By Charitha Ratwatte –

Charitha Ratwatte

On this, the first day of the first month of 2013, readers, in these times of doom and gloom, would without doubt appreciate a success story about a group of determined women from a district far away from the capital city, supported by a group of sensitive bureaucrats, who have successfully built themselves and their institution into a world class micro finance institution.

Hambantota District’s history

Time was when the Hambantota District was a quiet backwater in Sri Lanka’s Deep South. In ancient times, when the Kingdom of Ruhuna was in existence, it was a highly-developed area. Extensive cultivation of rice and other crops supported by an intricate water management system was the base of a highly developed Buddhist culture and civilisation.

The high standards of the hydraulic civilisation which existed in the Raja Rata at those times would have undoubtedly spread to southern Sri Lanka. The name Wel-Laksha (Wellassa), land of one hundred thousand paddy fields, gives a clue to this economic powerhouse.

The area was also a focus for the extraction and distribution of salt to the rest of the country. The dry climate was ideal for collecting sea water in vast areas of low lying land on the coast, and letting the water evaporate under the heat of the glaring sun. The salt distribution was the monopoly of Muslim traders who took salt by pack bull to the interior hills and bartered it for spices which they brought back to Magampura and exported. Research has shown that the development of Muslim communities in the interior of the island have been on this salt route inland, roughly a day’s march apart.

Similarly, before the advent of the Europeans, the Muslims held the monopoly of the internal trade in salt and the external trade in spices. It was a fleet which set out from the Portuguese enclave of Goa on India’s west coast – to hunt down some Muslim pirates who basing themselves in the Maldives harassed Portuguese vessels competing with the Muslim traders for the spice trade – that was caught up in a South West monsoon storm, damaged its masts and had to limp into Galle harbour to effect repairs, that brought the first Portuguese to this island.

Ancient Magampura (today’s Hambantota) was a harbour on the southern sea route from the west to the east – what has today been branded as the Spice Route. Indeed some historians argue that the name Hambantota is derived from ‘Sampan Thota’ – the harbour used by Chinese sea going Sampans which traversed the southern seas in the 1400s well before the European colonisers arrived.
A stone plaque at Galle records that Admiral Cheng Ho visited the Galle Port with his fleet at that time and kidnapped the local ruler and took him and his family back to China. Some time ago the descendants of that family visited Sri Lanka as guests of the Government.

International flavour of Southern Sri Lanka

The international flavour of Southern Sri Lanka can be measured by the fact that the Galle plaque is in four languages – Chinese, Persian, Arabic and Tamil. Even at that time Sri Lanka was clearly globalised.

An ancient carved edict on a rock near the ancient port of Magampura gives specific details of the tax revenue to be collected from imports and exports moving through the port, as prescribed by the ruler’s revenue department. It was certainly an emporium for international trade.

Ruins of ancient Buddhist religious buildings, some renovated, and antiquities recovered from archaeological sites in the area, provide a backdrop to the region’s rich cultural diversity. The prominent Muslim/Malay part of the population is said to be partly descended from seafarers from the Malay Archipelago who travelled through the Magampura port, and over time settled down.
The presence of a pre-existing Malay community prompted the British colonial Government to disband and settle soldiers of a Malay Regiment which had fought with the British in the Kandyan wars at Kirinda near Hambantota. After the arrival of the European colonialists, and the focus of the Galle harbour, Hambantota went into quiet decline.

The Portuguese and the Dutch were primarily interested in the spice trade and focused on the wet zone in the western part of Sri Lanka. Hambantota was an arid zone, located within the dry zone, and the interest of the colonials was mainly due to the salt pans, from which salt was extracted and distributed to the rest of the country.

The Portuguese and the Dutch, who were challenged by Muslim traders from West Asia in this spice trade, were keen to break the monopoly the Muslim traders had in the distribution of salt locally and to the Kandyan Kingdom.

