Business

The Plight of the Poor

Published

3 years ago

2022/07/19

Sahan Weerasooriya

Sri Lanka’s Deepening Economic Crisis:

By Lakshila Wanigasinghe

Empty supermarket shelves, endless queues to buy essentials and overnight camping around fuel stations are now regular sights in Sri Lanka. As the economy continues to plummet with no viable short-term solutions in sight, levels of frustration among the citizens continue to rise.

The country’s worst economic crisis since independence has battered Sri Lankans from all walks of life but the fallouts are impacting the poor with greater intensity. If urgent measures are not taken to support the most vulnerable at this time, more Sri Lankans will slip into poverty thus increasing intergenerational poverty in the long term. This blog identifies some of the most pressing challenges faced by the poor and vulnerable amidst the prevailing crisis and outlines policy options to safeguard their well-being.

Background

Sri Lanka’s current economic crisis is a result of several years of mismanagement, corruption, shortsighted policymaking, and an overall lack of good governance. Insufficient foreign reserves at Sri Lanka’s Central Bank and loss of access to international capital markets resulted in the country defaulting on debt for the first time in history. Unchecked external borrowings, tax cuts that widened the existing budget deficit, the chemical fertiliser imports ban and the sudden floating of the Sri Lankan rupee are among several factors that contributed to the economic collapse. Tourism, together with apparel and tea exports – some of Sri Lanka’s main income sources – were affected in recent years due to various internal and external factors such as the 2019 Easter Sunday attacks followed by COVID-19 in 2020. Now, the economic crisis presents multiple challenges including severe threats to nutrition, food security, healthcare, and education.

Impacts on the Vulnerable

The rapid depreciation of the Sri Lankan Rupee and the inability of wages to keep up with inflation have drastically lowered the standard of living. Inflation, as measured by the Colombo Consumer Price Index (CCPI) for June 2022, was 54.6% in comparison to 39.1% in the previous month. Further, food inflation rose to an alarming 80.1% in June 2022.

The ability to earn a living wage is hampered by insufficient fuel supplies. This along with the rise in transport costs and overcrowded public transport have left workers struggling to commute to work. Daily wage earners such as three-wheel drivers are in fuel queues for days losing out on productive work hours. Regular interruptions to the power supply are affecting small-business owners’ ability to conduct business and with many completely shutting down operations. Shortages in gas and kerosene oil for cooking, rise in commodity prices and supply shortages are changing people’s consumption patterns forcing many families to reduce their consumption and non-consumption expenditure. The inability to receive adequate nutrition due to increases in the cost of living is affecting children’s health and may lead to increased rates of malnutrition in the future. Apart from this, continuous school closures are impeding children’s education, especially at the village level where most families lack the technology for digital learning.

Short-term Relief

Sri Lanka was facing a reversal in poverty levels since the COVID-19 pandemic and faces the risk of many new groups following suit along with those who are already poor falling deeper into poverty. Hence immediate measures must be taken to support the poor and ensure their livelihood sustenance to some extent. As the current fiscal restrictions pose a challenge in supporting all groups in need, emergency relief efforts need to be targeted toward the most vulnerable so as to not further cripple the economy. Providing cash transfers is one such relief option. They were widely popular as a global emergency response during COVID-19. While Sri Lanka also adopted this as a response to the pandemic, the key in this context would be to provide an adequate sum of money to the most deserving households. Although this may include a considerably large number of at-risk families due to rising inflationary pressure, unfortunately only those in dire need of support must be beneficiaries at this time. As such authorities will have to make tough choices to correctly identify deserving households. Financing these cash transfers will require an allocation of a portion of funds from foreign aid, loans and other humanitarian assistance received by Sri Lanka.

Following the declaration of a three-day weekend for public sector employees, primarily to utilise their time to cultivate consumable crops at the household level, the provision of in-kind support such as seeds and fertiliser for cultivation is another option. As with monetary support, these initiatives must be targeted toward the poorest who are unable to meet their required nutrition levels. However, there is an issue with such families not having suitable plots of land for cultivation. Thus, initiatives need to be thought of on how to overcome space limitations. One option is through community gardens which can be introduced in village-level Grama Seva offices, school grounds etc. Proper organisation, allocation, and monitoring are imperative to successfully execute these initiatives.

