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| Sunday, 31 October 2004 |
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Microfinance reduces rural poverty Microfinance provides small-scale financial products such as saving schemes, credit facilities,insurance schemes, recognized as one of the effective instruments for poverty reduction in the country, Following remarks were made by S.S Colombage, Professor,Department of Social Studies, Open University of Sri Lanka at a lecture titled "Micro Finance as an Instrument for Small Enterprise Development:Opportunities and Constraints at the Centre for Banking Studies of Sri Lanka (CBSL). He said that, microfinance brings about a progress on living conditions of the poor and brings improvements in food intake, health, housing and education. Saving and insurance facilities provided under microfinance help to reduce various kinds of risks faced by the poor and it also provides a variety of enterprise services like skills development,training, advisory and counselling services, technical advice and market guidance. In Sri Lanka most of the studies on microfinance focus on a single microfinance programme and therefore it lacks a wider coverage. In his presentation Prof Colombage highlighted key findings of an Impact Assessment Survey of Microfinance conducted in Hambantota and Moneragala districts. This survey is a part of an on going research survey on Impact Assessment of Microfinance conducted by the Department of Social Studies of the Open University of Sri Lanka in collaboration with the University of Lund, Sweden. This three- year project 2003-2005 is sponsored by the Swedish International Development Agency (SIDA) under the Swedish Asia Research Partnership. At present studies conducted on microfinance pertaining to Sri Lanka do not adequately address the question on the issues of the poverty alleviation."Most studies without applying any scientific tests have accepted the hypothesis that micro-finance does have positive socio-economic effect,"Prof Colombage noted. He emphasised that a major objective of their study is to fill this lacuna by applying credit and different socio-economic variables,tested in this analysis. "We have adopted a wide approach in our study taking into account a multitude of factors affecting the performance of microfiance including both the client and small enterprise," he noted. Prof Colombage said that microfiance alone cannot eradicate the poverty in our rural economy and pointed out that it can improve the living conditions of the rural masses in a considerable manner as the system is not an alternative to get away from the poverty trap what-so-ever. According to Prof Colombage, findings revealed that more than 90 per cent of borrowing is between Rs 10,000-30,000, which shows a certain degree of limitation and a constraint on microfiance However, this has enabled to sustain the economic conditions of the rural economy. He also said that technology is the main factor for the country's growth adding to that microfiance should focus on this sector, he concluded. (HHS) |
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