affected by microfinance

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A protest against extremely high lending rates

The microfinance crisis that devours low-income women and their families is almost a decade old. Women, and community leaders, along with the cooperative movement, have been demanding solutions to this grassroots debt crisis that has taken over 200 lives of women, entrapping over 2.4 million women in a vicious cycle of debt, subjecting them to financialised violence, dispossessing and displacing many in the last eight years. Reluctant to provide debt relief, adopt pro-community development policy reforms, and strengthen community initiatives, subsequent governments since 2018, including the current NPP government, have touted regulation as the remedy.

As it became evident in late October 2023, the proposed government regulations on microfinance differed qualitatively from those demanded by microfinance victims, cooperatives, and community credit providers. Instead of regulating large finance companies, which contributed to and exacerbated the microfinance crisis, the government proposed overregulating community credit organisations. Under the guise of curbing usury, the government also proposed to subordinate all grassroots community initiatives to organise savings and lending under the diktat of a Credit Regulatory Authority. Discussions between community leaders and microfinance victims, who challenged the Bill, revealed that government officials, including those from the Non-Banking Finance division at the Central Bank, are unaware of the depth and breadth of the microfinance crisis.

Neither were they conversant with how the centuries-old problem of usury has been nurtured and reproduced by the household debt crisis caused by the profit-driven and extractive lending practices of big finance companies. Instead of reaching out to the affected communities to learn about the situation, they were proposing to nip in the bud the creative solutions that the affected communities implement to organise their credit needs, free from the intervention of both moneylenders and big finance companies. In place of fact and research, officials appeared to rely on hearsay as the basis for policymaking.

The government was forced to temporarily withdraw the Bill in mid-April 2024. Feigning community consultations in response to opposition from microfinance victims, as well as community credit providers, the Development Finance Division at the Ministry of Finance invited community representation to a sub-committee to provide alternative proposals. One microfinance victim and two representing the community credit providers were placed with the burden of representing microfinance victims and community credit providers spread across the country.

They opposed the basic framework of the Bill, which subjugates the autonomy of community credit providers under the rule of an Authority and forecloses the rights of people to organise their credit needs, and demanded that a fresh approach be taken to understand the crisis and the nature of policy and regulatory solutions needed.

There was no consensus on the definition of what constitutes a microfinance loan. While community representatives emphasised the importance of adopting a tight and closed definition to curtail pro-profit lending, the representative of microfinance providers and officials favoured a loose definition, allowing space for microfinance businesses to expand and evolve. When the proposals to amend the Bill were presented to the legal division of the Ministry of Finance in January 2025, the officials promised to share the amended version of the Bill with the community for consultation before presenting it to the cabinet for approval. Another official stated that the government is obligated to implement the Microfinance Regulatory Act as it is one of the conditions imposed by a loan provided by the Asian Development Bank (ADB).

As the cabinet decisions in early August and September 22 expose, the ADB condition has surpassed the government’s commitment to conduct broader community consultation on the amended Bill. The government’s responsibility to protect microfinance victims, safeguard low-income women, and foster community development is secondary to the well-being of the finance companies and fulfilling loan conditions. Efforts to meet the new sub-committee established to explore future steps to address the microfinance lending problem, led by Samanmali Gunasingha, Member of Parliament, also did not materialise.

The microfinance crisis demands a combination of debt relief, strong financial reforms to curb profit-driven lending, redirecting finance for development, fostering community credit initiatives and cooperatives as alternatives, and a serious undertaking to regenerate the agrarian economy, as well as local economies in rural, urban, and estate sectors, to strengthen women’s livelihoods. Multilateral lenders, such as the ADB, forcing the cooperatives and government-led credit programs to be weakened while promoting the commercialisation of microfinance, are as much to blame for the microfinance crisis in Sri Lanka as the big finance companies that prey on low-income women to maximise profit.

A government elected by a massive mandate of the people, inclusive of the blood, sweat and tears of women victimised by these finance companies, should place women’s needs at the heart of policymaking. Not ADB or the finance companies!

Members of the sub-committee
Renuka Bhadrakanthi Gunawardena, Ekabaddha Praja Sanwardhana Kantha Maha Sangamaya
Suneth Aruna Kumara, Collective of Women Victimised by Microfinance
Amali Wedagedara, Uva Wellassa Kantha Sangamaya



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Opinion

Education needed about people not feeding wildlife

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Being wildlife enthusiasts and bird watchers we took a river “safari” during a recent family trip to Bentota. We were dismayed to see that it seems to be the standard practice to feed the monkeys, I think they were the purple faced langurs, that were encountered on the river banks. Each boat that passed by stopped with boxed fruit, coconut and other odds and ends to feed them.

We managed to stop our guy from doing so but faced derision and laughter that we shouldn’t be afraid of monkeys. We tried to explain to him that this is a plague affecting Sri Lanka; elephants being fed on road sides and even in national parks, monkeys being fed from hotel balconies and apparently during river boat rides, birds being fed on hotel terraces etc.

