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Education equity in Sri Lanka: A pathway out of poverty



By Wimal Nanayakkara

Although Sri Lanka has provided universal free education since 1939, around one-fifth of poor children drop out of school after the age of 14 years and another-two thirds after the age of 16 years. Comparison of estimates based on the Household Income and Expenditure Survey (HIES)-2012/13 and HIES-2016, conducted by the Department of Census and Statistics (DCS), show only a marginal improvement.

With the closure of schools following the COVID-19 outbreak and the sudden shift to online learning, poor children with no access to e-learning opportunities risk falling even further behind. In this context, some proposals made in budget 2021 to improve the education system and reduce poverty will benefit poor children who have been disproportionately affected by the pandemic. This blog highlights some of the education-related difficulties faced by poor children in Sri Lanka based on HIES data and the recent budget proposals which could help them to overcome these difficulties.

Poor children out of school

A large proportion of poor children are dropping out of school after 14 years, and the percentage of poor children (15-16 years) not attending school has declined only by 4.2, between the two survey periods. Among poor children aged between 17-18 years, this figure has remained almost unchanged at nearly 65%. The corresponding percentages for non-poor children are much lower (Table 1).

Out of the poor children (15-16 years) who leave the education system, more than 66% left mainly due to “poor educational progress/not willing to attend” (36.6%), “financial problems” (22.1%), or to “help in housekeeping /other activities of the household” (8.6%). The corresponding percentages of poor children (17-18 years) were 49.5, 15.8 and 20.0 respectively. One of the reasons for poor education progress could be inadequate nutritional intake. The HIES-2016 shows that the per capita energy consumption of poor households with children (5-18 years) is less than 75% [or 1513 kilo calories per capita a day (kcpcad)] of the recommended energy requirement (2030 kcpcad). The corresponding consumption of non-poor households is 2081 kcpcad, above the recommended requirement.

As there is a possibility for some of the near-poor children to slip into poverty, due to the effects of COVID-19, it is important to consider both poor and near-poor. Figure (1) shows the proportions of early school leavers are very high for poor and near-poor children compared to non-poor. There is also a significant gender gap, especially among the poor and near-poor.


For example, 73.6% of poor boys aged 17-18 years are out of school compared to 53.9% of poor girls in this age group. The corresponding percentages for the 15-16 age group are 24.5 and 14.2 respectively. A similar pattern is observed for near-poor children and even non-poor children, although the proportions are significantly low for non-poor.

Inadequacy of facilities for online learning

Inequality in education can be further widened as not all children have the necessary facilities for online learning during prolonged curfews, lockdowns or when schools are kept closed indefinitely. According to the Computer Literacy Survey –2019 (DCS), only 22.2% of the households in Sri Lanka own a desktop/laptop computer (Urban: 38.3%; Rural: 19.9% and Estate: 3.8%). According to the Telecommunications Regulatory Commission (TRC) of Sri Lanka, there were a total of 1.53 million fixed internet subscribers and 5.73 million mobile subscribers in 2018. However, the use of smartphones would be limited, especially in remote rural areas, where broadband internet facilities are weak and there is no information on the extent of smartphone users among the poor.

‘E-Thaksalawa’ the national e-learning portal of the Ministry of Education (MoE), is facilitating e-learning for students (Grade 1 to Advanced Level). But some children, cannot access them at present due to the lack of facilities or means. Broadband internet facilities, a computer/laptop or a smartphone and sufficient data are essential to download available study material.

As highlighted in a previous IPS blog, the best option therefore would be to use television (TV) as 86% (HIES-2016) of households in the country own TVs (Urban: 88.9%; Rural: 86.1% and Estate: 81.2%). The ‘Guru Gedara’ distance learning programme of the MoE broadcast by Channel Eye/Nethra TV, ART TV and Ada Derana, for students from Grade 3 to GCE (A/L) are both in Sinhala and Tamil. The SLBC is also broadcasting these lessons for the benefit of children who do not have access even to a TV.

This is an excellent and innovative way for poor children to continue their studies in a stream of their choice, who may be leaving education prematurely due to lack of facilities, especially teachers, to teach science/ technology subjects, mathematics, languages, etc., in rural/estate schools and non-national schools.

Budget proposals

Budget 2021 has some proposals which, if implemented, could solve most of the issues highlighted above. They will benefit the poor and vulnerable children, who are facing difficulties in continuing their education, explained above. The proposals are also aimed at developing the entire education system with special emphasis on skills development, to meet the ever-increasing demand for high skills and also to provide necessary facilities.