Although an unpopular solution, temporary rationing measures will need to be put in place, especially for high-demand commodities such as fuel, gas, milk powder and medicine etc. This will help curb excess purchasing of items and ensure all individuals have access to purchase necessities. Excessive purchasing often leaves the poor on the losing end since they do not have sufficient funds to purchase beyond their immediate requirements. Hence rationing will help with maintaining sufficient supplies for low-income groups such as daily-wage earners. While it is important to support the poor and vulnerable at this time, it is imperative to ensure the limited fiscal and other resources are used effectively. Further, these measures need to be taken alongside working towards ensuring political stability and debt sustainability to restore international confidence in Sri Lanka. This will encourage support from the global community to help Sri Lanka work towards overcoming this crisis.

Link to the full blog – https://www.ips.lk/talkingeconomics/2022/07/18/sri-lankas-deepening-economic-crisis-the-plight-of-the-poor/

Lakshila Wanigasinghe is a Research Officer at IPS with research interests in poverty, social welfare, development, education, and health. She holds an MSc in Economics with a concentration in Development Economics and a BA in Economics with concentrations in International, Financial and Law and Economics from Southern Illinois University Carbondale (SIUC), US. (Talk with Lakshila – lakshila@ips.lk)

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Business

‘Landmark moment for Islamic Finance in Sri Lanka’

Published

10 hours ago

2025/06/13

Thilina Walpola

Dignitaries at the ‘Sukuk’ launch

When Vidullanka PLC announced it was launching Sri Lanka’s first listed Sukuk—a Shariah-compliant, asset-backed debt instrument—it wasn’t just another financial product hitting the market. It was a landmark moment for Islamic Finance in the country. At the helm of this groundbreaking initiative was Riyaz Sangani, Chief Executive Officer of Vidullanka PLC, who, along with a visionary team of arrangers and advisors, ushered in a new chapter in Sri Lanka’s capital market history.

“We believe renewable energy and Islamic finance are natural partners,” Sangani remarked in the press briefing in Colombo recently underscoring how Vidullanka’s asset-rich, sustainability-driven operations make it an ideal candidate for structuring Shariah-compliant financing. This alignment not only enhanced Vidullanka’s funding options but opened the door for a new class of investors seeking ethical and interest-free investment vehicles.

With Sri Lanka’s financial sector still emerging from a turbulent period marked by instability and credit tightness, Vidullanka’s Rs. 500 million Sukuk issue signals a calculated pivot toward financial innovation. For Sangani, the move is more than strategic—it’s symbolic. “This issuance is a stepping stone, he said, expressing hope it would inspire further diversification in Sri Lanka’s Islamic finance ecosystem.

The two-tranche Sukuk—offered in both fixed and floating rate structures—has been rated A+ (lka) by Fitch Ratings and secured by tangible assets and designated cash reserves. It also adheres strictly to Shariah principles, certified by a panel of reputed scholars, including Prof. Aishath Muneeza and Moulavi Mohammed Siraj Najubudeen.

Behind the scenes, the Sukuk’s success was driven by the unwavering dedication of partners like Eshani Thenuwara, Senior Vice President at NDB Investment Bank. Her team had begun work on the product long before formal regulatory frameworks were in place.

“It has been a fulfilling journey of learning and overcoming many obstacles,” Thenuwara noted. “Vidullanka was the perfect partner—dedicated to Shariah-compliant finance as a matter of policy, not just convenience.” NDB Investment Bank served both as Manager and Joint Arranger for the issue, alongside Adl Capital.

Ishrat Rauff, Managing Director of Adl Capital, offered a broader view of the accomplishment. “This is a product that has been on the industry’s wishlist for decades, he said, pointing to the perseverance it took to get regulatory buy-in from the Colombo Stock Exchange (CSE) and the Securities and Exchange Commission (SEC). He described the structuring exercise as “the most complex” in his nearly 30-year career.

