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Midweek Review

Micro Credit (Finance) – Facts and fallacies

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By Chandrasena Maliyadde

Perhaps, microcredit to some and microfinance to others is the term used, misused and abused in many recent discourses on economic recovery, after the COVID 19 pandemic. Policymakers, practitioners, economists, researchers, analysts, think tanks, banks, financial institutions, journalists, chambers, and INGOs are among the discussants. They explain and argue the importance of micro credit in alleviating poverty, uplifting Micro, Small and Medium Enterprises (MSMEs), and empowering women (as if they were not already) for the purpose of enhancing the contribution, employment and social welfare status of the low-income category of the population. MSMEs, indeed play a major role in most economies, both developed and developing, in creating jobs and reducing unemployment. Thus, they contribute to national income, employment, productivity and entrepreneur development.

The agencies and individuals involved in promoting, facilitating and providing “microcredit”, turn around the term in many dimensions to see the vistas of it. Some say it is not microcredit but micro- finance; some are worried about its nature; others discuss types, composition, with or without collateral, which should or can best deliver, the role of the government, the Central Bank, banks and financial institutions, and NGOs, for what purpose, at which interest rate and so on. According to them, the MSMEs and lower-income categories are badly in need of financial assistance and to be more specific, extended credit facilities on concessionary terms.

Several discussants beat the number of potential beneficiaries! The banks and financial institutions have, on the other hand, come out with a series of concessionary credit schemes under names never heard. They claim to be the first, to be the highest, to be providing the best terms, to be the most convenient, to be the easiest access, and to be leading in assisting MSMEs and low-income category. The credit they claim for their contribution in providing financial assistance to this category is much higher than the volume of credit they provided. If one analyses the schemes and statistics provided by banks and financial institutions and the figures published by the Central Bank (CBSL), no more financial need of this category is left unmet. Banks, Financial institutions, CBSL, policymakers and the Government happily talks of their achievements and success in providing credit facilities to low-income categories. But, the intended beneficiaries are not happy. Why?

The answer lies in the following section of an advertisement published by one of the benevolent banks in a daily paper. This depicts how a Micro Finance recipient begins and ends his/her entrepreneurship.

“Whereas Mr./Ms.……………………has made default in payment due ………………………………on the development loan facility extended and the Board of Directors of……………….Bank ………., do hereby resolve that the property and the premises ……………………….mortgaged …………………..be sold by Public Auction ……………………for the recovery of the said sum………………………….”

As students of economics, we learned four factors of production, namely Land, Labour, Capital and Entrepreneurship. An entrepreneur is a person who takes a risk and combines the other three factors of production – land, labour, and capital – to earn a profit. The most successful entrepreneurs are innovators who find new ways to produce goods and services or who develop new types of goods and services to bring to market. Entrepreneurs are a vital engine of economic growth helping to build the largest firms in the world as well as the small businesses in our neighbourhood. The payment to entrepreneurship is profit. Most MSMEs and low-income category enterprises in Sri Lanka are not making profits. The explanation lies in the lack of entrepreneurship. Only a fraction of MSMEs and low-income category are entrepreneurs. To our policymakers, CBSL, banks, donors, project staff, NGOs and many others, each and every individual in the low-income category who starts up a business or a production is an entrepreneur. In their eyes, the only issue faced is the shortage of capital. This is a misconception. The issue is not lack of capital but the absence of entrepreneurship. When the government, a Bank, an NGO or any other financier extends credit facilities and financial packages, MSMEs are mushrooming. But rarely found an entrepreneur among them.

The majority of those in the low-income category have access to land. It is the land inherited, gifted, transferred, titled, leased or encroached. They have their family labour. Two vital factors of production, land and labour are available free. The opportunity cost of these factors is not reflective in their cost calculation. Earnings, minus payment of interest, are profit for them. So, they are in business but do not sustain their venture long. Then they seek concessionary financing. They pay the interest and capital installments during the initial period and then only the interest and then nothing. Then they resort to distress financing. This is the saga of many low-income category entrepreneurs. Banks and financial institutions have no mechanism to assess the project viability and the entrepreneurship of the borrower. They go by the cash flow statement and the collateral. They are worried about the repayment.

The eligibility criteria for microfinance are poverty, being in the low-income category or a small businessman and being a woman. It is true that a poor individual who used to carry a box of ointments on his head and wandering on his foot has built up an empire. It does not mean that every man who carries a box on his head would end up as a business tycoon. Women are indeed honest, do not take alcohol, do not smoke, do not gamble, do not misuse funds and repay the loan promptly. They are all good deeds but do not mean that every woman is a successful entrepreneur. Those in the categories mentioned above deserve a decent livelihood. But it does not mean that they all can become successful entrepreneurs and are eligible for microfinance. But those who promote facilitate and provide microfinance, believe these good deeds as eligible criteria. They have failed to identify potential eligible entrepreneurs and promising projects for microcredit. This is reflected in the frequent failure of many micro small-medium business ventures. They cannot resist and survive the vagaries of climate change; they are not capable of identifying a product, quantity, standards, design, market needs, market size, regularity, and timing; they lack knowledge, information, technology and more the entrepreneurship. This is good breeding grounds for our policymakers and all other microfinance lovers. The lucky guy who manages and has the patience to undergo all the harassment involved in microfinance will get the facility and copy the neighbour. This is why you see many retailers, poultry producers and pumpkin growers around; suppliers/producers surpass the buyers. Competition among producers will end up with crashing of some if not all and with disputes or as the latest trend with a death.

