Poverty Alleviation in Sri Lanka: with special reference to Samurdhi (Prosperity) Movement By Sunil Jayantha Nawaratne Professor of Management & E-Commerce Sri Lanka Institute of Information Technology Chairman Centre for Strategic Management
Contents Poverty in the Global context Poverty in the South Asian Region Back ground of Sri Lanka Sri Lankan Economic History Poverty in Sri Lanka Poverty Alleviation Programs in Sri Lanka Samurdhi Movement of Sri Lanka Samurdhi movement today It s Strengths and Weaknesses Future of Poverty Alleviation of Sri Lanka Future of Samurdhi Movement of Sri Lanka Some comments on our Joint Research Project Final Comments and Q&A sessions
Poverty in the Global Context Definition : People living with an income of $1 a day Low income countries $2 a day middle income National Poverty Rate (NPR): is the percentage of the population living below that national poverty line Different countries have different definitions of poverty. The commonly used $1 a day standard, measured in 1985 international prices and adjusted to local currency using Purchasing Power Parities (PPP). There are many problems related to this poverty line
Poverty Rates in the Regions Share of people living on less than $1 a day (%) Sub-Saharan Africa 50% South Asia 36% China 20% East Asia and Pacific 19% Latin America and Caribbean 12% Europe and Central Asia 8% Middle East and North Africa 5% (Source: World Development Indicators, Page 1)
Poverty In the Global Context Source: 2004 World Development Indicators, Page 55-56 Country Algeria (1995) Bangladesh (1996) National Poverty Line 22.6% 51% International Poverty Line($1) 2% (1995) 36% (2000) India (1993-94) Kenya (1994) Madagascar(97) Pakistan (1993) 36% 40% 73% 28.6% 34.7% (2000) 23%(1997) 49.1% (1999) 13.4% (1998) Sri Lanka (1991) Zimbabwe (1991) 20% 25.8% 6.6% (1996) 36.0% (1991)
Extreme Poverty 1990 vs. 2001 1990 ($1 a day) 1,219 million people or 28% of the low and middle-income countries, lived in less than $1 a day. 2001($1 a day) During the next 11 years GDP of those countries grew 31% Poverty rate has fallen to 21% or 1,100 million people in extreme poverty Population growth of those countries was 15% during the period
Other Indicators of Poverty Low Income Hunger Low education Gender inequality High child mortality Poor Maternal Health Poor Shelter Poor Infrastructure
Brief Introduction to Sri Lanka Historical Back Ground 2550 years 1505 1948- Portugese / Dutch / British 1948 1977 Closed Economy 1977 To date Open Economy Overall Evaluation of Sri Lanka
Poverty Alleviation of Sri Lanka History of Poverty Alleviation Janasaviya (peoples vigor) Samrudhi (Prosperity) Movement 1994 2004 2004 onwards
Reaching MDGs in Sri Lanka (MDG=Millennium Development Goal)
Background In September 2000, all 189 UN member states adopted millennium declaration: There is wide spread political support in the development mainstream internationally and nationally People Centered and clear roles for all development partners (Governments, international Organizations, Citizens, CSOs and private sector): Scope for internalization and national capacity building (CSO=Community Service Organization) Results oriented: MDGs are results based & can make international institutions and governments more accountable for results.