The Portuguese and Dutch built and garrisoned forts at Bundala to guard the salt pans and control the internal trade. The British moved the garrison to Hambantota and built a Martello tower, overlooking the bay, which stands to this date as a look out post for enemy vessels. Martello, an Italian, had built similar towers on the British coast overlooking the British Channel, as a lookout for French ships during the Napoleonic Wars.

The British established the administrative centre of the District at Hambantota, situated the Kachcheri (revenue office), the court house, the Police station and other Government establishments in the town. A Customs post was also established. The Green Line, a round island ship service during colonial times, called at the Hambantota pier.

During the colonial years, Hambantota Distort went into gradual decline and the only industries of any capacity were salt extraction and the dairy industry and due to the large quantities of milk produced which could not be stored for marketing, a curd industry developed as the main cottage industry of the district. The brand Ruhuna ‘Meekiri’ or Ruhuna Curd is even today a product for which there is excellent brand recognition.

Leonard Woolf, a young British Assistant Government Agent in Hambantota, has written extensively on the district and its poverty. This is well reflected in his masterly novel ‘Village in the Jungle,’ which was later made into an award-winning film.

Hambantota was a stopover on the way for pilgrims travelling to the jungle shrine of Kataragama. Recently Hambantota has become a mega focus of development – international harbours, international airports, international conference centre, international cricket stadia, a venue for international sports competitions and a network of highly-developed highways, among other things.
As in Admiral Cheng Ho’s time, China is playing a big role again in the Deep South of Sri Lanka. The hitherto backwater of development is getting a major push into the globalised world of international trade. There is talk of an international free trade and manufacturing zone abutting the international harbour and the international airport.

A remarkable event

Long before all this, when Hambantota was still a poor district with social indicators well below the national level, at the height of the 1989 insurrection in the south, a remarkable event was kindled.
A group of mothers, who were worried about their young sons and daughters who were caught between a group of vicious terrorists fighting the Government and Government Police and soldiers who were waging an equally vicious campaign to wipe out terrorism, appealed to some senior Government servants serving in the district to assist them to build up their collective capacity to secure their lives of their children and develop their families.

At that the time, around 1988, the Government had launched a major poverty alleviation program called Janasaviya, based on two legs. The official Government Janasaviya program based on a hand out of funds and social mobilisation component by the Janasaviya Department of the Government on the one hand; and the Janasaviya Trust Fund (JTF), a apex funding agency – supported by the World Bank, UNDP, Germany’s KFW and other donors – which worked through civil society partner organisations, on the other.

The district had some capacity development instilled into its poor, through an extensive Integrated Rural Development Program (IRDP) implemented with the support of Sweden’s SIDA. Building on this capacity, the officials concerned formed the women who sought their help into small groups, and encouraged them to look at what steps they could first take within themselves as a Self Help Group (SHG).

This is the classic SHG model which has been highly successful in other parts of South Asia and also was the basis of the initial development of micro finance in Bangladesh by Nobel Prize winner Professor Mohammed Yunus’s Grameen Bank.

The officials used the mobilisation funds available from the official Janasaviya program to provide resources to the women’s SHGs. The funds handed out were used to generate a savings movement, and later the women within the SHG began to lend money among them from their group savings fund.
The officials, realising the opportunity offered by partnering the Janasaviya Trust Fund (JTF), encouraged the women’s SHGs to formalise their informal arrangement by federating the SHGs into the Hambantota Women’s Development Federation (WDF).

The micro financing aspect of the operation, which had now collected funds centrally and had begun making advances to the SHGs in addition to the SHG members transacting their own funds, was organised into Janashakthi Banku Sangam, or Association of People’s Power. The WDF became a partner organisation of the JTF.

