Hindsight - some thoughts on coordinating the Lanka Mahila Samiti's Small Enterprise Development Programme

 

Hindsight can be quite uncomfortable as those of my generation are keenly aware. In the current context when microfinance seems to be endangering the lives (200 plus women have committed suicide because of their inability to payback microcredit loans), livelihoods and wellbeing of many rural women and their families, and where the limited vision of the  Microfinance and Credit Regulatory Authority Act is likely to exacerbate the situation, my own engagement in the early 1980s implementing the Lanka Mahila Samiti’s Small Enterprise Development Project for Rural Women (SEDP), funded by USAID, makes me feel somewhat complicit in this rather egregious situation.  In this short article, I would like to recall the spirit of the SEDP and its impact on the participating women.  I believe this will provide a historical understanding that could be absent from the analysis of microfinance delivery or from the lived experience of the women imprisoned in the financial violence of the current system.   

The Lanka Mahila Samiti (LMS) is Sri Lanka’s oldest women’s organisation, set up in 1930 with the intention of empowering rural women.   The LMS worked through Mahila Samiti set up in different parts of the island. From the beginning, the associate members of the LMS, a group of urban-based, educated, middle and upper-middle class women, worked voluntarily on improving the life skills of their counterparts in the villages through training and through organisation.  Despite its classist structure, it had what was then, a very progressive agenda of "encouraging the women of Sri Lanka to strive for their own social and economic progress and that of their village"  (LMS Handbook published in 1947)  

I became a life member of the LMS while I was at university and supported my mother in her role as the President of the organisation.  After my mother passed away in 1979, and I returned to Sri Lanka after a four-year stint in Australia, I went to work for the Lanka Mahila Samiti as the Project Coordinator of the Small Enterprise Development Project for Rural Women (SEDP).  The LMS initiated the SEDP project with support from the International Women’s Tribune Centre, New York, an international NGO that provided communication and information support to women’s groups worldwide and funding from USAID.   

The SEDP was designed around the creation of District Revolving Funds that provided members in each district with credit to support new or existing enterprises.  The funds were placed in a district branch of one of the state banks, and decisions on loan distribution and repayment were made at an assembly of Samiti representatives of each district. Loans were taken by groups formed in the samitis.  Group members acted as collateral for each other and were collectively responsible for repayment.   The SEDP secretariat, comprising myself and two other staff, were mandated to monitor the bank transactions and present a statement to the assembly, record the decisions made there and execute the next round of loans and repayments.  Each Samiti in a district appointed a “Viaparikava” or an enterprise agent, who made decisions on behalf of the groups participating in the project at the monthly assembly.   Loan applications were vetted, and the distribution of money was decided depending on the amount available in the Revolving Fund.  The women discussed repayments and defaults. Defaults because of sudden life cycle events like deaths or serious illnesses were usually considered favourably but the peer pressure to repay was still quite strong.   

The project had a large training component which included training in finance and marketing, and also technical training in the different enterprises – poultry rearing, farming, food preservation, coir work, agriculture etc.  Samiti members were also linked wherever possible to relevant local state service providers such as the local government vet, or the agrarian services. The SEDP committed to managing the District Revolving Fund for a two-year life cycle after which the Lanka Mahila Samiti at the central and local levels were supposed to take over.   

The pilot took place in the Matara district, where most of the Samiti members were coir workers, retting coconut husks and spinning white coir rope, which they sold through middlemen to Hayleys, the main buyer.  Loans taken through the LMS Matara District revolving fund enabled them to relinquish the reliance on the middleman. The credit allowed them to purchase more coir or expand their retting pits, and marketing as a collective directly to Hayleys gave them a better price for their rope.   

Towards the end of the two years of the Matara programme, the SEDP in collaboration with  IRED (Development Innovations and Networks)1 and the Canadia International Development Agency (CIDA) initiated a travel programme for the Lanka Mahila Samiti coir workers from the Matara District and coir workers from Columbuthurai in the Jaffna District to visit Kerala, the world centre of white coir fibre production.  In Kerala the Sri Lankan women were exposed to the different technologies employed by the industry, the different products being produced, and the different ways production and marketing were organised.  The exchange happened during a period where the civil conflict between the Tamil Tigers and the Sri Lankan state was very intense and was positioned by the donors as a Sinhala-Tamil reconciliation initiative.  The story of that exchange programme deserves a whole chapter of its own, but what is significant for this paper is that the SEDP's mandate stretched beyond just credit provision, to providing opportunities for participants to be exposed to new ideas and experiences.  