UN & the MDGs Core Strategy The guiding principles for the overall strategy are that: (i) all 8 MDGs & their 18 targets are equally important; (ii) national ownership and participation will be pivotal to the achievement of the MDGs; (iii) partnership, with Governments but also with CSOs and the private sector, will be essential; (iv) much of the work required to achieve the MDGs is already underway but demands greater focus & urgency; (v) focus on MDGs neither diminishes nor precludes the important work of UN system in other mandated areas
8 Goals 18 Targets and 48 Indicators 1 GOAL 1 Eradicate extreme poverty and hunger 2 3 4 5 6 7 8 GOAL 2 Achieve universal primary education GOAL 3 Promote gender equality and empower women GOAL 4 Reduce child mortality GOAL 5 Improve maternal health GOAL 6 Combat HIV/AIDS, malaria and other diseases GOAL 7 - Ensure environmental sustainability GOAL 8 Develop global partnership for development
8 Goals & 18 targets at a glance Goal 1 : Extreme Poverty & Humber Half (1) extreme poverty and (2) hunger by 2015 Goal 2 : Universal Primary Education 3. Achieve Universal Primary Education by 2015 Goal 3: Gender Equity 4. Eliminate disparity in all levels of education Goal 4 : Reduce Child Mortality 5. Reduce under 5 and infant mortality rate by 2/3 Goal 5: Improve Maternal Health 6. Reduce MMR by 75% Goal 6 : Combat HIV/AIDS, Malaria 7.Halt and reverse spread of HIV/AIDS; 8. Same for Malaria and other major diseases
Goals, targets & indicators at a Glance Goal 7 : Ensure environmental sustainability. 9. Integrate Sustainable Development in national policies & progs & reverse loss of environmental resources. 10. Halve lack of access to safe drink water; 11. Improve the situation of slums Goal 8: Develop a Global Partnership for development 12. Open, rule-based trading & financial system 13. Address special needs of LDC 14. Address special needs of Land locked Cos 15. Deal with debt problems 16. Dev. & implet.. strategies for youth employment 17. Affordable essential drugs in dev. Cos 18. Make available benefits of the new technologies especially infor.. & comm.
Goals, targets & indicators at a glance Goals (8) & Targets (18) Goal 1 : Extreme Poverty & Hunger Halve (1) extreme poverty and (2) hunger by 2015 Goal 2 : Universal Primary Education 3. Achieve Universal Primary Education by 2015 Goal 3: Gender Equity 4. Eliminate disparity in all levels of education Goal 4 : Reduce Child Mortality 5. Reduce under 5 and infant mortality rate by two thirds Goal 5: Improve Maternal Health 6. Reduce MMR by 75% Indicator(48) 1. Population < $1; 2. Poverty Gap ratio; 3. share of consumption of poorest 20%; 4. % of underweight >5y; 5. % below min. dietary energy consump. 6. Net Primary Enrolment Ratio; 7. % children reaching Grade five; 8. Literacy rate of 15-20 9. Female Gross Primary Enrol Ratio as a % of male ratio; 10. 15-20 M:F Literacy Ratio. 11. Share of women in non agric. wage employment. 12. % women MPs 13. <5 mortality rate; 14. IMR; 15.% of <1 immunized against measles 16. MMR; 17. %births attended by skilled health workers
Introduction Samurdhi means Prosperity. Started in 1994 as the national poverty reduction program. It s just an 11 year old movement but a strong and steady one. The original concept was designed and developed by Hon. S.B. Dissanayake, who was the Minister of Samurdhi, then.
Situation Now Today, it is a giant organization with a national network of CBOs as well as public administration network. (CBO=Community Based Organization.) At present, nearly 26,000 full-timers are engaged as Change Agents of the movement. 24,000 SDOs and 2,000 graduate managers. (SDO=Samurdhi Development Officer) Nearly 2,000,000 families are covered.
Vision & Mission Samurdhi movement has a very clear Vision. Mission, Goals, Objectives, and Strategies. We will highlight the Vision and Mission here.
Vision Prosperous Sri Lanka with Minimized Poverty
Mission Contributing to the national development through empowerment and graduation of the low-income people out of Poverty Line and reducing disparity in their livelihood in the manner of participatory development through the process of identification and development of innate abilities of the low income families in the form of effective, efficient, sustainable and pro-poor poor manner.
Our Major Achievements During the last 10 years the movements major achievements are as follows:
Our Formal & Informal Organizational Structure Samurdhi Movement is a combination of both formal & informal structures. Formal Structure Ministry, Departments, Authority, District Secretaries, Divisional Secretaries, Areas(kalapa), Village Vasama (Grama Vasama).