When we travel outstations, we identify some places with particular products such as pottery, lace, silverware, cane, handicrafts, cotton products and coir products. Most of these products are not chosen but inherited by tradition coming over generations. Access to information, technology, design, packaging, market is denied to the low-income categories. They, therefore, go by tradition, what is familiar to them for generations, what is produced by the neighbour, what is promoted by extension workers, etc. They are not competent in identifying the right product for his enterprise. They produce but do not find a market for their products. For them, famous Say’s Law “Supply creates its own demand” is valid. Say’s Law was promulgated by J B Say, the French Economist in the 18th Century but rejected long before. These types of producers are the so-called eligible borrowers for microfinance providers.

From time to time, government on the Central Bank, to a particular ministry’s donor-funded Project or an NGO comes out with a package of financial assistance for the benefit of MSMEs and low-income category. This category includes cultivators (peasants and farmers include), home gardeners, smallholders, self-employed, micro, small-medium entrepreneurs, and beneficiaries covered by poverty alleviation programmes. They all display similar characteristics and face similar issues. They all line up and come out with a project seeking financial assistance. Policymakers and others involved in microcredit provide consultancy, counselling, advice, instructions, guidelines to this category of beneficiaries on wiser use of financial assistance. Financial needs of this category take a multiple nature. It may be individual, family, social or business need or a mixture of several. They seek financial assistance for a project but use to meet any or all of these needs. Their project never existed or existed but not survived. They wait for another project or a scheme to appear to secure financial assistance and they succeed and settle the encumbrances remaining from the previous scheme. Being blessed by reaching middle-income level by statistics rather than by performance, the country has lost access to foreign-funded projects. But, the country is blessed by frequent elections which come with many packages of new schemes to assist MSMEs and low-income category and write off existing burdens.

We, benefactors, preach to this category of beneficiaries on wiser use of financial assistance they receive. We are the people who involve in preparation of national budget or the ministry budget leaving handling of the family budget in good hands of our wives. We are the people who wisely use some financial benefits entitled to us. For instance, we are entitled to obtain a distress loan. We take it to settle the medical bills of our “ailing grandfather” who has left us many years ago. We use the money and buy a good sound system. We are unable to make ends meet with the remainder of the salary after deduction of interest and the loan installment. We go for a second distress loan to meet the funeral expenses of the same grandfather. We don’t offer merits to our late grandfather. We are rolling before the sound system, while the grandfather would be rolling in his grave.

Low-income category entrepreneurs including MSMEs do not have the capacity, access and information to identify a viable product. The product in demand, quantity, quality, standards, volume, price, regularity, timing, access to market, new ideas and technology, knowledge, skills and skills development, designs, packing and packaging (presentation), market needs are essential ingredients to identify the right product. One would say why not? Google provides all such information. Of course, Google provides but our prospective clients do not receive. It is due to non-availability of power, internet facilities, computers, IT knowledge, and language barriers. The use of obsolete or inappropriate technology results in low productivity, low quality, and high rate of rejection, higher costs and a reduction in market competitiveness.

Successive governments since independence have introduced many schemes, institutions, programmes, projects and officers with the mandate to assist, advise, train, disseminate, share, demonstrate, and promote MSMEs and raise the economic status of low-income category. There are armies of advisors, extension officers, technical officers, development officers and field officers. Yes, the personnel are present but the service is absent. There are Departments, Agencies, Boards, projects to provide information and advice on plants, planting materials, planting techniques. But their presence on the ground is absent. We have Research institutions for almost every crop. They are in air-conditioned rooms with IT facilities and access to the latest knowledge. They can claim the credit for having the lowest productivity in respective crops. While the countries started plantation after Sri Lanka enjoy higher productivity in tea, rubber, coconut, field crops, spices we take the pride for our historical achievements. We have failed to improve the cost efficiency, standards, timing to suit the market. Most of the agencies walk with the producer up to the harvest and leave him high and dry. Because marketing is outside their perimeter.

Activists, policymakers, practitioners, academics, donors, NGOs, project managers, including Prof. YUNUS, think that lower-income categories have land and labour but not capital. But what they do not have is entrepreneurship. Every poor man or Each MSME is not an entrepreneur. This is why most of them fail. Professor Muhammad Yunus, who is widely known as “Banker to the Poor” established the Grameen Bank in Bangladesh in 1983, fuelled by the belief that credit is a fundamental human right. Grameen Bank is treated as the model for microcredit. He received the 2006 Nobel Peace Prize for founding Grameen. But critics say that this model has actually created a debt trap for some of the poor it tried to help. There were also isolated reports that lenders had repeatedly harassed borrowers, and that some of those who had defaulted had been forced to sell their organs to pay back the loans.

