What, How and Who Fill the Gap of Microfinance Sector in Northern Province in Sri Lanka

Abstract

This paper investigates the potential gap of microfinance [MF] sector in Northern Province (NP) of Sri Lanka. The study compares the MF landscape in the Province based on MF performance of Southern Province, using data and information gathered through two research studies conducted by Asian Development Bank (ADB) and AusAID. It has been expected that armed conflict results that not only have many people been displaced from their traditional family but they are denied access to their traditional livelihood also. Large proportion of the displaced people comprise of the farmers, fishermen, agricultural labour and self-employed in small enterprises. Alongside the finishing of armed conflict technically, there may be a higher demand for microfinance in the area related to production of agriculture, farming, fishing, trade-craft, and construction throughout the Northern Province. As it has been expected, a considerable gap of microfinance outreach is observed in the NP compared with the MF performance of Southern Province where economy was working in normal situation in the last few decades. Among actors in the field, the cooperative sector is the largest MF practitioner group in the Northern region. The formalized Microfinance Institutions (MFIs) such as Specialised Development Banks, Licensed Commercial Banks or government managed microfinance institutions can be hardly seen in the region. The study therefore, suggests that the entry of the national level specialized MFIs including the government into the MF market is necessary for regaining the livelihood of the resettled population of the Northern region.