Formal Structure MINISTRY OF SAMURDHI POOR RELIEF DEPARTMENT SUBSIDY PROGRAMME SAMURDHI AUTHORITY SAMURDHI COMMISIONER'S DEPARTMENT EMPOWERMENT AND DEVELOPMENT PROGRAMME SOCIAL INSURANCE AND INFRASTRUCTURE DEVELOPEMNT
Formal Structure National Level Provincial Level 9 provinces (no office) District Level 25 Districts Divisional Level 323 Divisions Grama Vasam 14,100 vasam Villages 52,000 villages Families 4,000,000 (total number)
Informal Structure Family level 2,000,000 5 member group 326,000 groups Samurdhi Society Village level Area (kalapa) Society Area level 1,000 General union (Maha sangam) level 179 District level 25 National level 1 ( Poor Peoples Parliament)
Major programs Programs are divided into six major areas. 1. Social Welfare (safety net) 2. Social Insurance 3. Infrastructure Development 4. Micro Credit 5. Income Generation 6. Socio-cultural Development
Social Welfare Implemented by the department of poor relief. Poverty Line Rs. 1,500 per family/per month. Subsidy scheme Rs. 1,000, 700, 400, 350, 250, 140 Total subsidy amount Rs. 12,000,000,000. (US$120,000,000)
Samurdhi Subsidy Program by year 2005 No. of Families 9,6 35 mil. 4,7 42, 70 5 2,0 65, 55 4 3 6 8, 2 5 7 2 4 4, 4 5 7 3 6 7, 6 5 5 4 6 4, 2 1 8 6 1 3, 7 8 2 7, 8 4 0 All Am ou nt Tot al Fa mil y Nu mb er Rs. 1 4 0 Rs. 2 5 0 Rs. 3 5 0 Rs. 4 0 0 Rs. 6 0 0 Rs. 1 0 0 0 Dis tric t
Social Insurance Program Implemented by Samurdhi Commissioners Department Rs. 30 deducted from the subsidy and entitled for followings: Death Rs. 5,000 Wedding Rs. 3,000 Child birth Rs. 2,000 Hospitalization Rs. 1,500 (Rs.50 x 30 days) Educational Scholarship Program for AL students. 6,000 students are getting this.
Infrastructure Development Program Implemented by Samurdhi Authority Participatory Development Approach Basic Material Cost from the Government and labor contribution from the beneficiaries. Up to now progress is as follows:
Rural Development Division Infrastructure development through community participation Rs. 200 million in year 2003. Bank building network development Canals, rural roads, steps, culvert, agro-wells, common amenities development One month subsidy donation program Ratnapura district Kuruwita example
Micro Credit Program Samurdhi Bank network has been developed. At present 1010 banks are operating. (Including North-East areas) Two types of savings Compulsory savings: Rs. 100 from subsidy Voluntary savings Program progress is as follows:
Samurdhi Bank Program - Compulsory Savings - Rs. 6 Billion - Voluntary Savings Rs. 4 Billion - Self Employment Loans - Agricultural Loans - Consumption Loans - Recovery Rate - Bad Debts
Socio-cultural Development Social Development, Human Resource Development, Youth & Cultural Development Programs are implemented. Samurdhi Housing Development Lottery Rs. 10 from subsidy Rs. 150,000 x 100 houses in a month. Up to now progress is as follows:
Social Development Anti smoking, alcohol, and drug prevention program. Reducing Illiteracy program Suicide prevention and reduction program Anti smoking flag day housing development for acute poor ( Rs. 18 mil- 2002) 2000 houses Child care and widow mother development Specially trained 450 SDOs are engaged
Youth and Cultural Development New division of the authority Alleviate poverty through youth development (empowerment) Vocational training Talent identification and development Organizing the youth and provide knowledge, information, attitude and skills
Income Generation Programs Also Implemented by SA. Agri-Business, Livestock Development, Small Industry Development, Marketing Network Development Programs. Up to now progress is as follows:
Agri- Development Division Forward contracting cutting flower & leaves, horticulture, organic rice and vegitable Export Oriented Agriculture New Technology Drip / Sprinkler /Poli-Tunnels / Post-harvest technology 42,000 families to be empowered in 2003
Livestock Development Reduction malnutrition and improve income generation Back yard poultry / Goat farming Sub-contracting with private sector Nelana Farm + Samurdhi Program - cage for 1000 birds by the people - chicks, food, drugs and extension services from the company - after 42 days guaranteed purchase - average income after 42 days per family Rs. 25000 30,000. ( Nelana = a poultry company)
Small Industry Development Alleviate poverty through value addition Micro and small industry development red-clay, coconut fiber pots, garments, metal crushers, lime processing, rice milling and packing, steel furniture, decorating lights, electric and electronics, wooden furniture for some examples.