As the SEDP expanded to the other districts where the Lanka Mahila Samiti had a presence, similar activities also took place.  In Moneragala, where the produce from the fruit trees was so abundant, and the prices offered for fresh fruit in the local market were so low, villagers found harvesting the fruit not worth their while, and the fruit rotted on the ground.  The SEDP took samiti members to the Kollupitiya Market in Colombo and encouraged them to see for themselves how much this fruit costs in the city.  Following an entrepreneurship training for the Viaparikavas, the Moneragala Samiti members decided to start a fruit processing enterprise and make jam in small quantities.  With Prima bread beginning to hit the market, it was fast becoming a convenient breakfast food, especially for daily wage workers.  The samiti members recognised that big jam bottles were unaffordable to this potential consumer and considered small yoghurt cup sized packaging for their jam.  A volunteer from VSO was stationed in Moneragala to help develop the concept. 

Sri Lanka was not a stranger to community-driven local financing initiatives.  A traditional community-based group savings and lending system, "seettu," was, and still is, popular among low and middle-income groups.  Thrift and Credit Cooperatives were initiated in the early 20th century.  At the time of the SEDP, the  big player in the Sri Lankan microenterprise ecosystem was the Sarvodaya Economic Enterprise Development Services (SEEDS)  which was based on the Sarvodaya philosophy of self-help and included not just microcredit but also an articulated concept of "credit plus" that comprised micro-credit and savings, support for enterprise development, borrowers organised, plus other social development activities. The Women's Development Fund is Hambantota was another.  

 

So the SEDP was a project very much of its time - a time when the development sector was arguing for communities to take the initiative to improve their social and economic conditions and transforming development from a technocratic project into a political, ethical, and democratic process.  It was rooted in the ideas of Paulo Freire on critical pedagogy, Robert Chambers on participatory rural development and Orlando Fals Borda and Mohammed Anisur Rahman on participatory action research. Our inspiration came from the Self-Employed Women's Associatio (SEWA) in Ahmededebad, India and the phenomenon of the Grameen Bank and BRAC in Bangladesh. 

 

USAID, through its PISCES initiatives, was researching, providing technical assistance and funding microenterprise programmes.  The UNDP and the World Bank jumped on the bandwagon, and with hindsight one could say that it was inevitable that it would take a stronger neoliberal turn and be coopted by commercial lenders.  In fact, this cooption was facilitated by the Micro Credit Summit of 1997,  where international donor agencies, not-for-profit leaders and others working on microenterprise and microfinance in the global south formulated a plan to expand micro-credit to 100 million of the world's poorest people and sought to encourage commercial lenders to join them.   

 

From both the work of researchers and the agitation of activists and borrowers in the microfinance sector themselves, it is evident that the social and developmental missions of those early microenterprise development schemes have been usurped by the quest for profits.  In Sri Lanka, post-1977 signs of a move towards a market economy were eroding the livelihoods of SEDP participants even during the time of the SEDP.  In Moneragala, traditional farmlands were acquired for the commercial farming of sugarcane; in Matara, the coir husk retting pits were being eradicated by the burgeoning hotel industry in the interest of tourism, and mechanisation started creeping into the processing of white coir rope. In Anuradhapura, the Mahaveli scheme created a divide between those who had access to water and those that did not; in the Matale district spice growing families experienced climate changes from the setting up of the Victoria dam, and could no longer predict how much cloves or cardamoms their trees would yield.  

 

For our part, we failed to structure the SEDP in a way that ensured sustainability. It is unlikely we could have resisted the onslaught of commercial finance competitors, nor could we have transformed the SEDP into a bank or a formal lending institution. As it happened, the District Revolving Funds were gradually decapitalised, and the organisation lost people capable of managing the system.  The only long-term enterprise development success story was a village samiti in the Kegalle district, which, though deemed a 'failure' in the SEDP project reports because they consistently defaulted on their loan, were found almost a decade later, carrying out an efficient and growing poultry business that they had started with the SEDP credit!