The Janashakthi Banku Sangam became an implementing partner of the JTF’s credit fund, one of the most efficient. The WDF itself was involved in the other development windows of the JTF, the Social Mobilisation Fund, the Nutrition Fund and the Community Projects Fund. The WDF responded heroically to a challenge thrown to them by the founder Managing Director of the JTF, at one of the Annual General Meetings of the WDF – that ‘if they perform and show results, the JTF will be unstinting in their support’. The WDF was one of the most effective partner organisations of the JTF, continuing its relationship even after the JTF name was changed to the National Development Trust Fund (NDTF) and even when the Credit Fund was transferred to the Sri Lanka Savings Bank, after the poverty alleviation project ended, the relationship still survives.

Outstanding performance

The WDF and the Janashakthi Banku Sangam is today one of the most formidable and efficient instruments for empowering women in Sri Lanka. As at 31 October 2012, it had a membership of 61, 948 women.

The number of Women’s Society SHGs is 1,176. The number of Janashakthi Banku Sangam branches is 149. The number of clients to which the Janashakthi Banku Sangam provides micro finance program services is 99,285. The total value of shares in the enterprise purchased by members is Rs. 72,920,352. Depositors have invested Rs. 503,430,218 in the enterprise.

The number of active borrowers from the Janashakthi Banku Sangam’s micro finance program is 23,724. The total loan portfolio of the Janashakthi Banku Sangam is Rs. 627,245, 691. Of this only 2.55% are overdue over 30 days, all other repayments of loan instalments are on time. The surplus of income over expenditure in 2100 was Rs. 24 million. The assets, Rs. 1,142 million. Total liabilities for 2011 were Rs. 511 million.

This is an outstanding performance and profile for women from, what was at one time one of the most underdeveloped areas of Sri Lanka, achieved in the timeframe of 1998 to 2012, a mere 14 years. Hambantota’s social indicators are also much improved.

Future outlook

What of the future? The first requirement is that the micro finance operation of the WDF through the Janashakthi Banku Sangam must be placed on a firm legal footing. For this, the draft legislation on setting up a regulatory framework for micro finance under the authority of the Monetary Board of the Central Bank of Sri Lanka must be enacted soon.

Once this is done and the WDF’s Janashakthi Banku Sangam is registered as a Micro Finance Institution, then the confusion over the legality of deposit taking brought about by the provisions of the Finance Business Act of 2012 will be cleared and the Banku Sangam will be on a firm legal footing.
The second would be enhancing the WDF’s capacity to provide insurance services to its membership and to others. The poor remain poor mainly due to the fact that they are unable to cope with economic shocks – sudden unexpected events such as death, sickness, catastrophes such as floods, cyclones, fire, etc. The WDF has already a micro insurance scheme for its members. This insurance scheme covers: death of the borrower, permanent paralysis of the borrower, natural catastrophes like flood and drought, if the enterprise which has been set up by the loan is destroyed by fire, theft or robbery of the assets of the enterprise.

In the future the WDF should consider hiving off its insurance business into a separate entity, in compliance with the regulatory environment of insurance in Sri Lanka, get into a fully-fledged subsidiary which would focus on providing micro insurance to poor residents of the region to assist them to face up to various unexpected economic shocks which are the fundamental reason why people fall into or fall back into poverty.

The third step would be for the Janashakthi Banku Sangam to get into providing members with a Mobile Money Service. Given the penetration of mobile phone connectivity in Sri Lanka, without doubt over 75% of the membership must be connected. Mobile money services will provide them to undertake financial transactions without ever having to visit the branch. The legal framework for mobile money services is already in place in Sri Lanka; providers such as Dialog Axiata PLC are already providing it through their eZ cash window.

The fourth future step for the WDF would be to provide technical support to other women’s groups in and out of Sri Lanka who aspire to set up an institution such as theirs. This is already being done in a small way. But this service could be enhanced and developed and turn into an income generating enterprise, through the provision of consultancy services.

The success of the Janashakthi Banku Sangam of the Women’s Development Federation is an inspiration for all Sri Lankans; something of which we should be really proud. Self help, not dependency, is the way to go; it is important that the policy and legal framework must be supportive.