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Pro-Poor Tourism: Can it reduce poverty in Sri Lanka?

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By Kimuthu Kiringoda

“Tourism has been described as the world’s largest transfer of resources from rich to poor, dwarfing international aid.” – Salli Felton, CEO, Travel Foundation

The tourism industry’s performance was hampered first by the Easter Sunday bomb explosions in 2019 and then the COVID-19 pandemic. Sri Lanka saw a decline in tourist arrivals from 1,913,702 in 2019 to 194,495 in 2021. It is estimated that revenue declined from USD 3600 million to USD 261 million during 2019-2021, reflecting a staggering 92.75% reduction due to a fall in arrivals.

At present, the government is severely challenged with maintaining funds for basic provisions, and expansive investments in tourism cannot be expected in the foreseeable future. In November 2021, the Ministry of Tourism released the draft National Policy on Tourism for Sri Lanka with recommendations for improvement. Among them are the promotion of sustainable local tourism in Sri Lanka and community engagement. This article discusses existing disparities in tourism and the possibility of adopting a sustainable, pro-poor tourism strategy to reduce poverty in Sri Lanka.

Poor-poor Tourism

‘Pro-poor tourism’ aims to uplift livelihoods by garnering net benefits to the poor through tourism. It is not an act of charity to help the poor but to empower them with the knowledge, skills, and recognition to utilise their existing capacities to serve in the tourism industry. While the government can provide an impetus through regulations and infrastructure, the capacities must be commercially viable and not run on government aid.

The key objective of pro-poor tourism is empowering the communities. They must be aware and proactive participants. Communities are not required to be ‘tourist destinations’ solely functioning for the purpose. Still, they can benefit from the indirect effects of tourism – for example, by increasing poultry meat sales demanded by local eateries. On the other hand, if tourist arrivals fall, the loss of revenue will have to be borne by them. Participation is voluntary, and therefore, it is the individual who must maintain a balanced approach to manage the income.

An example of government intervention is South Africa’s Broad-Based Black Economic Empowerment strategy. The engagement of marginalised communities is measured through indicators such as ownership management, employment equity, etc., to rate establishments. For instance, a considerable number of black women as a percentage of the Board of Directors will give a higher rating to the tourist establishment or be fined if it falls short. A mandated quota to include women may offer relief to female poverty.

The ‘Sri Lanka Tourism: Strategic Plan 2017-2020’ emphasises the need to uplift livelihoods through tourism, with a focus on engaging local communities, supporting local businesses, and promoting the cultural values of the country. The active participation of minorities and women in traditional arts, crafts, and cottage industries is also recognised as key aspects in the poverty-focused tourism strategy.

Existing Regional Disparities

On the ground, there is a notable regional disparity in the operations of the tourism industry. The foreign guest nights spent, as per region in 2019 shows approximately 73% of foreign guest nights are spent in Colombo and the South Coast. Foreign guest nights spent in the North are almost zero as a percentage (See Figure 1). The area that foreigners choose to reside in is important because they tend to purchase commodities in the vicinity such as local goods use local services such as transportation, laundry, food, and beverages.

The accommodation capacity of tourist hotels also indicates a regional disparity (See Figure 2). However, these numbers are only related to 474 tourist hotels. There are 2,145 other supplementary tourist establishments that provide 24,831 rooms for guests. Unfortunately, data pertaining to the regional distribution of these establishments are not available. The number can be higher where unregistered establishments might be in operation.

Increasing Local Engagement

From the above, it is evident that tourism in Sri Lanka is centred in the Western and Southern provinces and the spatial concentration in these provinces should be eased. The Northern and Eastern provinces have untapped tourism potential. For example, Anailativu and Eluvativ islands in Jaffna with kayaking, bird watching, and ferry rides can be promoted as tourist destinations. Tourist hotspots should be identified by the authorities and the responsibility of surrounding operations should be handed over to the local communities.

Conservation of such locations should also be carried out by the community in consultation with the relevant tourism and environmental authorities. The tourism authorities’ role should be confined to that of a consultant and licensor. The authorities should exercise caution in inviting large corporates for investment. The naturally preserved locations may be destroyed for accelerated profit and locals may lose the right to use their own land and resources.

Greater utilisation of the island’s seas and natural resources can be beneficial to Sri Lanka. Stilt fishing, for example, has artistic and touristic value. This does not require the fisherman to make drastic changes to his main livelihood but to earn a separate income by promoting the fishing methods. The extra income can be seasonal but necessary education and awareness can be offered to manage the livelihood along with tourist services. Governmental agencies can act as educators rather than guarantors for income/services.

