Gemidiriya’s rural finance scheme a role model - WB Advisor

By Gamini Warushamana

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The success of the Gemidiriya rural development project is amazing and the world can learn many lessons from Gemidiriya, said Renate Kloeppinger-Todd, World Bank Advisor, Rural Finance, in Colombo recently.

She said they came to Sri Lanka this year for their Rural Finance Study Tour. “We have heard about Gemidiriya earlier and last year in Ghana we heard many success stories of the Gemidiriya micro finance scheme and decided to visit Gemidiriya this year.

During the past few days we studied and experienced the success of the Gemidiriya rural development process and the results are astonishing, she told the Sunday Observer.

The participants who came from around the globe, learnt a lot and experienced how Gemidiriya addresses rural development issues. They can’t take the model as a whole but they can incorporate and emulate some parts in their rural development projects especially in rural finance programs, Renate said.

The study tour consisted of a two-day international conference on rural financing and a three-day study tour to Gemidiriya villages. The Central Bank officials and bankers made presentations on rural finance programs in Sri Lanka.

Cargills CEO Ranjith Page made a presentation on market linkages. Representatives from African and Latin American countries made presentations on their rural finance programs. Two groups of participants visited Gemidiriya villages in Ratnapura, Badulla, Hambantota and the Moneragala districts.

World Bank officials and representatives of rural development and rural finance projects funded by the World Bank took part in the study tour.

People in rural areas lack financing. They need finance, credit and insurance to make their lives better. Our job is to help them to achieve these needs. On the other hand they also need sustainable institutions to address their financial needs. Another objective of the World Bank is strengthening rural financing institutions, she said.

Under these rural finance schemes the poor people start saving small amounts in their village organisations and use them for their urgent needs.

On the other hand they take small loans but they have to be repaid. To sustain the system the institutions should be strong. The Gemidiriya rural finance scheme has all the features we expect from a rural finance scheme.

Gemidiriya has well designed small groups and the group members have a necessity of saving.

They cultivate savings habits and most importantly they have a community feeling. The small groups are organised in clusters and the clusters form the Village Savings and Credit Organisation (VISCO), which provides loans to the community.

Small groups are collectively responsible and ensure the repayment of loans. With the interest income their own fund grows. Small groups have links with banks and they have shown their credit worthiness and the banks are ready to provide loans to them.

The system is very much focused on women and they have been really empowered. They are proud of themselves and they can explain better about what they do. Many of them bear responsibilities in village organisations such as group leader, VSCO chairman, Treasurer or a position in the cluster.

In infrastructure projects they have a sense of ownership.

They feel that they should do it and not depend on the government. The ownership concept built in the Gemidiriya is wonderful and I believe that this is a low cost solution for rural infrastructure development.

Renate said that there are many successful rural finance programs in the world. The Gemidiriya is one of them. One is in Mexico. Under this system there is one big bank and many rural credit organisations.

They also have a good supervision system. The rural finance scheme in Ghana is also very successful. Under this system there is a network of rural banks and one apex bank, she said.