Mahinda Chintana: Vision for a New Sri Lanka – A Ten Year Horizon Development Framework 2006-2016

This paper describes challenges to the development of microfinance in Sri Lanka.

Although Sri Lanka has a long tradition of microfinance, it does not have a microfinance policy. Sri Lankan microfinance lacks institutions for specialized training and research in microfinance as well asmechanisms for knowledge and information sharing. The financial viability of Sri Lankan MFIs is deteriorating. Sri Lanka does not have MFI associations, and commercial banks exposure to microfinance is limited.

In the next decade, Sri Lanka intends to have a strong and flourishing microfinance sector. Towards this goal, it intends to:

• Formulate a policy and strategy for the sector;
• Set up a high level body, whose members can develop and implement microfinance concepts;
• Establish a separate unit in the Central Bank of Sri Lanka for effective supervision and regulation of microfinance agencies;
• Undertake reforms that will enable government-run MFIs to generate savings, expand outreach and improve service delivery;
• Introduce a system to link the microenterprise sector to the small and medium enterprises sector;
• Establish a network between microfinance stakeholders;
• Strengthen capacity of microfinance training, knowledge and information services providers;
• Strengthen microfinance apex agencies.