Low-income categories and MSMEs encounter many issues as described above. This is due to lethargy, and lack of coordination among supporting and facilitating agencies in the field. Each agency is working in isolation. They do not communicate, consult and deliver one single message. They confuse rather than facilitating. MSMEs and low-income category entrepreneurs do not have access to supporting agencies, such as ITI, IDB, and National Design Centre. These agencies have survived for decades; they have been conducting research; presented papers in Conferences; conducted fairs and exhibitions; awarded certificates and cups for the best entrepreneurs; they have built up modern facilities and new buildings for themselves; promoted their officers; have been exposed in a foreign land; Directors have become Directors General. They celebrate their mere existence with Anniversary events at public expenditure. But, the impact made on the ground is nil or little. Intended beneficiaries of their services are not even aware of the very existence of them.

Successive governments have provided employment to graduates as development officers. This move has elevated unemployed graduates to underemployed graduates. But, the livelihoods, earnings and the living standards of the low-income categories have not been elevated.

Officers, researchers, policymakers, bankers, lenders go by poverty line. Those who are below the poverty line are poor and in the low-income category and eligible for microfinance. Economists and policymakers look at the poverty line calculated by Statisticians and boast that poverty has come down to 4% of the population. But they fail to look at the waistline of the people living in the periphery. That will say ratio of the poor is 40%.

Chandrasena Maliyadde has served as a Secretary to three Ministries before his retirement. He is currently a Vice President of Sri Lanka Economic Association and a University Council Member. He can be reached via chandra.maliyadde@gmail.com

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Midweek Review

20 A: Govt. takes a step back…

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Justice Minister Ali Sabry, PC, receiving his letter of appointment from President Gotabaya Rajapaksa.

 

By Shamindra Ferdinando

Samagi Jana Balavegaya (SJB) National List nominee, Attorney-at-law Shiral Lakthilaka, teamed up with the editor of Anidda, Attorney-at-law K.W. Janaranjana, on August 9, 2020, on Derana ‘Aluth Parlimenthuwa’ to target the proposed 20th Amendment to the Constitution. They took on former President of the Sri Lanka Bar Association (BASL) U.R. de Silva PC, and Attorney-law-Kanishka Vitharana.

The writer participated in the live two-hour discussion, anchored by Attorney-at-law Sanka Amarjith. The programme dealt with 19th and 20th Amendments.

During the debate, both De Silva and Vitharana acknowledged the need to amend the proposed draft 20th Amendment. The former President of the BASL revealed that Justice Minister Ali Sabry PC accepted the need to retain Article 53 of the Constitution which required Ministers to take an oath against separatism. De Silva said so in response to the writer seeking an explanation why such a dangerous lapse was allowed to slip through by the SLPP (Sri Lanka Podujana Peramuna).

The writer pointed out even the treacherous yahapalana administration, that betrayed the war-winning armed forces, in Geneva, in Oct 2015, didn’t let through something so obvious.

The National Joint Committee (NJC), in a statement issued on Sept. 6, 2020, raised the issue in respect of Article 53 of the Constitution. The NJC said: “We are astonished at the decision of the Government to amend Article 53 of the Constitution which mandatorily requires Ministers to take the oath against supporting and promoting a separate state, (i.e. the 7th Schedule introduced by the sixth amendment) and by restricting it to the original oath prescribed in the fourth schedule. Article 61D of the proposed amendment; too, require the public officers to take the fourth schedule oath that existed in the original Constitution and not the oath prescribed in the seventh schedule introduced by the sixth amendment.”

The NJC also emphasized the urgent need to repeal the 13th and 16th Amendments. The Sept. 6 statement was the second issued by the NJC, on the same matter.

The writer, on Sept, 10, 2020, raised serious concerns expressed by the National Joint Committee (NJC), Federation of National Organizations (FNO) and Manohara de Silva, PC, at the post-cabinet media briefing, at the Government Information Department. The media received an assurance from Co-cabinet spokesperson and Pivithuru Hela Urumaya (PHU) Leader Udaya Gammanpila that the government would definitely look into concerns expressed by nationalist groups and Sri Lanka’s Ambassador in Myanmar Prof. Nanlin de Silva.

Cabinet spokesperson Keheliya Rambukwella and other co-cabinet spokesperson Dr. Ramesh Pathirana did not comment on the matter. Prof. De Silva strongly criticized some sections of the 20th Amendment. The academic, in a statement sent to The Island, alleged that the media didn’t provide sufficient coverage to his concerns.