Marketing Network Development Rural fair development 300 rural fairs Home based retail shops Wholesale suppliers Door to door distribution (milk, bread, news paper, vegetables, etc.) Samurdhi Home Services Ltd. Ice-cream distribution through three wheelers Cargils Magic Ice Cream
Ultimate Objective Graduation of low income families from the poverty through total empowerment: Economic Empowerment Social Empowerment Cultural Empowerment Physical and Psychological Empowerment Political Empowerment (Leadership)
National Targets - 2003 Contributing to the national economy more than the double the cost of the program Total Cost Subsidy Rs. 9 bil. Admin. - Rs. 3.5 bil. Total - Rs. 12.5 bil Estimated total contribution Rs. 28 bil In way of Income improvement, Infrastructure development, Housing development, and improved savings.
Graduation from poverty Monthly income has to be improved more that Rs. 5000 Total families in the year 2003 200,000 families. District allocation and divisional allocation is given to each district and divisional heads. Various poverty reduction plans: NPRP / DPRP/ DivPRP/ KPRP / VPRP
Investments in Community Projects 1995 2001 (Rs. mn) Year No. of District Secretariat No. of Divisional Secretary Divisions Investment s No. of Projects 1995 18 235 114.06 11,306 1996 18 235 210.52 11,640 1997 18 235 562.54 11,288 1998 21 283 373.50 6,061 1999 21 283 611.90 13,206 2000 21 294 416.65 6,071 2001 21 301 169.67 2,005 Total 21 301 2458.84 61,577
Community Dev. Projects Project Category Irrigation Canals/Dams/Anicuts Public Wells/Agri Wells/Small Scale Water Supply Schemes Transport/ Roads/ Bridge / Culverts / Climbing Steps Marketing Centers / Collection Centers/ Public Facilities Total 7,099 x Rs. 10,000 12,428 x Rs. 50,000 28,318 x Rs. 100,000 5,443 x Rs. 10,000 Actual Value 70,990,000 621,400,000 2,831,800,000 54,430,000 ( Anicut = a concrete dam in a canal)
3. Samurdhi Banking Program Savings Program No. of Families Amount Rs. Million Compulsory 886,055 6,367 Voluntary 366,234 (Small Groups) 4,556 Promoted by Change Agents?
Quantum & Value of Loans given by SBs Category Quantity Percentage Amount Rs. Million Percentage Agriculture 192,514 22.00 1,084 17.9 Consumer 41,074 4.70 46.8 Fishery 12,087 1.40 14.8.24 Distress 14,076 1.60 15.1.26 Selfemployment 613,595 70.30 4,869 80.80 Recovery % Default % Market Leader Micro Fin. 104.0 3.5 4 th in the Market
Labor Intensive People's Projects (LIPP) Special feature of this Programme is the expenditure 65% of the allocated provision for rural labor and balance 35% as the Capital.
