PAMP helps NE small industrialists

by Gamini WARUSHAMANA

Poverty Alleviation Micro Finance Project II (PAMP-II) of the Central Bank now reaches the War affected North and Eastern provinces. State owned Bank of Ceylon (BoC) and People's Bank (PB) have already released millions of rupees for poor people in the two provinces to start income generating activities.

Women entrepreneurs participate at the awareness program organised by BOC.

The Assistant Governor of the Central Bank W.M. Karunaratne said that the small entrepreneurs should understand the benefits and opportunities offered by the various financial institutions as well as the risks in dealing with informal financial institutions. Financial inclusion is crucial for the SMEs. Access to the formal financial system is difficult, but after you enter into the system there are huge opportunities, he said. He was addressing an awareness program organised for women entrepreneurs in Kathankudy, in the Batticaloa district where over 350 women participated.

Today after 30 years of conflict the common enemy of all communities in this region is poverty. We have to break the vicious cycle of poverty. This credit scheme will help the poor people in the country to start income generating activities, Karunaratne said.

PAMP provides loans through commercial banks for livelihood development at 12% interest in ten districts including Batticaloa and Jaffna. PAMP is a credit plus approach of the central bank where the borrowers need not provide collateral. The loan security is ensured by organising entrepreneurs in small groups and closely monitoring the progress of the businesses. The small groups are saving money in the banks and the group is commonly responsible for repayment of the loans. It covers farm and non farm economic activities and provides Rs. 50,000 maximum credit for a project with repayment period of three years. The target group is poor people with less than Rs. 15,000 monthly family income.

The manager of the BoC Kathankudi branch V. Rangeshwaran said that the bank has already issued Rs. 21.8 million for 436 small entrepreneurs in Kathankudy.

Most of the livelihood projects started in Kathankudy are small industries. Kathankudy town in the Eastern coast is famous as the industrial hub of the district. There are hundreds of small industries at household level. It is also famous for duplicating reputed global brands in garments as well as other industrial products and for smuggling goods from India.

The population of Kathankudy is Muslim. The town has suffered heavily from the civil conflict and was under LTTE control over a long period. In August 1990 LTTE massacred 103 people in the Kathankudi mosque.

Part of the town was destroyed by the tsunami of 2004. The town is rebuilding to reflect its ethnic composition. Two arabic arches are under construction to simulate an Arabic city. In addition a row of date palms have been planted along the main street.

Siddi Rasina (48) has obtained Rs.50,000 from the BoC under PAMP and she has started making fans using palmyrah leaves. The rough product painted in dark colours is far behind in quality compared with imported Chinese products selling in Colombo streets. "These are not for the posh people in Colombo. All of our products are sent to Jaffna and people use them. It is durable. If we produce for the Colombo market we have to make them differently. I make a profit of rupees seven per fan and earn around Rs. 20,000 monthly", she said.

Women entrepreneurs of Kathankudy with their products.

Gesmina Subair (32) has started a dressmaking business using the loan. She has three sewing machines. "I produce ladies garments and earn profits and I have Rs. 15,000 in small group savings" she said.

Shur Fauma (48) has started a retail shop with the Rs. 50,000 loan she obtained from the BoC.

M.K.M. Alavia (36) has also started a dressmaking project. She too is making ladies garments. She sells them house to house with the support of her husband and two sales girls. She said that there are ample opportunities to expand the business. She expects to repay the loan and go for a bigger loan.

M.A. Hakeemul Ameen has started a footwear manufacturing unit under the "Good Way Footwear" brand. This is a competitive business because there are many others who do the same thing in this area. "I sell my products with a Rs. 50 profit margin", he said.

Apart from PAMP, CB has planned to provide Rs.27.8 billion for 12 special loan schemes targeting SME sector, agriculture and livestock development and self employment creation for students passing out from vocational training institutes.

'Saubagya' a loan scheme launched recently for the SME sector provides credit up to Rs. 20 million from any registered commercial bank or registered specialised bank at 9% and 10% interest rates.

SMEs affected by war, economic downturn or a natural disaster can obtain a maximum of Rs. 20 million credit at 9% interest for restoring the business. New SMEs and existing ventures can obtain credit up to Rs. 500,000 at 10% interest rate for expansion. The repayment period of the loan is a maximum five years with a grace period of six months. CB has allocated Rs. 500 million for the scheme.