 

SJB et al exploit 20 A

The continuing controversy over the 20th Amendment drastically changed the political situation. Unexpected opposition from even those who campaigned against the yahapalana administration, throughout its rule, really unsettled the SLPP. The badly depleted Opposition received a tremendous boost, by way of the 20th Amendment, replete with obvious flaws. The main Opposition SJB swiftly exploited the situation to its advantage.

Lakthilaka, who had been an advisor to the then President Maithripala Sirisena, before switching allegiance to the SJB, expertly demolished the draft 20th Amendment. The prominent civil society activist, however, repeatedly emphasized that he solidly stood for the presidential system of governance though he strongly disliked, what he termed, President Gotabaya Rajapaksa’s move to secure dictatorial powers for himself, at the expense of the Parliament.

The writer asked those who backed the 19th Amendment whether the public demanded an elected President, deprived of the right to hold a defence portfolio? Having pointed out that the draft 20th Amendment accommodated some key features in the 19th Amendment, such as five-year terms for both the President and Parliament and two-term limit for a person to hold presidency, the writer reiterated concerns expressed by those who backed Gotabaya Rajapaksa and the SLPP at the Nov. 2019 presidential and Aug 2020 general election, respectively.

Dr. Gunadasa Amarasekera, on behalf of the FNO, on Sept. 09, 2020, requested President Gotabaya Rajapaksa to review the proposed 20th Amendment to the Constitution. Dr. Amarasekera requested the President not to abolish Article 53 of the Constitution and raised matters related to the formulation of a new Constitution.

The FNO asked the SLPP government to establish a mechanism to (1) accept public proposals as regards a new Constitution (11) suspend Provincial Council polls until the enactment of the new Constitution and (111) far reaching alterations to the proposed 20th Amendment approved by the Attorney General before the Government Printer issued the relevant gazette.

The FNO also called for rectification of technical and wrongful policy decisions, in addition to members of the cabinet given an opportunity to provide comments, in writing. Having rectified mistakes, the government would have to amend the draft 20th Amendment and re-gazette it, Dr. Amarasekera told the writer.

The civil society group emphasized that it would be a mistake to bring in amendments at the committee stage as it could create a situation, similar to that of the passage of the 19th Amendment.

The FNO also requested the following provisions altered: (1) do away with the proposal in the 20th Amendment to reduce the number of days from 14 to seven available for the public in respect of enactment of urgent bills (ii) abolish provisions relating to the enactment of urgent bills as successive administrations abused them (iii) rescind the proposal to amend Article 53 of the Constitution which required members of Parliament to take an oath against supporting and promoting a separate State (iv) remove proposal to allow dual citizens to enter Parliament. In addition, it urged the government to extend that law to cover the Governor of the Central Bank, Attorney General, IGP, Auditor General, Service Commanders, Judges of the Supreme Court, and Secretaries to Ministries and (v) abolish the move to do away with the National Audit Commission and also to ensure that no state institution is exempted from audits.

The FNO appreciated the SLPP decision to retain the two-term limits on presidency as well as the five-year terms for both the President and the Parliament.

 

BASL, PM step in

Interventions made by nationalist organizations didn’t receive sufficient coverage in both the print and electronic media. Some sections of the media conveniently refrained from reporting their concerns.

Amidst growing opposition to the much touted 20A, because of its glaring flaws, the BASL, on Sept. 11, 2020, appointed a special 14-member committee, headed by Nihal Jayamanne PC, to inquire into the 20th Amendment. Secretary to the BASL, Rajeev Amarasuriya, in a statement, explained that the Jayamanne committee would also address law’s delays and other related matters undermining the administration of justice. The committee also comprises Ikram Mohamed PC, M.M. Zuhair PC, L.M.K. Arulanandam PC, Prasantha Lal de Alwis PC, Nihal Jayawardene PC, Nalin Ladduwahetty PC, Maithri Wickramasinghe PC, Uditha Egalahewa PC, Anura Medagoda PC, Mohan Weerakoon PC, S.T. Jayanaga PC, Priyal Wijayaweera PC, and Maurapada Gunawansha,PC. Ravi Algama and Shantha Jayawardena are its convenors.

Among the group, M.M. Zuhair is the only former Member of Parliament. Zuhair represented the People’s Alliance (PA) as a National List member, during Chandrika Bandaranaike Kumaratunga’s tenure as the President. It wouldn’t be too hard to reach a consensus on required amendments to the proposed 20th Amendment.

The current political leadership, the Opposition and the BASL, should take into consideration concerns raised not only by nationalist groups but those who backed the enactment of the 19th Amendment to the Constitution, in early 2015. Having made the UNP project to dilute powers of the President, by way of the 19th Amendment, a reality, SLFP leader Maithripala Sirisena, as a candidate at the 2020 general election, campaigned for the abolition of the same.

Let us hope that the Executive Committee of the BASL and the Bar Council act on recommendations made by Jayamanne’s committee. The BASL announcement made it clear that the 20th Amendment is a flawed document, though the Attorney General cleared it, in terms of the Constitution. The AG asserted that the 20th Amendment could be adopted by a two-thirds majority in Parliament, sans a referendum.