Way Forward

In promoting pro-poor tourism, it is important to draw boundaries not to over-depend on tourism. Sole reliance on tourism has proven to be detrimental during travel restrictions and off-season periods where incomes dry up. The communities’ livelihoods should be shaped to cater to tourists with minimal disruptions to their normal routine. Therefore, the government’s role should be limited to providing regulatory and educational impetus rather than guaranteeing financial incentives. Empowering the communities to maintain their existing capacities and capital and developing them, are key to effective pro-poor tourism.

Link to Talking Economics blog:

https://www.ips.lk/talkingeconomics/2022/02/14/pro-poor-tourism-can-it-reduce-poverty-in-sri-lanka

Kimuthu Kiringoda is a Research Assistant at the Institute of Policy Studies of Sri Lanka (IPS) with research interests in health, labour markets, tourism, SMEs and SDGs. She holds a BA (honours) degree in Economics from the University of Colombo. She also has a Bachelor of Laws (LLB) from the University of London. Kimuthu is currently reading for an MSc in Sustainable Management offered by the University of Bedfordshire (UK). (Talk with Kimuthu: kimuthu@ips.lk)



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Lanka inflation hit 70.2% in August

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Food prices climbed 84.6 percent, while prices of non-food items rose 57.1 percent in the crisis-hit island nation.

(Al Jazeera) Consumer inflation in Sri Lanka accelerated to 70.2 percent in August, the statistics department has said, as the island nation reels under its worst economic crisis in decades.The National Consumer Price Index (NCPI) rose 70.2 percent last month from a year earlier, after a 66.7 percent increase in July, the Department of Census and Statistics said in a statement on Wednesday.

Food prices climbed 84.6 percent, while prices of non-food items rose 57.1 percent in the tourism-dependent South Asian country of 22 million people.The Central Bank of Sri Lanka (CBSL) in August said the inflation rate would moderate after peaking at about 70 percent as the country’s economy slowed.

The NCPI captures broader retail price inflation and is released with a lag of 21 days every month.The more closely monitored Colombo Consumer Price Index (CCPI), released at the end of each month, rose 64.3 percent in August. It acts as a leading indicator for national prices and shows how inflation is evolving in Sri Lanka’s biggest city.

Sri Lanka’s economy shrank 8.4 percent in the quarter through June from a year ago in one of the steepest declines seen in a three-month period, amid fertiliser and fuel shortages.

“Inflation is expected to taper from September,” said Dimantha Mathew, head of research for Colombo-based investment firm First Capital. “However, inflation is only likely to moderate and reach single digits in the second half of 2023.”

An acute dollar shortage, caused by economic mismanagement and the effects of the COVID-19 pandemic, has left Sri Lanka struggling to pay for essential imports including food, fuel, fertiliser and medicine.

The country earlier this month reached a preliminary deal with the International Monetary Fund for a loan of about $2.9bn, contingent on it receiving financing assurances from official creditors and negotiations with private creditors.

India on Tuesday said it had begun talks with Sri Lanka on restructuring its debt and promised to support the crisis-hit neighbour mainly through long-term investments after providing nearly $4bn of financial aid.

The High Commission of India in Colombo said it held the first round of debt talks with Sri Lankan officials on September 16.

“The discussions held in a cordial atmosphere symbolise India’s support to early conclusion and approval of a suitable IMF programme for Sri Lanka,” the High Commission said.

Sri Lanka will make a presentation to its international creditors on Friday, laying out the full extent of its economic troubles and plans for a debt restructuring.

The Indian High Commission also said New Delhi would continue to support Colombo “in all possible ways, in particular by promoting long-term investments from India in key economic sectors”.

India’s support to Sri Lanka this year has included a $400m currency swap, a $1bn credit line for essential goods and a $500m line for fuel. In addition, India has also deferred payment on Sri Lankan imports of about $1.2bn and given a credit line of $55m for fertiliser imports.

The High Commission said India had continuing development projects worth about $3.5bn in Sri Lanka, whose president earlier this month asked his officials to resolve obstacles to projects backed by India. He did not specify the obstacles or the projects.

President Ranil Wickremesinghe has said Sri Lanka will turn a free trade agreement with India into a comprehensive economic and technological partnership.

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Raigam Wayamba Salterns Group turnover tops 1 bn

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Raigam Wayamba Salterns PLC saw its group turnover increase from Rs. 959.6 million to Rs. 1,147 million recording a growth rate of 19.5% year on year.Despite the fact that the financial year 2021/2022 was filled with many challenges, as a result of prudent management practices implemented and followed, the Raigam Wayamba Group was capable of reporting its ever-highest growth in 2021/2022,” said Chairman, Raigam Group, Dr. Ravi Liyanage.