A summary of some of the most important proposals are:

• ‘Gamata Sannivedanaya’ to provide 4G/Fiber broadband facilities to cover all Grama Niladhari divisions; internet facilities to all schools.

• ‘E-Thaksalawa’ learning portal to be strengthened further to minimise the difficulties faced by students in rural / estate and non-national schools.

• ‘Guru Gedara’ programme to be made available to all students, by providing TV sets to schools in difficult areas.

• Improving and expanding the opportunities for vocational/technical education, which will be extremely useful in developing the necessary skills in a rapidly changing environment.

The early implementation of these proposals could pave the way to breaking the vicious poverty trap through equitable education and ensuring that no child is left behind.

Link to original ‘Talking Economics’ blog:

Wimal Nanayakkara is a Senior Visiting Fellow at the Institute of Policy Studies of Sri Lanka (IPS) with research interests in poverty, and is a specialist in sampling. He was previously engaged at the Department of Census and Statistics, where he functioned as the Director General for 12 years. He received his BSc in Mathematics and Physics from the University of Peradeniya and holds a Postgraduate Diploma in Applied Statistics from the University of Reading, UK. (Talk to Wimal –

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Seylan Bank records Rs. 1.5 Bn PAT for 1H 2022



Seylan Bank recorded a Profit after Tax of Rs. 1,504 Mn for the 6 months ended 30th June 2022 against Rs. 2,105 Mn reported in the corresponding period of 2021. This has been seen by financial analysts as commendable given the extremely challenging and adverse conditions the Bank operated in, with Sri Lanka facing its worst economic crisis since Independence, especially in Q2 this year.

Net Interest income increased from Rs. 10,971 Mn to Rs 16,851 Mn, a growth of 53.60% over the previous year for the 6 months ended 30th June 2022. The Bank’s net fee based income increased by 27.36% from Rs. 2,180 Mn to Rs. 2,776 Mn during 1H, mainly due to an increase in debit and credit card related income, commission income on e-banking, service charges on deposits and commission on remittances which were partly offset by decrease in guarantees related income and loans and advances related income. Other income captions comprising net gains from trading activities, net gains from de-recognition of financial assets, net gains on foreign exchange transactions and other operating income increased by 37.20 % a net gain from Rs. 1,526 Mn from the correspondent year to a net gain of Rs. 2,093 Mn during 1H 2022. The net increase is mainly due to increase in mark to market net gain on derivative financial instruments and impact from net revaluation losses on FCY assets and liabilities.

Total expenses recorded an increase of 7.43 % from Rs. 6,750 Mn in the 1H of the previous year to Rs. 7,251 Mn for the 6 months ended 30th June 2022. Personnel expenses increased by Rs. 287 Mn mainly due to an increase in the staff benefits based on the collective agreement. Other operating expenses and depreciation and amortisation expenses too increased by 7.35% due to increase in prices of purchases and services as a result of higher inflation and local currency depreciation. However, the Bank will continue to take relevant measures to curtail costs with various cost initiatives.

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CSE turnover exceeds Rs. 6 billion as bullish trend accelerates



By Hiran H.Senewiratne

CSE activities were extremely bullish yesterday as market turnover exceeded Rs 6 billion after seven months and the All- Share Price Index surpassed 9000 points for the first time since March 31 this year, stock market analysts said.

All blue chip company shares appreciated by more than five per cent, driven mainly by Lanka IOC and Hayleys. The reason for the market being upbeat was the relative political stability which has come into being under President Ranil Wickremesinghe, who spearheads an effort to establish a national government with some other political parties in parliament, together with the gradual movement of the economy despite all odds, stock market analysts opined.

Observers are of the view that Sri Lanka stock market is still one of the most attractive emerging stock markets in the region. It is said that during 2011/12 the stock market was at the 7000 points level and after ten years, i.e. 2022, the stock market is at 9000 points level. Besides, Sri Lanka’s equity market is ranked as one of the top most of such markets.

Amid those developments both indices moved upwards. The All- Share Price Index moved up by 321 points or 3.69 per cent and closed at 9027.48 points and the S and P SL20 rose by 159.5 points. Turnover stood at Rs 6.3 billion with four crossings. Those crossings were reported in Melstacorp, which crossed 5.2 million shares to the tune of Rs 280 million, its shares traded at Rs 54, JKH 500,000 shares crossed to the tune of Rs 64 million, its shares traded at Rs 128, Kahawatte Plantations one million shares crossed to the tune of Rs 27 million and its shares fetched Rs 27 and Hayleys 200,000 shares crossed for Rs 22 million; its share price stood at Rs 110.