Regardless of that, in addition to the Opposition, and some sections of the civil society, the government, too, realized the rapidly developing crisis, caused by the draft 20th Amendment.

Despite having secured a historic near two-third majority last month, the SLPP self-inflicted a major injury by way of the draft 20th Amendment. Premier Mahinda Rajapaksa’s decision to name a nine-member group, consisting of SLPP lawmakers,to examine the draft 20th Amendment, is also evidence that in its current form the draft is a flawed document. The Premier’s Office made the announcement on Sept. 12.

The Premier’s team comprises SLPP Chairman and Education Minister Prof. G.L. Peiris, Justice Minister Ali Sabry PC, PHU leader and Energy Minister and Attorney-at-law Udaya Gammanpila, Labour Minister and Attorney-at-law Nimal Siripala de Silva, Jathika Nidahas Peramuna leader and Industry and Commerce Minister Wimal Weerawansa, Education Reforms, Promotion of Open Universities and Distance Learning State Minister and Attorney-at-law Susil Premajayantha, State Media Minister Sathasivam Viyalendran, MP Dilan Perera and MP and Attorney-at-law Premanath C. Dolawatte.

Nimal Siripala de Silva represents the SLFP whereas the appointment of Viyalendran, a former Tamil National Alliance lawmaker, is significant.

Premier Rajapaksa called for the report by Sept 15, according to his office. However, Minister Weerawansa, on Saturday (12), said that examination led to the SLPP paying a huge price for not being tactful in handling the 20th Amendment. However, the SLPP’s readiness to address the concerns, raised by various parties, should be appreciated and recognized as a positive development to openly accept shortcomings, when pointed out.

 

Prez Gotabaya’s response

President Gotabaya Rajapaksa, on Friday (11), assured Manohara de Silva, PC, and SLPP National List member Gevindu Cumaratunga, of his readiness to submit a fresh draft by rescinding the controversial current draft of the 20th Amendment. The President’s Counsel, and the MP, met the President, on behalf of the National Joint Committee (NJC) and civil society group Yuthukama. The assurance was given in the wake of Prime Minister Mahinda Rajapaksa, too, assuring SLPP coalition partners a new draft would be presented in Parliament. The Premier’s move was revealed by Minister Wimal Weerawansa, at a public rally he addressed, at Avissawella, a on Saturday (12).

The government responded quite wisely by deciding to withdraw the draft 20th Amendment, amidst the Opposition, and those opposed to the SLPP, exploiting the situation to their advantage. The SLPP struggled to cope up with the Opposition attacks as well as criticism directed by several civil society groups.

Polls monitoring group PAFFREL (People’s Action for Free and Fair Elections) warned the SLPP that though the coalition secured a nearly two-thirds majority, at the recently concluded general election, it was not empowered to introduce whatever it desired. In a strongly worded statement, issued on Sept. 13, PAFFREL’s Executive Director Rohana Hettiarachchi pointed out that the electorate twice endorsed the SLPP’s move to abolish the 19th Amendment. However, the SLPP shouldn’t abuse the people’s mandate to introduce an Amendment merely to suit its agenda, regardless of hostile public sentiment. While recollecting how only UPFA lawmaker Rear Admiral (retd.) Sarath Weerasekera voted against the 19th Amendment in 2015, Hettiarachchi urged members of the 9th Parliament not to do anything they would regret later.

Transparency International Sri Lanka (TISL), too, expressed serious concern over the proposed 20th Amendment when its Executive Director Asoka Obeyesekere recently explained how the proposed law could undermine the monitoring of public spending, Commission to Investigate Allegations of Bribery or Corruption (CIABOC), curtailment of the Election Commission’s powers and operation of RTI (Right to Information) Law.

Obeysekere didn’t mince his words, at a recent media conference at the TISL office, where he declared: “The proposed 20th Amendment also removes the Audit Service Commission and National Procurement Commission, key institutions intended to act as a check on public spending. By removing any mention of the Audit Service Commission, the proposed 20th Amendment effectively renders the National Audit Act obsolete. The National Audit Act provides the Audit Service Commission with considerable powers, including the ability to impose surcharges on public officials, who cause losses to the state. The removal of the Audit Service Commission will invalidate this essential power.

Despite the mandate of the National Procurement Commission not being fully operationalized, the existence of the institution is nonetheless important to ensuring a transparent and accountable procurement structure. Public procurement is a high-risk area for corruption. Whilst recognizing the importance of the President’s own commitment as clearly enunciated in his manifesto to eradicate corruption and promote efficiency, we call on the government to recognize the importance of the institution of an independent procurement commission to realize this commitment.”

