SRI LANKA: Small Credit Makes a Big Difference in Women’s Lives

By Feizal Samath Reprint | | Print |

Feizal Samath

COLOMBO, Jun 30 2003 (IPS) - Winnifred Weerasinghe gave up a teaching job due to health problems and tried her hand at being self-employed. Struggling until Ceylinco Grameen Credit Ltd extended her a small loan, the 45-year old Sri Lankan now sews clothes for the local market and has been able to have her own house built.

Similarly, Mariage Maheswaran is preparing to buy a plot of land among rows of tenement houses just behind Prime Minister Ranil Wickremesinghe’s official residence at Kollupitiya in the heart of the capital – all because of access to low-interest loans.

”If not for this, we would still be struggling,” she says, pointing to Victor Ratnayake, executive director of Ceylinco Grameen while packing a lunch packet. Maheswaran sells 170 lunch packets a day now compared to just five, four years ago.

Weerasinghe and Maheswaran are among a group of struggling women entrepreneurs who have access to cheap credit without any security or collateral, unlike normal commercial banks.

The Ceylinco group is a giant conglomerate in Sri Lanka with more than 120 companies and thousands of employees involved in banking, insurance, information technology, real estate and other businesses.

Ceylinco offers loans starting from 5,000 rupees (about 50 U.S. dollars) to double that amount. "When a recipient completes the payment of the first loan, then she is entitled to a bigger, second loan and so on up to 100,000 rupees. At that point, they have built up their business and have sufficient collateral to take bigger loans from a commercial bank," Ratnayake said.

This is how Ceylinco has helped them grow out of poverty toward a more sustainable business and a chance to grow further, he noted.

The programme was born in 1996, just after the Ceylinco headquarters building in the main business district of Fort was devastated by a Tamil rebel bomb that targetted the Central Bank building across the road.

Ceylinco group chairman Lalith Kotelawela suffered injures in that blast and while recuperating in hospital, read a book on banking for the poor authored by Prof Mohamed Yunus, architect of the Grameen banking concept of microcredit in Bangladesh.

Impressed, Kotelawela, one of the most wealthiest men in Sri Lanka, sent two of his senior executives, including Ratnayake, to study the Bangladeshi scheme.

The company has so far disbursed more than 90 million rupees (937,500 dollars) in loans to some 10,000 women entrepreneurs across the island nation, including its war-torn north and east.

There is also a sponsor-an-entrepreneur programme under this scheme, which has attracted wide public support through donations. Ceylinco picked as its first target group 100 women and 60 men at Kollupitiya. But the men were soon moved out of the programme because of alcoholism and their inability to do business, reinforcing the trend that also emerged in Bangladesh and showed that microcredit goes further with women.

Ceylinco decided to extend it only to women who were to be more responsible, hardworking and more committed to the family. There are 400 recipients in this particular Kollupitiya locality.

The only requirement to being a member of this scheme is that recipients are poor, according to a Ceylinco Grameen statement. "We train and guide them to develop their own small business,” it said.

The scheme has worked far better than normal commercial banking loan schemes – the repayment rate is more than 100 percent. "The repayment rate is amazing. The recipients are more responsible and payments are made on time. They are a very disciplined lot," Ratnayake added.

Ratnayake and his officers often visit the homes of the microcredit recipients. "They want me to contest local council elections," he laughs, after a sweaty woman behind a claypot cooking, shouts out, ”Ah sir, how are you?” as he walks through a row of tenement houses.

The programme has made a difference in the lives of women like Nadaraja Sumathi, who was selling just 50 stringhoppers – a kind of pancake made out of noodles strung together – until she heard of Ceylinco Grameen credit.

With the help of start-up capital from Ceylinco, Sumathi is now selling 2,000 stringhoppers a day and making a comfortable profit.

"You don’t need to look for the poor outside Colombo. They are there right in the heart of Kollupitiya, a wealthy area in the capital," explains Ratnayake.

From stringhopper makers, coconut sellers, toilet cleaners, seamstresses to a woman who runs a welding unit, the Ceylinco Grameen scheme – modelled on the lines of the Grameen banking concept in Bangladesh that has benefited millions there – has enriched the lives of thousands of families in Sri Lanka.

Ceylinco Grameen has a staff of 110 officers working out of 14 branches in Sri Lanka. Its employees include those who began as peons who have gone up the ladder to be branch managers.

The company’s main office, unlike the group’s other businesses located in high-technology, sophisticated buildings, is sparsely furnished.

Loan recipients are covered by an insurance scheme – accident, medical and death. In case of death, the balance repayment of the loan is covered by insurance and the bereaved family is spared the worry of having to repay it.

Administrative costs are covered by the two percent interest charged on each loan. Interest on normal business loans are 12 percent and over.