In the retail market, top seven companies that mainly contributed to the turnover were, Lanka IOC Rs 1.4 billion (8.7 million shares traded), Expolanka Holdings Rs 720 million (3.3 million shares traded), Browns Investments Rs 339 million (41.7 million shares traded), Hayleys Rs 326 million (2.8 million shares traded), JKH Rs 294 million (2.3 million shares traded), Melstacorp Rs 235 million (4.4 million shares traded) and Dipped Products Rs 199 million (4.3 million shares traded). During the day 209 million share volumes changed hands in 47000 share transactions.

Lanka IOC and Hayleys drove the market. Lanka IOC shares moved to Rs 27.75 or rose by 20 per cent. Its share price rose to Rs 172.50 from Rs 144.75 and Hayleys share price gained by 11 per cent or Rs 11.75. Its share price moved to Rs 119.75 from Rs 106.25.Yesterday, the Central Bank announced the US dollar buying rate as Rs 357.24 and the selling rate as Rs 368.56.

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Sampath Bank remains vibrant, backed by strong capital and liquidity positions



Sampath Bank continued to maintain a solid capital base and stable liquidity profile in the first half of 2022 notwithstanding multiple economic challenges. The Bank remains vigilant in identifying the current economic issues and has continued to implement in a proactive manner the required countermeasures, clearly demonstrating its strength and stability.

In line with that objective and in order to improve the foreign currency liquidity position, the Bank continues to focus and promote inward remittances as well as to encourage the inflow of export proceeds. The Bank further reinforced its commitment to all its stakeholders by continuing to support all affected segments to sustain their respective businesses in order to ride out the current economic crisis.

Despite the prevailing economic turmoil, the Bank posted a commendable PAT of Rs 7.1 Bn and PBT of Rs 9 Bn for the period ended 30th June 2022, reflecting a minor increase of 0.3% and slight decrease of 5.5% respectively compared to the figures declared in 1H 2021. In the meantime, the Group declared a PAT of Rs 7.4 Bn and PBT of Rs 9.6 Bn, denoting a decline of 2% and 5.5% respectively over the first half of 2021.

Key financial highlights declared by Sampath Bank for 1H 2022:

Strong NIM of 4.85% on the back of rising AWPLR.

323% growth in exchange income stemming from the sharp depreciation of LKR against USD by 80% or by Rs 160.25.

Sizable 69.9% increase in net fee and commission income during the period, driven by cards and trade-related operations.

Higher impairment provisions on loans and investments to capture possible economic uncertainties.

A surcharge tax of Rs 2.67 Bn recognized against the opening retained earnings of the Bank.

Fund Based Income

Total interest income increased by 41.1 % year on year to Rs 59.2 Bn in the first half of 2022, compared to Rs 41.9 Bn in the same period of the previous year. This significant increase in interest income is due to the upward trend in interest rates in the first half of 2022. The AWPLR at the end of the reporting period reached 22.62%, which is 1,711 bps higher than the rate reported on 30th June 2021. Furthermore, the current AWPLR surpassed the end 2021 figure by 1,401 bps. At the same time, the interest rate on a one-year treasury bill climbed by 1,861 bps from the treasury bill rate reported at end of 30th June 2021 and stood at 23.84% at the end of 30th June 2022.

Interest expenses increased by 22.6% compared to the corresponding period of last year due to rising interest trend. The Bank’s total interest expense was Rs 27.8 Bn at the end of the current reporting period compared to Rs 22.7 Bn reported in 1H 2021. Prudent asset and liability management however ensured that net interest income grew by 63% in 1H 2022. This trend is reflected in the NIM growth of 124 bps reported for the period.

Non-Fund based income

The Bank recorded a significant increase of 69.9% in its net fee and commission income (NFCI) in 1H 2022 compared to the same period of the previous year. NFCI is made up of income from a variety of sources, including loans and advances, credit cards, trade, and electronic channels. In the period under review, significant growth was noted in card-related business volumes and as well as fee and commission income from trade-related activities.

During the first half of 2022, net other operating income increased to Rs 16 Bn, an unprecedented 378% increase compared to Rs 3.4 Bn recorded in the corresponding period of the previous year. This was mainly due to the 80% depreciation of LKR against US Dollar. Meanwhile, the Bank posted a net trading loss of Rs 2.5 Bn, compared to the gain of Rs 46 Mn reported during the corresponding period of the previous financial year. Total exchange income for the first six months of 2022 was Rs 13 Bn compared Rs 3 Bn registered in 1H 2021.

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