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This uniqueness of the country is further amplified by the diversity that exists within the nine provinces of the island nation. With a population of over 20 million people and literacy levels well over 94%, one wonders why Sri Lanka is still not an economic powerhouse in the Asian region; instead the country is still trying to become a middle income level country.
There are many reasons for that but primarily it is because of the three decade-old war which was recently concluded. However Sri Lanka has lost many opportunities and advantages due to lack of political vision in the past and until the President Mahinda Rajapaksa got elected to the office of the President, where he began to put things on a right framework and more a progressive path for development.
Also one of the country’s past leaders that also initiated the country on a modern economic development path was President J.R. Jayewardene during his regime, however he left many things that he envisioned undone and much politicisation of key institutions during his regime led to some of the issues the country is faces now.
“Where there is no vision,
people perish”
Despite much criticism, President Mahinda Rajapaksa and his team have done many good things to put the country on a very clear path for economic development. Firstly by ending the war, creating a more stable government and building key infrastructure that is essential for sustainable development across the country.
It was King Solomon who was considered as one of the wisest men that ever lived who reigned from 970- 931 BC and was responsible for creating Israel as one of the most powerful nations of the world even at that time, articulated in his famous writings in the book of Proverbs “Where there is no vision people perish” (Proverbs. 29:18).
It was from this articulation only that most of the global corporate sector was inspired to visioning for the future. Leadership not only needs to have a vision, but also needs to be clearly articulated and shared with all stakeholders; politicians, bureaucrats, private sector business corporates and society leaders who will have to take ownership of that vision. This is what I call the need to “See the big picture, see eye to eye and then put your hands together”.
Creating commercial brands based
on rural identity
The uniqueness of Sri Lanka is the very diversity that exists in the country, not only geographically but also culturally, economically and socially in each of the nine provinces, except the Western Province. Most of the other provinces have a flavour of more of a rural atmosphere and agricultural-based economy which is less urbanised. 
While the Government is building capacity across the country through its major infrastructure development projects like the road network, airports, harbours etc., what rural Sri Lanka needs is not the urbanisation and changing or radical transformation of well preserved rural identity but a more genuine, pragmatic and sustainable “ruralisation of the Sri Lankan economy” and for the benefits and fruits of that economic development to trickle down to the people of rural Sri Lanka equally.
There are multiple benefits by preserving the unique identity of each province of the country and strategically convert that uniqueness to a commercial brand that can drive economic development.
The Northern Province has unique economic, cultural and social features that can be branded commercially, so are the North Central, Eastern, North Western, Central, Uva, Sabaragamuwa and the Southern Provinces equally. For example in the Southern Province, the Galle Literary Festival is now an internationally known brand and helps the development of the tourist related economy for people of the province.
Cash inflow to rural
Sri Lanka
The agricultural-based rural Sri Lanka in comparison to the Western Province is less cash rich, with indebtedness and over-indebtedness having been one of the issues we have witnessed among the people in some of the rural based provinces to a greater extent. In particular among the farming community of rural Sri Lanka, where money lenders/loan sharks not only survive but thrive.
Even the ordinary rural folk buy their food stuffs from local boutiques most often on credit and then go through a vicious cycle. We have seen many private sector corporate institutions making their presence in rural areas of the country particularly during the last four years, yet it looks pretty one-sided to their own advantage and not really handholding development and empowering the rural community of Sri Lanka.
With those areas of rural Sri Lanka being agri-based economies, a critical issue faced by the farmers of the country is getting their produce to the market and getting the right price at right time. Though many are connected to the value chain for agricultural produce, the supermarket chains, traders and exporters have come forward to create markets for Sri Lankan farmers; some of them no better than the rural money lenders who exploit the farmers by charging high interest rates by their conditional “Buy Back” arrangements of the farmer produce and demanding three to six months credit to pay back the farmers’ dues.
This is not an acceptable practice, driving back the rural farming community to over indebtedness and back to the arms of money lenders. While it is interest free credit given by farmers to their produce buyers, for them to survive three to six months, they will have to borrow money from moneylenders at high interest rates. This is a tragic double blow to the rural economy of Sri Lanka.
A maximum of one month credit could be more reasonable and if they can buy on spot cash that could be more beneficial to farmers. This is one way of creating greater cash inflow to the rural economy.
Role of the private
sector making a cash rich rural economy
Since the private sector has been very clearly identified as the engine of economic growth, with sweeping effect across rural Sri Lanka with benefits of this development to trickle down to every individual, the private sector has to take the lead role in capacity building to trigger significant cash inflow to the rural community of Sri Lanka.
Based on each province’s unique business opportunities, whether it’s agriculture, tourism, trading or specialised industries in creating commercially-oriented capacity building at micro, small and medium levels which are essential.
For example in the clearly identified tourist zones of the country, the creation of a number of hotel schools in those very zones to train and employ local youth can have very great impact. Also by replicating Institutions like the renowned German Technical Training School Katubedda in every province of the country to train and equip youth to support provincial industrial and technology advancements.
More commercialised and affordable small and medium warehouses to support the farmers with more practical warehouse financing through the collaboration of the commercial banks is a vital requirement.
Banks and finance companies should clearly identify the specific financial requirements of each specific province based on agriculture, trading, tourism and industry etc., and design products and services to match the affordability and have specialised officers to evaluate taking into consideration the level banking and financing needed at micro, small and medium business entities in the rural areas.
Creating a country of middle income people
To the extent of various discussions that take place at the public and private sector level on driving sustainable economic development and inclusion, the implementation mechanism does not get activated at the same extent and timing. This has been a major issue in many developing countries across the world, but based on Sri Lanka’s unique advantageous strengths; driving Sri Lanka only towards a middle income country is not feasible if the majority of the people still live in the lower income category.
Making Sri Lanka an economic powerhouse in the Asian region is a most achievable task. With the political leadership having a clear vision, a proactive bureaucracy and a more triple bottom line-conscious private sector with every individual either rural or urban contributing with self motivation, can drive the country towards a middle income country and make every individual citizen of the country middle income people in the not too distant future.
(The writer is the Chairman of Asia’s largest microfinance network BWTP. He is also the Chairman of Lanka Financial Services for Underserved Settlements (LUFSUS) and serves on the boards of number of national and international financial institutions that advocate and practice financial inclusion. The thoughts and comments expressed here are his own and in no way connected to the organisations he represent. He can be reached via [email protected] or [email protected].)