The TISL refrained from commenting on other contentious matters, such as the proposed setting up of a five-member Parliamentary Council in place of the highly flawed 10-member Constitutional Council, abolishing limit on the number of cabinet and non-cabinet ministers, doing away with the prohibition on dual citizens to contest parliamentary election, denying the citizens right to file fundamental rights cases against the President, naming the Attorney General as the respondent. Many an eyebrow was raised when the age limit of those seeking the Office of the President were lowered to 30. Some of the provisions in the 20th Amendment disappointed the public. In fact, the proposed 20th Amendment diminished the importance of restoring the President’s right to hold a defence portfolio by resorting to a despicable political agenda. The SLPP could have easily avoided the embarrassing situation if the proposed amendment was at least discussed among members of the cabinet, as well as the parliamentary group. There hadn’t been a genuine effort, within the SLPP, to reach a consensus on the vital amendment. In fact, the SLPP could have easily discussed the matter informally with the parliamentary opposition. The consensus with the Opposition could have been reached, especially against the backdrop of the SLPP retaining three key provisions in the 19th Amendment, namely restriction of the number of presidential terms to two and five-year tenure for the term of the President and the Parliament.

The crisis over the 20th Amendment should be examined also taking into consideration the SLPP MP-elect for the Ratnapura District, Premalal Jayasekera, taking oaths as a Parliamentarian, on Sept, 8, 2020, subsequent to the Court of Appeal taking a stand, contrary to that of the Attorney General. State Minister Sanath Nishantha’s brother Jagath Samantha caused media furore by destroying a part of Ramsar wetlands at Anavilundawa. Former Chairman of Arachchikattuwa Pradeshiya Sabha Jagath Samantha is alleged to have got part of the sanctuary bulldozed to establish a shrimp cultivation centre. This was revealed by a ministerial committee that inquired into destruction of the wetlands. Wildlife and Forest Conservation Minister C.B. Ratnayake, and some of his officials, recently struggled before the media. State Minister Nishantha, having admitted to President Gotabaya Rajapaksa, when inquired from him about the Anavilundawa incident, however denied responsibility. The State Minister refrained from mentioning his brother being wanted by the police in that regard. The destruction of a part of a historical building, allegedly at the behest of the Kurunegala Mayor Thushara Sampath, also did immense damage to the SLPP, regardless of action taken by the government to save face.

The SLPP needs to review its strategies or prepare to face the consequences. What is really praiseworthy about the line up behind this government are the brave faces among its frontline partners who are willing to call a spade a spade to correct things in the bud as is proved by their willingness to speak out to correct those at the helm for the good of the nation, where necessary, as in the case of 20A, or rape of the environment.

 

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‘Elina wanted Premadasa to succeed JRJ’: correction

 

 

In last week’s Midweek article, titled ‘Elina wanted Premadasa to succeed JRJ’, on the Sept. 09 edition of The Island, the writer inadvertently identified Lilani de Silva as an aide to Elina Jayewardene. Lilani is a neighbour of the Jayewardenes. The relevant section should read as: ‘Elina Jayewardene’ is based on interviews with several persons, including Pradeep Jayewardene, Rukshan Amal Jayewardene (the second grandchild JRJ and Elina), Charmaine Mendis, first wife of late Ravi Jayewardene (their only son), close relatives, Professor Asvini Fernando and Lakshmi Suneetha Subasinghe. The author also interviewed Dr. Sathis Jayasinghe and Nalini Mapitigama. In addition to them, the author talked to several female aides, who had been with EJ until the very end. Among them were Galahitiyage Lilawathie and Hettiarachchige Magilin and the Jayewardene’s immediate neighbour, Lilani de Silva. The Jayewardenes’ third grandson Amrik, hadn’t been so excited about the brief biography about their late grandmother, and the author did not get an opportunity to speak with him. The author also quoted from the work of the late senior government servant, Amara Hewamadduma. The error is regretted.

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Midweek Review

Genealogy of Concept and Genesis of 13th Amendment-1

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By Prof. Gamini Keerawella

Those who oppose devolution of power are up in arms now against the 13th Amendment, believing that the Provincial Council system has created a political space for the sub-national groups in the North and East to share power at the regional level. They allege that the 13th Amendment was an externally engineered move, and the Provincial Council system is a parasitic organ planted in the body politic of Sri Lanka by India and, therefore, they should be abolished without delay.

When one traces the chain of dramatic events leading to the 13th Amendment, it is clear that the immediate compulsion that forced President J.R. Jayewardene to present the 13th Amendment to the Parliament was India’s coercive diplomacy against Sri Lanka, which was known as ‘Parippu Diplomacy.’ However, the concept of devolution of power and the idea of Provincial Councils as a unit of devolution had been at the centre of political discourse well before the Indo-Sri Lanka Peace accord, at least from the 1920s. The Provincial Councils did not come from the blue sky with the Indian dhal cannon in 1987. The concept of devolution had surfaced again and again in the post independent political discourse in the course of sporadic attempts to accommodate political interests of sub-national groups. However, the manner in which the Provincial Council system was established in 1987 and the presence of the IPKF destroyed the legitimacy of the provincial council system at its inception. It does not negate the validity of devolution of power as a devise of unity in a fractured society. This essay intends to debunk certain misperceptions relating to the origins of the Provincial Council system by tracing the genealogy of the political discourse on devolution of power embodied in the 13th Amendment.