Raigam Wayamba Salterns PLC, which was listed in the Colombo Stock Exchange (CSE) in 2010 is the front line player in the value added salt market in Sri Lanka and it supplies a range of consumer salt products under the popular brands “Isi”, “Ruchi”, “Welcome” and “Triple Washed” as well as various salt products used as an input for different industries in bulk form.All the consumer products of Raigam Wayamba Salters are SLS certified for its quality and consistency and the processes are ISO certified.’8

The Raigam Wayamba Salterns Group is equipped with salterns, salt refineries and processing plants located in Puttalam and Hambantota districts. In addition to that the raw material supply for these operations has been ensured by the 1,800 Acre saltern established in Kuchchaweli in Trincomalee District by the parent company of the Raigam Group. Further the Puttalam Salt Limited (one of the successor to the National Salt Corporation) is also an associate company of the Raigam Group.

The well-known Raigam brand and state of the art island wide distribution network are distinct strengths of the Raigam Group. The Raigam distribution network operates on a latest IT platform and also includes distribution channels for modern trade, industry and bakery sectors.

Sri Lanka’s economy which was under-performed for two years due to COVID pandemic situation was experiencing the impacts of the foreign exchange crisis in the latter part of the financial year 2021/2022. Despite the fact that the financial year 2021/2022 was filled with many challenges, as a result of prudent management practices implemented and followed, the Raigam Waymba Group was capable of reporting its ever-highest growth in 2021/2022.

The group turnover increased from Rs. 959.6 million to Rs. 1,147 million recording a growth rate of 19.5% Y to Y. At the same time the Profit after Tax grew from Rs. 149.7 million to Rs. 215.6 million at an annual growth rate of 44%. As a result of these successful financial performances the Earning Per share for the year stood at Rs. 0.76 compared to Rs. 0.53 in the corresponding year. This has made a significant impact on the value of the shareholders’ investment increasing the Net Asset Value Per Share form Rs. 5.06 to Rs. 5.74.

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Singer’s legendry sewing industry and Academies developing skills and entrepreneurship in Sri Lanka

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A name synonymous with Singer (Sri Lanka), Singer sewing machine has over the years become an indispensable product at local households, helping thousands of women and men to make a living through a sewing business. For over six decades, Singer has been manufacturing its trademark sewing machines in Sri Lanka. Singer brand has claimed many firsts in sewing machine innovations including the world’s first zig-zag machine and the first electronic sewing machine.

Singer Industries, a subsidiary of Singer (Sri Lanka) manufactures traditional, portable and digital sewing machines at a fully-fledged facility, where it provides direct employment for over 100 factory workers and accommodates around 150 service agents. The traditional sewing machines are of two variants such as the straight stich and the zig-zag sewing machine, while the portable and digital sewing machines cater to the modern customers. Singer Industries is mandated with assembly of sewing machines and manufacturing of cabinets and stands for sewing machines.

The sewing machine stands and cabinets are 100% locally manufactured with the help of local suppliers who also depend from sewing machine manufacturing. Singer Industries also consists of a strong R&D section for sewing machine innovations. All the sewing machines produced by Singer Industries are distributed by its parent company, Singer (Sri Lanka) through their 431 distribution touch points. Currently, Singer sustains its dominance as the market leader for domestic sewing machine industry with a market share of 85%. Among the facilities, Singer Industries provides to its customers, it has deployed special service technicians at island wide service centres for technical assistance and support related to sewing machines. Its YouTube channel has access to over 130 technical assistance videos to further support its valued customers.

The name ‘’Singer’’ is closely associated with sewing. One of its major contributions to the local sewing industry is the Singer Fashion Academy. For more than 60 years, the Academy has helped thousands of individuals to develop sewing skills and become entrepreneurs. The Fashion Academy conducts sewing courses and diplomas while a degree pathway is to be implemented soon to further support students. The Academy is also the first and only institute in the country to receive course validation status from the Chartered Society of Designers (CSD) in the UK.

As of today, the academy consists of 54 branches Island wide and offers 22 sewing courses, 2 diplomas and another 10 courses as part of its Diwi Saviya program for low-income families. Annually, over 5000 – 6000 students get enrolled in Singer Fashion Academy’s courses. In addition to the physical classes, the academy conducts online courses and also provides a recorded version of lessons to further facilitate students. During the last decade, over 60,000 students have successfully completed the Fashion Academy’s courses and some of these students have already started their own sewing businesses. The Fashion Academy has helped in developing the passion of sewing among Sri Lankans and as a result, sewing has become a hobby among many.

Sewing can be considered one of the most feasible self-employment opportunities with its potential to generate a good income. A business of one’s own is a luxury at present due to current economic crisis. Many individuals who started their sewing businesses from scratch have developed their businesses to highly profitable ones. Singer Fashion Academy has all the resources ready to help develop sewing skills and is committed to develop a skilled workforce for the betterment of the country.

(Company news release)

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