Adl Capital’s involvement went beyond technical advisory—it helped bridge gaps between regulatory expectations, investor confidence, and religious compliance. “We sincerely hope this sets a precedent for more ethically aligned financial products in the market, Rauff added

By Ifham Nizam ✍️

Business

ICC unveils sustainable, cost-effective housing solution with innovative Durra Kit Houses

Published

10 hours ago

2025/06/13

Thilina Walpola

In a bold move to revolutionise the construction industry, International Construction Consortium (Pvt) Limited (ICC), one of Sri Lanka’s leading engineering and construction companies, has introduced an innovative, eco-friendly housing solution aimed at shaping a more sustainable future.

Celebrating 40 years of construction excellence, ICC remains true to its vision of being the most innovative and responsible developer, contractor, and engineering solutions provider on a global stage. Its latest venture—Durra Kit Houses—embodies this vision, offering a modern alternative to conventional building methods through cutting-edge design and environmental responsibility.

Durra panels, a remarkable construction material made from compressed straw bound with a zero-emission adhesive, form the foundation of the prefabricated Durra Kit Houses. They deliver superior thermal insulation that maintains stable indoor temperatures while dramatically reducing energy consumption. Homeowners can expect significantly lower heating and cooling costs, alongside a reduced carbon footprint.

Beyond energy efficiency, Durra panels offer excellent soundproofing, creating a peaceful and comfortable indoor environment. Their fire resistance, pest-proofing, and mould resistance ensure safety and durability, making these homes as practical as they are sustainable.

A standout feature of the Durra Kit Houses is their cost-effectiveness. The prefabrication process enables rapid assembly, reducing construction times and labour expenses. Additionally, the energy-efficient design offers long-term savings on utility bills.

The design is highly customisable, allowing for a variety of aesthetic and functional preferences—from sleek modern styles to more traditional layouts. Its flexible structure also simplifies future expansions or modifications.

Business

DFCC Bank unveils iConnect 2.0: A banking platform built for the future of business

Published

10 hours ago

2025/06/13

Thilina Walpola

DFCC Bank PLC has officially relaunched its flagship digital corporate banking platform, DFCC iConnect 2.0, reinforcing its commitment to delivering digitally advanced, client-centric solutions. Engineered for speed, security, and precision, iConnect 2.0 now includes TradeConnect, a robust trade finance module that fully integrates both cash management and trade services into a single, integrated platform.

Created in direct response to the evolving needs of Sri Lanka’s corporate and SME sectors, DFCC iConnect 2.0 goes beyond standard digital banking. It is a strategic enabler that helps clients simplify financial operations, gain greater control, and scale with confidence. By consolidating daily banking and complex trade workflows into a single, secure, and real-time interface, the platform empowers businesses to focus on growth while managing their finances with transparency and efficiency.

Sohantha Wijesingha, Senior Vice President – Head of Corporate Banking at DFCC Bank PLC, stated,

“At DFCC Bank, our approach to digital banking is built on the principles of service, simplicity, and trust. iConnect 2.0 has been reimagined to support our clients not only with advanced functionality but also with the flexibility and responsiveness they need to succeed. Whether through enterprise-level user controls, real-time mobile authorisations, or dedicated relationship support, every element of the platform is designed to reduce complexity and enhance the client experience.”

DFCC iConnect 2.0 delivers a comprehensive suite of enhancements that elevate the corporate banking experience. Features include multi-tiered approvals, group-level access, customisable alerts, real-time dashboards, and mobile transaction authorisations. Clients also benefit from a dedicated client service team, providing end-to-end support throughout the onboarding and operational journey.

The introduction of TradeConnect marks a significant leap forward for DFCC iConnect 2.0, transforming it into a truly end-to-end digital trade platform for businesses. It brings together a comprehensive suite of trade finance facilities—including Letters of Credit (LC), Import and Export Loans, and both Local and International Bank Guarantees—while supporting multiple payment terms such as Advance Payments, Open Accounts, Documents Against Payment (DP), and Documents Against Acceptance (DA).