Author Archive
Farewell from Sri Lanka
By Cheney Wells, KF 11
Finishing up my Kiva fellowship in Sri Lanka was a bittersweet experience. My relationship with both Kiva, and with their field partner, the ever-efficient BRAC, has been a positive one. I believe I made tangible contributions to the relationship between the two organizations, and through those efforts, learned a great deal. I enhanced some of the hard technical skills that I had expected to improve on the job (financial reports, Excel), and also had the chance to learn valuable soft-skills that I had not anticipated needing when I set off for Sri Lanka to work as a Kiva fellow.
One soft skill I had the opportunity to practice was the process of negotiation. When I arrived to Sri Lanka, I did not anticipate having to try to facilitate an agreement with the Central Bank of Sri Lanka (CBSL) in order to get approval for a continuation of an agreement signed last year between Kiva, BRAC Sri Lanka, and the CBSL. My final month of work in Sri Lanka, however, ended up being dedicated almost entirely to trying to get a renewal of that approval. Through several meetings with the CBSL and with other parties, I did my best to try to reach a new agreement between the three parties. It is unclear if those efforts will bear positive results, but I am proud of the work of Kiva and BRAC Sri Lanka to get renewed Central Bank approval.
Thus the future of BRAC Sri Lanka remains uncertain. There are a great number of borrowers here who already received Kiva loans, and they are now in the process of using those loans for their businesses, and making repayments on the loans. There are not, however, any new borrowers being added to Kiva’s Sri Lanka portfolio, due to the aforementioned problems with the Central Bank here in Sri Lanka.
It is of course difficult to measure the exact impact Kiva has had here in Sri Lanka. Certain tools do exist in the field of development to try to monitor and evaluate the impact of development programs, and Kiva has in fact begun to do so in many countries with CERISE, to continue to improve its measure of its microfinance activities. Despite not having all the tools and resources needed to do a thorough report on the overall impact of Kiva’s work in Sri Lanka, I can at least say that I do not see the situation with Kiva here as a failure. Although many resources were invested here both on the part of Kiva, and by BRAC Sri Lanka to bring Kiva loans to borrowers here, there are now nearly 200 borrowers who received loans at a special interest rate of 12% from BRAC Sri Lanka, and at no interest from Kiva. As had been stipulated by the Central Bank here, all of those borrowers are below Sri Lanka’s poverty line (families below household incomes of 7,500 LKR, or approximately $2 per day), so these loans went to some of the neediest people in Sri Lanka. And if things work out, then there will still be a future for Kiva in Sri Lanka! Let’s keep our fingers crossed.
Microfinance regulation – The case in Sri Lanka
By Cheney Wells, KF 11
With the recent financial crisis, and questionable practices by America’s biggest banks, the word “regulation” had made frequent appearances in the headlines of newspapers.
As of yet, Sri Lanka’s government has not implemented a means of regulating the microfinance industry here. However, according to Sri Lanka’s Central Bank website: “A law to regulate and supervise Micro-Finance Institutions is […] being formulated. Action is being taken to establish an independent authority for monitoring micro- finance institutions.”
That there is no regulating authority of yet for the microfinance industry has led to strong hesitation on behalf of Sri Lanka’s Central Bank to promote or support any micro-lending activities in the country.
Just as there has been debate over how much the private banks in the United States should be regulated, there are concerns over the effects of an over-regulated microfinance industry here in Sri Lanka. Such concerns include:
- A minimum capital requirement for MFIs, which could exclude some of the smaller MFIs from operation if unable to meet the minimum
- An interest rate cap provisioned by the Act, which make operational and financial sustainability for MFIs a difficult task if the cap is set too low
- The cost of regulation, which would be borne by the MFIs in the form of a license fee. This cost would ultimately affect the borrowers
What effect regulation of the microfinance industry will have remains to be seen, but MFIs would do well to prepare themselves for complying with what is a near certainty in the future of the industry here.
Buddha’s birthday!
By Cheney Wells, KF11, Sri Lanka
Last week was Vesak in Sri Lanka, an important holiday celebrating the birth, enlightenment, and death of Gautama Buddha—the supreme Buddha in many Buddhist traditions, including the Sinhalese Buddhism practiced here. The streets of Colombo were a blur of lights, people, and street food sure to spin your stomach like the electrical toranas and lanterns strung across the city. Approximately 69% of Sri Lankans are Buddhist, but there are also sizeable populations of Muslims, Christians and Hindus. Despite being a Buddhist religious celebration, Vesak in Sri Lanka appears to be enjoyed by people of all faiths.
In addition to this special Vesak holiday, there are 28 “poya” holidays throughout the year (occurring every full moon), which makes the repayment schedule here a difficult task to administer. Since loan collections aren’t made on poya days, the repayment schedule uploaded to Kiva has to capture this, skipping any weeks where collections won’t be made.
Sri Lankan Kiva borrowers could start a lantern business!
Part of the work of a Kiva Fellow is to set up an easily executable system for such processes as the repayment schedule, so that these tasks can be passed along to the staff of the MFIs that Kiva partners. In a sense, a Kiva Fellow works to make his or herself obsolete at the MFI—a wry term that has been coined amongst Kiva Fellows.
While I’m still here, however, I’ll make sure to keep you posted on all the developments from the island!
BRAC and a Sri Lankan Haiku
By Cheney Wells, KF11, Sri Lanka
In 1972, Fazle Hasan Abed founded BRAC (Bangladesh Rural Advancement Committee) to serve the needs of the people of the newly sovereign state of Bangladesh. Today BRAC is one of the largest development NGOs in the world, providing services that extend beyond micro-credit, to include health, education, social development, and human rights initiatives, to name a few. The power and efficiency of BRAC helped facilitate a quick response to the 2004 tsunami that devastated the small island of Sri Lanka; within four months of the tsunami, BRAC was operating in Sri Lanka.