The conceptual origins of the Provincial Councils could be traced back to the Donoughmore Report in 1928. Conceptualizing it within the framework of local government, it presented a proposal to establish Provincial Councils to delegate certain administrative functions of the Central Government. More important is the rationale presented by the Donoughmore Commission for Provincial Council in 1928.

The argument in favour of the establishment of a Provincial Council in each Province is that such a scheme might result in a large part of administrative work now carried out in the Legislative Council coming into the hands of persons permanently resided in the country districts and thus more directly in contact with their needs; in the relief of the departments of the central government of much detailed work and in their being thereby set free to consider and advise on the larger affairs of the country: in the special views of the different races predominant in the different part of the Island having effects in the administration of these parts; in members of growing body of politically-minded persons in the country being placed in an honourable position to render real assistance in administration.

The Commission recommended that the new department without delay should explore the possibility of establishing Provincial Councils. Further it proposed that ‘an experiment with a council of this nature may be made in a more highly developed province within the next few years, and if that should prove successful, the system rapidly extended throughout the island’. The Issue of Provincial Councils came to discussion at the State Council in 1940 when R.S.S. Gunawardena proposed a motion on 10 July 1940. The The motion declared, “This Council is of the opinion that immediate effects should be given to the recommendation of the Donoughmore Commission with regard to the establishment of Provincial Councils”. Following the Motion, S.W. R.D. Bandaranaike as the Minister of Local Administration placed a detailed report of the Executive Committee of Local Administration on Provincial Councils before the State Council. It identified functions of proposed Provincial Councils in three main classes: supervisory, direct executive and advisory. The proposal was soon overtaken by other developments relating to the transfer of power and the issue of representation. Referring to the Provincial Councils, S. W. R. D. Bandaranaike stated in December 1947 during the Budget Debate that: “I do not think I shall be able to introduce the Bill relating to Provincial Councils before January next year. The Bill is ready, but as it impinges on the functions of my colleagues in the Cabinet, I have to obtain their consent to all the implications of the Bill before I can introduce it in this House”. It is important to note that even in the 1940s the Tamil leadership had not taken the issue of Regional Councils and devolution of power to regions into their hands.

When the transfer of power to Sri Lanka was in sight after the 1943 Declaration, the issue of how to reconcile the competing claims to present a constitutional arrangement satisfactory to all stakeholders came to the forefront. The 1943 Declaration requested the Board of Ministers to proceed with the framing of their constitutional proposals. At the same tine it emphasized that the proposals should obtain a three-fourth majority. One of the key issues that cropped up in this process was the basis of representation. Both, the purely population basis as well as communal representation were found to be not acceptable. Accordingly, the method of one seat for every 75,000 of population and one seat for every 1,000 square miles of territory in each province was worked out. It was at this point the British Government appointed the Soulbury Commission. The Tamil Congress under G.G. Ponnambalam was not prepared to accept the Ministers’ proposals and presented their own instead. After the experiences of the Donoughmore Constitution, the main Tamil leadership insisted on balanced representation, i.e. fifty percent of the seats for minorities including ‘Ceylon Indians’ – term used then to identify the Tamils of Indian origin. As I. D. S. Weerawardena pointed out when the Ministers drafted their proposals they pledged to give some weightage to all the minorities. S.W.R.D. Bandaranaike offered a scheme of 60:40 as a basis of representation. The proposals of the BOM were accepted by the Soulbury Commission and incorporated into the new constitution. In I. D.S. Weerawardena’s words, “From the point of view of the minorities, the new Constitution of Ceylon was the point of balance among the various conflicting communal claims”. Ultimately, the Tamil Congress of G.G. Ponnambalam agreed to settle for the unitary form of constitution with balanced representation based on 60:40 formula negotiated by S.W.R.D. Bandaranaike on behalf of the Ceylon National Congress. The one of very first acts of the rulers of Independent Sri Lanka disrupted this balance setup by the Soulbury Constitution ‘among the various conflicting communal claims’. The Citizenship Acts of 1948 and 1949 changed the political scenarios. This move not only made the earlier formula of distributing seats to provinces meaningless but also created an unresolved issue between Sri Lanka and India, leaving room for India to intervene. “The Soulbury Constitution received minority support (without which it could not have been implemented) because it arranged to enable the minorities to win a certain number of seats. The Ceylon Indians were among these minorities. To deny them the vote is to deny them the seats. One moral undertaken has been done away with. To deny the vote to Ceylon Indian is also to reduce the total number of seats available to all minorities. That is a broken pledge to all minorities…. The moral basis of the Soulbury Constitution has been wiped away. To attempt to prove the constitutionality of the position is not to attempt to prove its justice”.

