Post-war realities in the Northern Province: CB replies Friday Forum

Thursday, 12 June 2014 00:00 -     - {{hitsCtrl.values.hits}}

With reference to the recent media release by the Friday Forum titled ‘Post-war realities in the Northern Province,’ the Central Bank’s Regional Development Department Director Srinath Abeysinghe has written the following response to Friday Forum’s Jayantha Dhanapala.     The Friday Forum’s concerns raised in the media release covers certain economic developments which do not seem to have been taken into consideration and therefore, in the interests of providing a more balanced understanding, we wish to set out details of some of the work carried out by the Regional Development Department (RDD) of the Central Bank of Sri Lanka (CBSL) in facilitating the economic activities in the Northern Province (NP).       Uplifting livelihoods One of the concerns raised in your media release is about the need to uplift the livelihood of the rural masses of the NP. In that context, we wish to inform you that in the area of generation of sustainable livelihoods in the NP, in addition to many others, the RDD has implemented several loan schemes successfully amounting to disbursements of about Rs. 5,880 million which have been granted to 35,609 small and medium scale entrepreneurs. These loans have been granted under four SME loan schemes, of which the Awakening North Loan Scheme was specially introduced to serve the small and medium entrepreneurs in the NP. In addition, the people and entrepreneurs in the NP were able to receive benefits under other three loan schemes which were implemented island-wide, as well.       Microfinance sector In the microfinance sector too, loans amounting to Rs. 797 million have been granted to 12,781 beneficiaries of whom the majority were women. Further, for the cultivation of short term crops, farmers have been granted cultivation loans under the ‘Sarusara’ loan scheme, where, from 2009 onwards, for 11 cultivation seasons continuously, loans totalling Rs. 13,260 million have been granted covering 116,337 farmers in the NP. This scheme has provided working capital requirements of farmers where the Jaffna District had the highest number of loans for three consecutive years from 2011 to 2013. These outcomes were achieved due to the special attention that was given to the NP, and this clearly indicates that the CBSL and the banking sector have given top priority to serve the people in that region.       Reconstruction and awareness building A special loan scheme targeting the reconstruction of damaged houses in the Northern and Eastern Provinces has also been implemented since 2012, whereby concessional loans have been granted to repair houses in these two provinces. Under this program Rs. 214 million has been disbursed so far to repair 2,091 houses. Overall, since the end of the conflict in 2009, over 166,800 beneficiaries have been served in the NP through various loan schemes, where loans over Rs. 20 billion have been granted. At the same time, the RDD has conducted a large number of awareness building programs on financial literacy, entrepreneurship development and post-harvest technology in the NP. In that manner, the RDD has worked closely with the rural masses in the NP to improve their financial well-being by improving their knowledge through financial literacy programs, and during the period from 2012 to date the RDD staff has conducted over 80 financial literacy programs covering the five districts. The Governor of the Central Bank himself has visited Northern Province at least on 16 occasions so far since the end of the conflict, to meet the rural masses and discuss their economic and financial issues as well as inspect first-hand, the banking and other financing facilities provided to them.       Remarkable performance As a result of these and many other programs launched and implemented by the Government, other State authorities and the private sector, the economic performance of the NP since 2009 has been remarkable. The NP contribution to GDP has been steadily increasing, and it has risen from 3.2% in 2009 to 4.0% in 2012. The Province’s GDP growth rate has also showed a steady acceleration, starting from 12% in 2009, to 22% in 2010, and to over 25% per annum in 2011 and 2012. The progress made by the NP is evident from the index prepared by the Central Bank to measure the level of prosperity of various provinces as well. This index was prepared in 2008 and published by the Central Bank to measure the comparative level of progress made by various provinces. This index uses 26 variables which cover socio economic status of various provinces. In 2007, the NP was ranked last, of all the Provinces. This ranking has since improved to the sixth ranking by 2011. This also indicates that the NP has made rapid and continuous progress in the socio economic sectors of the country, as well.       Industrial and agriculture sectors Since 2009, another interesting feature that has been observed is that the NP has been getting stronger in the industrial sector, too. The share of industry in its provincial GDP has risen sharply from 9% in 2009 to 24% in 2012, while the share of the services sector has declined from 72% in 2009 to 57%, although the sector itself has recorded reasonable growth in absolute terms. Meanwhile, the share of agriculture has remained around 20% on a much larger base. These results indicate that the manufacturing sector in the NP is now establishing itself firmly. The growing and firm platform of the industry sector could also be attributable to the financial support the banking sector has been providing the NP entrepreneurs, particularly with concessional financing as a result of the many programs that have been implemented.       Development programs It must also be emphasised that the Government too has been engaged in implementing numerous development programs in the NP. The Presidential Task Force for the Northern Province on Resettlement, Development and Security established by the President on 7 May 2009 had carried out programs on three broad categories, namely humanitarian assistance, early recovery and sustainable development. For completeness sake, we are enclosing herewith, a report prepared by the Task Force on its work performance for your reference. In the meantime, let us assure you that we would be pleased to share more details of the enormous amount of work done by us and others in the midst of many challenges, particularly at the early stage of implementing the development activities in the NP. We would also be happy to apprise you of our future programs of work that we would continuously carry out to rebuild the livelihood of the people in the NP. At the same time, we would also be pleased to provide you with any further information about the massive developments that have taken place in the NP over the past few years. Since your statement has been issued as a media release we would also release a copy of this letter to the media, as we believe that this information should be shared with all other stakeholders as well.