Projects Constructed Under the Labour Intensive People's Projects (LIPP) Particulars 1998 1999 2000 Total Total number of projects 1,385 571 916 2,872 Small Tanks 645 183 209 1,037 Minor irrigation 587 348 595 1,530 Agro wells 116 24 101 241 Other 37 16 11 64 No. of beneficiaries 92,005 42,644 83,202 217,851 Extent of land cultivated 27,301 21,254 45,175 93,730 Number of labor units engaged - 400,154 678,826 1,078,980 Amount of expenditure Rs. million 200 100 140 440
Other Programs Program Small Industry Dev. Agriculture Dev. Animal Husbandry Marketing Development Social Security Program No. of families 5,256 4,326 1,022 8,173 21,142 All Implemented By the Change Agents Benefit Training & Employment Training & Financing Projects Training & Financing Projects Weekly fairs, Trade Centers, Mobile Stalls Death/Marriage/Birth / Ailments Relief
Budgetary Allocation and Actual Expenditure for Development Programmes 1996 to 2002 (Rs. mn) Year 1996 1997 1998 1999 2000 2001 2002 Allocation 400.0 978.7 930.0 942.0 500.0 403.0 50.0 Expenditure 308.5 749.0 991.0 845.0 564.0 406.0 32.4
Cost & Benefit of the Change Agents? Total Cost of SDOs & SMs 28,000 x Rs.10,000 = Rs. 280,000,000 If one officer can graduate 10 families out-of poverty trap by improving their income up-to Rs.3,000 a month the Total Benefit will be 26,000 x 10 x Rs. 3,000 = Rs.780,000,000 If 200,000 families income can be improved up-to Rs. 3,000 per month then = Rs.600,000,000 If 100,000 families income can be improved up-to Rs. 3,000 per month then = Rs. 300,000,000.
Samurdhi Movement Has Done a Lot Through our village based Change Agents has done a lot to Empower the Poor and Graduate them out of the Poverty Trap. It has a giant network Let s use that network more Effectively and Efficiently through Pro-poor Approaches for the benefit of Poor People themselves.
Percentage of poor household by area and survey period Area Sri Lanka 2002 Percentage of poor households 23.9 Survey Period 1995/96 1990/91 Percentage of poor households 26.7 Percentage of poor households 30.4 Sector Urban 7.9 13.4 18.2 Rural 26.4 28.7 34.7 Estate 22.1 26.1 20.5
Per capita income (average monthly) by area and poverty status of the household - 2002 Area Mean per capita income per month Non- poor households Rs. Ppoor households Rs. All households Rs. Sri Lanka 3709 1341 3048 Sector Urban 5654 1435 5243 Rural 3402 1348 2765 Estate 1928 1135 1707
Electricity, Telephone and LP Gas using; households (percentage) by area 2002 Area Sri Lanka Mean per capita income per month Electricity using households % 65.7 Telephone using households % 22.9 LP Gas households % 22.9 Sector Urban 86.8 47.1 57.7 Rural 64.2 19.6 18.8 Estate 37.1 14.6 2.5
We vs. Them 1950-2000 Per Capita Income in US$ Country SRI LANKA JAPAN SINGAP 1950-$ 89 90 30
Japan vs. Sri Lanka Per Capita income in US $ Country SRI LANKA JAPAN SINGAPOR E 1950-$ 89 90 30 2000-$ 840 32,000 28,000
Growth Compared Country 1950 2000 Growth % Sri Lanka 89 840 9 Japan 90 32,000 355 Singapore 30 28,000 933 Malaysia 30 3,420 114
Why did this happen to us? 1. No Long-term Vision 2. Too much freedom / No discipline 3. Giving every thing, everyday, to everybody free of charge 4. Working on wrong paradigms and conflicting policies