This was met with further mockery and amused dismissal. An effort to make them understand that this was their livelihood that they were destroying it in this manner sailed over their heads. They even have a picture of a baby crocodile on the shoulders of a tourist on their billboard.

We need to consider the following:

Educate such tour operators about the importance of not interfering with the environment and the behaviour of wild animals.

Include education and training in the hotel school, and in schools in tourist resort towns about their duty and responsibility to the environment and the ecosystem on which we all depend.

If it is not already the case such operators should have licenses that should be revoked and fined if found to be engaging in such destructive acts.

Tamara Nanayakkara

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Opinion

Capt. Dinham Suhood flies West

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A few days ago, we heard the sad news of the passing on of Capt. Dinham Suhood. Born in 1929, he was the last surviving Air Ceylon Captain from the ‘old guard’.

He studied at St Joseph’s College, Colombo 10. He had his flying training in 1949 in Sydney, Australia and then joined Air Ceylon in late 1957. There he flew the DC3 (Dakota), HS748 (Avro), Nord 262 and the HS 121 (Trident).

I remember how he lent his large collection of ‘Airfix’ plastic aircraft models built to scale at S. Thomas’ College, exhibitions. That really inspired us schoolboys.

In 1971 he flew for a Singaporean Millionaire, a BAC One-Eleven and then later joined Air Siam where he flew Boeing B707 and the B747 before retiring and migrating to Australia in 1975.

Some of my captains had flown with him as First Officers. He was reputed to have been a true professional and always helpful to his colleagues.

He was an accomplished pianist and good dancer.

He passed on a few days short of his 97th birthday, after a brief illness.

May his soul rest in peace!

To fly west my friend is a test we must all take for a final check

Capt. Gihan A Fernando

RCyAF/ SLAF, Air Ceylon, Air Lanka, Singapore Airlines, SriLankan Airlines

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Opinion

Global warming here to stay

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The cause of global warming, they claim, is due to ever increasing levels of CO2. This is a by-product of burning fossil fuels like oil and gas, and of course coal. Environmentalists and other ‘green’ activists are worried about rising world atmospheric levels of CO2.  Now they want to stop the whole world from burning fossil fuels, especially people who use cars powered by petrol and diesel oil, because burning petrol and oil are a major source of CO2 pollution. They are bringing forward the fateful day when oil and gas are scarce and can no longer be found and we have no choice but to travel by electricity-driven cars – or go by foot.  They say we must save energy now, by walking and save the planet’s atmosphere.

THE DEMON COAL

But it is coal, above all, that is hated most by the ‘green’ lobby. It is coal that is first on their list for targeting above all the other fossil fuels. The eminently logical reason is that coal is the dirtiest polluter of all. In addition to adding CO2 to the atmosphere, it pollutes the air we breathe with fine particles of ash and poisonous chemicals which also make us ill. And some claim that coal-fired power stations produce more harmful radiation than an atomic reactor.

STOP THE COAL!

Halting the use of coal for generating electricity is a priority for them. It is an action high on the Green party list.

However, no-one talks of what we can use to fill the energy gap left by coal. Some experts publicly claim that unfortunately, energy from wind or solar panels, will not be enough and cannot satisfy our demand for instant power at all times of the day or night at a reasonable price.

THE ALTERNATIVES

It seems to be a taboo to talk about energy from nuclear power, but this is misguided. Going nuclear offers tried and tested alternatives to coal. The West has got generating energy from uranium down to a fine art, but it does involve some potentially dangerous problems, which are overcome by powerful engineering designs which then must be operated safely. But an additional factor when using URANIUM is that it produces long term radioactive waste.  Relocating and storage of this waste is expensive and is a big problem.

Russia in November 2020, very kindly offered to help us with this continuous generating problem by offering standard Uranium modules for generating power. They offered to handle all aspects of the fuel cycle and its disposal.  In hindsight this would have been an unbelievable bargain. It can be assumed that we could have also used Russian expertise in solving the power distribution flows throughout the grid.

THORIUM

But thankfully we are blessed with a second nuclear choice – that of the mildly radioactive THORIUM, a much cheaper and safer solution to our energy needs.

News last month (January 2026) told us of how China has built a container ship that can run on Thorium for ten years without refuelling.  They must have solved the corrosion problem of the main fluoride mixing container walls. China has rare earths and can use AI computers to solve their metallurgical problems – fast!

Nevertheless, Russia can equally offer Sri Lanka Thorium- powered generating stations. Here the benefits are even more obviously evident. Thorium can be a quite cheap source of energy using locally mined material plus, so importantly, the radioactive waste remains dangerous for only a few hundred years, unlike uranium waste.

Because they are relatively small, only the size of a semi-detached house, such thorium generating stations can be located near the point of use, reducing the need for UNSIGHTLY towers and power grid distribution lines.

The design and supply of standard Thorium reactor machines may be more expensive but can be obtained from Russia itself, or China – our friends in our time of need.

Priyantha Hettige

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