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ADB help to uplift poor

by Channa Kasturisinghe

The Asian Development Bank's (ADB) Japan Special Fund has granted US$ 550,000 to Sri Lanka to conduct a study to develop a rural finance system targeted at improving the quality of life in the rural areas.

The study, which is most likely to lead to an ADB financed project for implementation of its recommendations will support Government policy reforms to build a market oriented rural finance system, the Governor said.

It is aimed at rationalisation of rural finance institutions and strengthening of governance.

Despite Sri Lanka's relatively high economic growth in the last decade rural poverty remains prevalent. The main constraints to reducing rural poverty have been identified as slow growth in agriculture, limited opportunities for diversification and an inefficient rural finance system.

"We have identified that providing cheap money to farmers and fishermen does not serve the purpose, Mr. Jayawardena said.

"What the rural poor need is credit to promote their agriculture and rural business. The study will enable us to identify the areas that should be developed and implement the policy reforms and undertake necessary investments through ADB financed projects he said.

The Central Bank will operate as the apex institution in implementing the project and another ADB funded micro-finance project is scheduled to be implemented next year.

"We expect the study will help Sri Lanka to strengthen the governance and financial performance of rural financial institutions in order to provide a quality service to the rural poor," Mr. Cooney said.

Since 1988, the Japan Special Fund, financed by the Japanese Government, has provided grants to prepare projects and undertake technical or policy studies. The Fund particularly supports activities aimed at poverty reduction, with an emphasis on environmental protection, gender and development, private sector promotion and financial sector reforms. Japan's contribution to the fund has amounted to around US$800 million.

Central Bank of Sri Lanka, Governor, A.S. Jayawardena and ADB Resident Representative John Cooney signed the agreement for the project yesterday at the Central Bank, Colombo, in the presence of Japan's Ambassador Seiichiro Otsaka.

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