“Develop rural village communities through sustainable financing”: SDF Chairman Channa de Silva

Sarvodaya Development Finance Chairman Channa de Silva discusses the vision behind the activities of, and values embodied by Sri Lanka’s first dedicated development finance institution. Following are excerpts:

SDF Chairman Channa de Silva

Q: What is the main purpose of the Sarvodaya Movement and what were the values that the organisation was built upon?

Over 62 years ago, Dr. A.T. Ariyaratne first saw the disparity prevailing at remote villages, in terms of caste and ethnic divide, education, quality of life, and social and economic development. He decided that immediate

intervention was necessary and that it was the responsibility of the community to work together in unity and harmony, to develop the villages. As the second step he identified microfinance as an important avenue. Village entrepreneurs lacked the ability to raise their own businesses, as all possible capital available in the village was moved to Colombo. He wanted to ensure that money remained in the village, which could be used to develop the village entrepreneurs, leading to growth. 

Dr. Ariyaratne aimed to enhance village savings, then provide these savings to village businesses and gradually build their capacity was a key factor. Thereafter the cultivation of important business-oriented skills, the ability of these village entrepreneurs to engage and lead their businesses were important aspects of this economic development agenda.

After engaging in micro finance for last 30 years the Sarvodaya movement formed a licensed finance company in 2010, which later evolved into Sarvodaya Development Finance as we now know.

Q: What was Dr. A.T. Ariyaratne’s vision with the inception of Sarvodaya?

The central vision revolved around empowering villages – ensuring inclusivity while empowering the underserved and underrepresented. This is showcased by the variety of crucial projects that have tackled a number of key social issues, from developing village roads, to the provision of clean drinking water and sanitation facilities, to leadership projects for youth, and homes for children and elders, through which Sarvodaya has helped enhance countless lives.  Building almost 5,000 village preschools was also an important landmark.

Q: What makes Sarvodaya Development Finance different to other institutions?

The core difference is the institutions focus on becoming a ‘social enterprise’. A key differentiator is that its main goal is not to make money and optimise shareholder returns, but instead to give back and reinvest in society. It strives to balance profitability and ethics in a sustainable manner. This is easily seen in that most microfinance organisations in general provide lending rates which are over 40% higher than those that SDF offers.

All of the institute’s dividends earned by Sarvodaya movement the principal shareholder, are re-invested to the villages to secure their development. The money does not end up in one shareholder pocket but goes back to serve the village communities. Sarvodaya movement is still actively involved in the villages and the money earned by Sarvodaya through SDF will go back to the village to serve the villages better.

Currently, 84% of SDF’s overall lending is to rural village communities, focusing on agriculture and small industries which are usually considered high risk by most microfinance institutions. The institution also undertakes the provision of comparatively smaller loans that banks would not agree to disburse, thereby guaranteeing greater financial inclusivity. Most importantly, empathy is a key part of the company’s culture and is purported in all of its actions.  

Also, most importantly the entire institute embodies the concept of ‘Amma Gamma Rudawa’ – which is used widely in the organisation. This colloquial village saying when translated means, cultivating passion for what you do, then driving positive momentum through it, and then the relentless pursuit to fulfil the undertakings or the task that has been placed ahead.

This passion drives 480 staff members to perform extremely committedly at SDF.

Q: What are some programs implemented by SDF that benefit the grassroots?

One example of such a program is when over 150 village entrepreneurs were brought to Colombo to showcase their products at the last Village Biz Fair organised by SDF before the COVID pandemic. Furthermore, we organised Pumpkin Farmers Festival in Colombo and these farmers sold over 100,000 pumpkins in one day.  Furthermore, they were enrolled into a training program where they were taught about key aspects of their businesses value chain, from packaging to IT to marketing skills.

Q: How many individuals and businesses has SDF aided to date?

 SDF at any point in time actively is involved with over 150,000 village entrepreneurs. Over 50% of its customers have been female – a sign of the gender inclusivity the institute strives to create. The institute currently works with over 2,000 village societies across the country. This is a great strength we have as we reach a large village population that is extremely loyal to Sarvodaya. Our main business module is not to give consumer loans, but only to businesses where cash flows are generated, that guarantee the sustainability of the process. 

Q: Impact investing by conscious investors is a trend in the developed nations. Is SDF also benefitting from such global movement? 

A: Impact investing and conscious capital to social enterprises that serve the society has become a huge trend post the COVID pandemic. Deep pocketed investors are looking for organisations that help the less privilege societies. ‘Doing good, while doing well ‘has become very popular theme for these investors. In fact, SDF currently have a Japanese impact investor which owns 13% equity of the company that has invested with the same motive. 

Locally we witnessed a very active high net worth fund Senthilverl Holdings Ltd., acquire a 7% stake at SDF few months ago. These are socially conscious investors who are also extremely active in the CSE. Therefore, SDF appointed S.N. Senthilverl as a non-executive, non-independent Director, to our Board of Directors. Senthilverl brings over 18 years of active corporate experience to our organisation.

Q: How does SDF plan on continuing to support villages across the country?

SDF with Sarvodaya Movement is now ready to take a quantum leap now. We are determined to link our village produce to the market place whether in Sri Lanka or overseas. 

Throughout the pandemic, SDF noticed activity of up to 15,000 online transactions (product purchases) per day clearly, demonstrating the ever-growing appetite in Sri Lanka, towards selling and purchasing products through online platforms. 

Therefore, SDF is currently developing a ‘Village Business’ app which will greatly assist the rural entrepreneurs in their efforts to grow their online businesses. We will be engaged in assisting the development of this village business app that will link these village entrepreneurs. Sarvodaya societies will endorse their products, and village transportation scheme will bring the products to a central hub for delivery. This will be groundbreaking effort for us.

Furthermore, transforming our entrepreneurs with international level product knowledge, packaging and marketing skills will be a key aspect in our approach. We will educate them with current requirements to do business successfully. Training therefore is a key aspect we will engage in this journey.

SDF will also identify hidden talents, skills and committed youth operating in the unrecognised market place. We will bring them to the lime light with training, mentoring and guidance. About six months long educational experience on business studies will be offered to them. We believe they can be game changers who will be able to perform well in the future and contribute significantly to the country’s economic and social success.