Abstract
The objective of this paper is to assess the capability of microfinance as a tool of reconciliation through economic activity generation and empowerment in the conflict-affected communities in the Northern and Eastern regions of Sri Lanka. The principal data collection tools for this study were Focus Group Discussions and Key Informant Interviews. The impact of microfinance engagement is in varying degrees with certain areas and groups showing evidence of receiving more beneficial impacts compared to others. It also showed very high involvement of women and those women who are active namely, those from groups above the very poor and those who have comparatively better educational levels. We found that microfinance intervention has both tangible and also created other intangible benefits on clients. The post-conflict Northeastern region is not a monolithic entity and there are a number of diverse groups of potential beneficiaries with different needs, skills, capacities and opportunities. Therefore, microfinance initiatives need to consider these situations and develop their interventions accordingly.
Highlights
The discourse on microfinance traverses several fields and interconnects with issues of economic globalization and neoliberal policies, strategies for poverty and vulnerability reduction, and pathways for women’s empowerment
Following the food shortages originated from the Second World War, the government got involved in the co-operative movement in the second phase that began in 1942 by bringing in initiatives like co-operative Agriculture Production and Sales Societies (CAPS) and provided credit facilities to them
On the whole microfinance intermediaries in Sri Lanka can be categorized into four groups as professional national level microfinance institutions, local Non-Governmental Organizations (NGOs), International Non-Governmental Organizations (INGOs) and government programs
Summary
The discourse on microfinance traverses several fields and interconnects with issues of economic globalization and neoliberal policies, strategies for poverty and vulnerability reduction, and pathways for women’s empowerment. The Microcredit Summit held in Washington DC in 1997, recognized it as a “miracle tool” for poverty reduction. It focused on four themes – reaching the poorest, the empowerment of women, building self-sufficient financial institutions and ensuring a positive and measurable impact on the lives of clients and their families. The United Nations has declared that 2005 as the international year of microcredit, which recognized microfinance as an important way to meet the millennium development goals, the goal of having the world’s poverty rate by 2015.It has been recognized that microfinance leads to increase income, helps reduce strains of consumption, and reduces the vulnerability of the poor. By providing the poor with financial services that are flexible and easy to access and aimed at generating economic activities microfinance is considered as an effective means to help break the vicious cycle of poverty
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