Its implications for the new political environment as well as for Tamil political circles were far reaching. Within the Ceylon Tamil Congress a group led by S.J.V. Chelvanayakam left the party to form the Federal Party on a regional agenda. At first, however, the regional agenda put forward by the Federal Party did not have any serious impact on Tamil politics and in the 1952 general elections the regional agenda was clearly rejected by substantial margins in the North and East in favour of the Ceylon Tamil Congress candidates. This situation rapidly changed in the period 1952-1956.

In 1955 the Commission of Local Government was appointed with N.K. Choksy as its Chairman. In its report the commission admitted that there was a strong support in favour of the establishment of Regional Councils in the country. However, the Commission strongly presented the case in favour of the Provincial Committees and not Regional Councils.

The phenomenon of regional councils based on existing provinces came into political discourse once again in the history of post-Independence Sri Lanka in 1957, with the Bandaranaike-Chelvanayakam Pact, three decades prior to the 13th Amendment. Part –B of the Pact contained the Joint Statement on Regional Councils. According to the provisions of the agreement regional areas were to be defined in the Bill and the Northern Province was to form a regional area but the Eastern Province was to be divided into two or more regional areas.

 

Provision was to be made in the Bill to enable two or more regions to amalgamate beyond the provincial limits and for one region to divide itself subject to ratification by Parliament. Parliament was to delegate powers and specify them in the Act. The Central government would provide block grant to the Regional Councils. At the same time, the Regional Councils would have powers of taxation and borrowing.

The unilateral abrogation of the B-C Pact in the face of articulate small group of political activists belied an early opportunity of accommodating the interests of sub-national groups. Bandaranaike did not address the broader constituency over the heads of these elements using his mass appeal to save the B.C. pact. In the face of a lack of support within the government quarters itself, Bandaranaike did not have courage to confront the anti-Pact forces. What happened to the B-C Pact is now well known. However, the political dynamics of post-colonial Sri Lanka linked with multi-ethnic social reality did not allow burying the basic principles embodied in the B-C Pact and they conjured up again and again in different garb.

The UNP, which took to the streets in opposing the B-C Pact was forced to come to terms with the Federal Party in 1965. The Senanayake-Chelvanayakam Agreement of 1965 covered three issues: the language rights of the Tamil people, granting of land in colonization schemes and regional devolution of power. According to Article 3 of the Agreement, “Action will be taken to establish District Councils in Ceylon vested with powers over subjects to be mutually agreed upon between the two leaders. It was agreed, however, that the Government should have power under the law to give directions to such Councils under the national interests”.

The main Left parties (the CP and the LSSP) who were the champions of equal language rights in their good old days now joined hands with the SLFP to oppose the Tamil Language (Special Provisions) Regulations. In the light of the antipathy created by the opposition in the country, the UNP-led coalition government was faltering in presenting District Councils provisions to the Parliament. Ultimately a White Paper on proposals for the establishment of District Councils under the control of the central government was presented to the Parliament in 1968. The SLFP boycott the debate at the Parliament and campaigned against it outside. In view of a possible backlash on the part of the Government caucus itself, Prime Minister Senanayake decided not to go ahead with the White Paper.

It is important to note that Mrs. Bandaranaike also had to grapple with the issue of regional devolution of power. S.J.V. Chelvanayakam resigned his seat in protest following the adoption of the first Republican Constitution. After much delay the UNF government decided to have s bye-election in1975. The United Front decided to field V. Ponnambalam, a veteran Communist Party member against Chelvanayakam. Despite the unfavourable political climate in the country in general and in the region in particular, V. Ponnambalam fared comparatively well (9457) vis-à-vis Chelvanayakam (25,927). After the bye-election, V. Ponnambalm resigned from the C.P. It was later revealed that Ms Bandaranaike had promised V. Ponnambalam that a statement will be issued before the Election Day promising regional devolution. Santasilan Kadirgamar refers to the book Senthamilar Ahuvom written by V. Ponnambalam in which he reasoned out why he resigned from the C.P. According to Kadirgamer, “he revealed how he and the Tamil supporters of the left movement who had worked hard at the 1975 bye-elections had been severely let down. The United Front had given him the assurance that 48 hours before the poll the Kankesanturai electorate would be flooded with pamphlets promising a substantial degree of autonomy to the North and East, that would gone beyond the abrogated Bandranaike-Chelvanayakam Pact of 1957. At the last minute the SLFP high command went back on this promise and the CP leadership succumbed to this betrayal”. (To be concluded)

 

 

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Midweek Review

Labs, Literature and the Driving Seat

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By Lynn Ockersz

They once told you,That there’d be National Schools,All over your far-flung wastes,At the Land’s widening margins,To give your children,Said to be enjoying,A ‘free education’ legacy,Cutting edge knowledge,Born of Labs, Literature,And mathematical ingenuity,But all that you have for yourselves,Are dimming dreams,And a citizenship of least standing,Though you’re touted as the driver of history.

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