Public Debt Central Bank Report 2002 Year Total Rs. Millions As a GDP % As a GDP % As a GDP % ( 000) Domestic Foreign Total 1950 654 13.7 3.2 16.9 2000 1,218,70 0 53.8 43.1 96.9 2002 1,669,28 4 59.8 45.5 105.3
War Expenditure Defense Budget 1998 2003 Rs.Million Year 1998 1999 2000 2001 2002 2003 Rs. Mill. 42,496 40,071 56,915 54,242 50,212 49,721
Foreign Exchange Central Bank Report: 2002 Year US$ UK Pounds Japanese Yen 1950 Rs.4.76 13.33 0.01 2000 Rs.75.78 114.78 0.70
The Way Japanese Think Kuni Country Kaisha Organizatio n Kazoku Family Boku Self
Our GNP vs. Global 500 2001 Our GNP was Rs. 1,377.1 US $ Bil. 15.4 2000 GLOBAL 500-World s Larges Corporations RAN K 1 10 20 30 34 40 41 292 CORPORATION GENERAL MOTORS ITOCHU NISSHO IWAI SONY HONDA FIAT NESTLE KAJIMA REV:$ Bil 176 109 65 60 54 51 49 15 5 EMPLOY EES 388,000 5,306 18,446 189,700 112,000 221,043 230,929 12 247
Honda s Growth Mr Honda also started his company in 1948 In year 2000-34 rank /US$54 bil /112,000 employees In year 2003-25 rank / US$72 bil/ 131,800 employees. 2000 2003 33% growth, 9 positions up. If assumed in year 2003 our GNP is US$ 20 billion, there are 248 companies are their bigger than our GNP. 248 th Company Aventis (France)
Sri Lanka s s Largest Companies 2001 GNP was Rs. 1,377.1 1,377.1 (US $ Bil. 15.4) 2000 TOP TEN In Sri Lanka RANK 1 2 3 4 5 6 7 8 9 10 COMPANY NAME JOHN KEELS HAYLEYS HNB CENTRAL FINANCE NDB COMMERCIAL BANK DISTILLERIES COMPANY CEYLON TOBACCO COM. NESTLE AITKEN SPENCE REV:$ Bil 0.105 0.089 0.078 0.062 0.046 0.045 0.043 0.041 0.0395 0.0394
2004 Top Ten Companies Overall Performance 1. Distilleries Company of Sri Lanka (5.940) 2. John Keels Holdings (5.750) 3. Sri Lanka Telecom (5.075) 4. Hatton National Bank (4.160) 5. Commercial Bank (4.065) 6. Ceylon Tobacco Company (3.800) 7. Aitken Spence & Company (3.565) 8. Hayleys (3.060) 9. DFCC (2.910) 10. Carson Cumberbatch & Co. (2.850) -
Top Ten 2004 Based on Turnover ( 000) 1.Sri Lanka Telecom Rs.25,553,000 2.John Keels Holdings Rs.20,924,520 3. Hayleys Rs.15,476,576 4. Hatton National Bank Rs.15,158,444 5. Seylan Bank Rs.11.110,059 6. Distilleries Co. SL Rs.10,651,406 7. CIC Rs.10,018,981 8. Commercial Bank Rs.9,749,463 9. Aitken Spence Rs.9,049,244 10. Central Fiance Rs.8,408,531
Strategic Approach 1995 1990 2000 1985 1980 1975 2005 Strategic 2010 1970
Effectiveness & Efficiency Effectiveness Do the right things
Poverty Indices District wise (Except N/E) District Poverty Incidence District Poverty Incidence Colombo 10 K negala 34 Gampaha 11 Puttlam 33 Kalutara 26 A pura 33 Kandy 30 P naruwa 27 Matale 35 Badulla 30 Nuwaraeliya 21 M gala 49 Galle 25 R pura 37 Matara 28 Kegalle 25 H tota 27 Sources: Poverty estimates: Gunawardana 2000;
GDP Shares and Average Growth (Province) Province Western North Western Central Sabaragamu wa Southern Eastern Uva North Central North 1996 43.5 11.3 10.6 8.9 9.1 4.8 5.0 4.5 2.4 2000 49.4 10.4 9.9 9.3 6.7 4.5 4.0 3.8 2.1 Average Growth % 3.3-1.8-1.6 1.2-7.1-1.2-5.1-3.6-2.6
Tada ga Ichiban Takai FREE IS MOST EXPENSIVE
DEAD MONEY & LIVE MONEY Shinigane Ikigane