Micro finance for eastern development

The Secretariat for Coordinating the Peace Process (SCOPP) said this week it was working with representatives of banks, UN agencies and the business community to address the question of access to micro-credit to facilitate the return to normalcy in the east ‘after its liberation from LTTE control.’

At a meeting convened by SCOPP on July 30, access to credit, loan recovery and determining most needy were identified as key impediments to improving livelihood opportunities, especially in agriculture, with the cultivation season about to commence, according to a SCOPP press release.

Representatives of the chambers of commerce (FCCISL), commercial banks and UN agencies participating in the meeting agreed that a humane approach was needed to alleviate the difficulties of in the East affected by both the tsunami and the conflict. In the East, around half the debtors failing to reply, compared for example with Jaffna and Vavuniya where the recovery rate is over 90%.

This has made commercial banks wary of offering credit facilities and other financial products, banking representatives told SCOPP.

Sam Stembo of the Federation of Chambers of Commerce and Industry said there is a problem about determining the criteria for selecting people to grant loans.

“We have highlighted this at meetings with the ILO,” he said in a view endorsed by Tom Hockley from a UN agency.

The issue of timing was also raised. For example, since the planting season begins in September, the demand for credit becomes high and it’s crucial that the right people get the right amounts and the right time, it was pointed out. To deal with all this, representatives of the state banks, acknowledging that their responsibilities and obligations are different from other commercial lending institutions, said that possibilities to assist farmers before the cultivation season begins will be explored.