GTZ-ProMiS report lists challenges for Sri Lanka microfinance

Microfinance Focus, Nov. 23, 2009: The growth of microfinance in Sri Lanka is hampered by the lack of a coherent regulatory and supervisory framework, governance issues, lack of technology and shortage of skilled personnel, said a report on the results of a nationwide survey of microfinance institutions undertaken by GTZ-ProMiS (Promotion of the Microfinance Sector), a project of Deutsche Gesellschaft fir Technische Zusammenarbeit (GTZ) GinbH – German Technical Cooperation – in Sri Lanka.

The survey was funded by the German Federal Ministry for Economic Cooperation and Development (BMZ) and was conducted on behalf of its implementer, GTZ, by TNS Lanka.

The microfinance sector in Sri Lanka consists of a diverse range of institutions which do not fall under the purview of a single authority and there is currently no single and up-to-date database on these institutions, it said. In order to obtain a comprehensive picture of microfinance institutions (MFIs) in Sri Lanka by identifying all institutions engaged in microfinance activities at a significant level, the survey was taken up by GTZ-ProMiS.

The survey was aimed at building a database on different types of MFIs, their activities, approach, mission, outreach, colume and quality of operations, governance and products and services offered. The information is extremely valuable to microfinance promoters, potential investors, policymakers and to all stakeholders in the microfinance industry, said the report.

The survey covered microfinance providers of various institutional types, from the Samurdhi Banks, Cooperative Rural Banks and Thrift and Credit Cooperatives to the Regional Development Banks and other institutions from the ‘formal’ financial sector who have ventured into microfinance. The survey also covered the rapidly growing NGO-MFIs some of which have grown very rapidly in the past decade.
The results of the survey indicate that although the outreach of microfinance services in Sri Lanka is considerable, this is especially so with regard to savings and deposit products. Access to credit remains below its potential and barriers still exist for the lower income groups. Further the market seems to be characterized by a proliferation of traditional financial products (savings, loans) with few products and services beyond these (e.g. insurance, money transfer services).

Related Posts:

• Sri Lankan Govt to set up Microfinance Regulatory and Supervisory Authority
• KfW provides EUR86.7M to SIDBI for Indian microfinance sector
• Azerbaijan’s microcredit bank AccessBank triples deposits in 2009
• BASEL releases guidance for effective Banking Supervision to microfinance activities
• MIV investments in 2008 grew by 31%: CGAP survey
• New microfinance bank set up in Tajikistan
• Basix settles Rs.5M worth flood insurance claims
• Pro-Credit Leasing unveils new energy-efficent products

© 2009, Microfinance News. All rights reserved. 2008-09