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Sri Lanka’s Post-War Poverty Trap

By Meera Srinivasan

The recently-released findings of Sri Lanka’s Household Income and Expenditure Survey has revealed that eight years after the civil war ended, people in the war-hit north and east are gripped by poverty. Kilinochchi, the former rebel stronghold, has the highest level of poverty headcount at 18.2%, over four times the national average.

The coastal district of Mullaitivu, which witnessed the gore of the final offensive that claimed an estimated 40,000 lives as the armed forces defeated the LTTE, has the country’s lowest median household income per month, at LKR 25,526 (about ₹10,000), significantly lesser than the national average of LKR 43,511. Even the estate sector, notorious for its persisting poverty levels and exploitation, fairs marginally better.

Recovering from three decades of strife was never going to be easy, considering the enormous loss of assets and livelihoods. The government’s post-war development drive was centred on infrastructure and credit-driven entrepreneurship. Even though the new infrastructure restored much-needed connectivity for those living in the former battle zone, its reach and purpose remained rather limited in a local economy that had degenerated in the years of war. It was mostly traders from the south who took maximum advantage of it.

Aggressive expansion of credit through loans and microfinance, with predatory interest rates, pushed a livelihood-starved population into an even deeper debt crisis. In effect, not only did the state’s measures fail to resurrect an ailing economy, but loose credit from banks and financial companies also created a poverty trap, firmly entrenching it as a post-war reality.

There were early manifestations of the problem soon after the war, in falling incomes, people migrating for employment and debt-ridden individuals even committing suicide. However, it drew little notice from those in power, both at the Centre and at the provincial level, until recently.

It was the Central Bank that first acknowledged the problem in May and undertook a study on the high levels of household debt pervading families in the north and east. The seriousness of the situation prompted its Governor to look at regulatory measures to free the people from the firm clasp of financial companies. The apex bank’s intervention has now brought belated national attention to the matter.

Recently launching ‘Gramashakti’, an initiative focussing on the island’s rural areas, President Maithripala Sirisena spoke of a likely relief package in the coming Budget for families under a huge debt burden. “Private banks and financial institutions descended on the north and east soon after the war and motivated most of the families to obtain loans under their microfinance programmes,” he said.

Two narratives

In declaring 2017 as the year of poverty alleviation in Sri Lanka, initiating a programme that focusses on the country’s villages, and voicing concern over debt, President Sirisena has turned the spotlight on Sri Lanka’s rural economy, apparently counter-balancing Prime Minister Ranil Wickremesinghe’s emphasis on urban development and trade liberalisation. Through their respective thrust areas, the two leaders are also speaking to their core electorates.

The senior politicians will know well that prevailing economic conditions are central to people’s voting decisions. And that is perhaps why at a Cabinet meeting last month, Mr. Sirisena reportedly brought up the rising costs of living as an impediment to facing elections. (Courtesy The Hindu)

7 Comments for “Sri Lanka’s Post-War Poverty Trap”

  1. Trevor Jayetileke

    Yes we have a ‘Poverty Trap’ like we have a ‘Debt Trap” and the two are interrelated and one feeds on the other.
    There does not seem to be any hope on the Horizon for a solution to these two problems except we get into more debt in the process which exacerbates the situation. World Financial Bodies like the World Bank/IMF also gets entwined in our predicament yet we seem to be heading to a edge of the cliff and despair sets in.
    What do we do now?
    My advice to my people is to get together and PRAY to our collective God’s irrespective of what our faiths are seek a consensus that we could overcome this dilemma that has taken away their means to live a decent life with their Children..
    When I see the Picture in this article my Heart brakes for them looking helpless.
    If the people of Sri Lanka are behind me I will seek a solution to their problem and for this purpose I will come HOME to my people after over 40 long years in exile.
    We have to come to the conclusion that there is a solution to any problem but we have to look at the right place and if there is a WILL then there is always a WAY.

  2. Kumar Soysa

    Whether it is the “Yahapalanaya” or the previous administration, we as a civilized society has an OBLIGATION to assist these poor and desperate souls to merely LIVE. In my visits to the North East in the recent past, I have seen how desperately poor these people are. They have a bare roof over their heads, have to walk miles for water, food is very basic and items like milk, sweets, toys etc for children are hardly seen. Many are shattered by the “war” and they have lost loved ones and bread winners as well as eyesight, limbs and all their property. I have to say that roads that were mere tracks during and prior to the war have been paved, and many areas are getting power. But, transport, water supply, grocery stores etc are non-existent. What good are roads and electricity, if they have no water for basic needs and cultivation, no base for earning even a minimal salary? The government, society and the diaspora can do so much but hardly anyone cares, except a few Christian groups and a little work done by NGOs.

    God will hold us responsible for the lack of interest in addressing these issues. If a fraction of funds used by the people living in the cities to address these needs, then there will be smiles on the faces of these poor brothers and sisters.

    • robert

      Poverty of these people are not merely because of war; It was a well planned atrocity by negligence. Former Almighty took all funds received for the north to his region in the South. I have to the south to see how prosperous are the southerners.
      Karma hits not the perpetrators, but their children some day.

  3. Sangaralingham

    Poverty is national crisis. With all donations etc poverty still excist is a shame and tragedy in all of us., that is all the reason we need complete revamping of social political moral behavioural changes among all the citizens of the land. Getting help from overseas also send family against family individual against individual with all debt unemployment bad weather interference by armed forces police even close associates neighbours s
    Weather flods por harvest etc make things bad.resolve poverty improve morals lead to production improved education etc

  4. Eng.M.V.R.Perera

    Get rid of segregated schools by making English the medium of instruction from kindergarten upwards also get the assistance of the British Council to make all Sri Lankans including our representative in parliament proficient in English . Also Support all Buddhist organizations and the people of our Country who are claiming from our government the rights they were given at the Kandyan Convention which has not being full filed by our government while in New Zealand a Similar agreement called Waitangi Agreement is being full filed by the New Zealand government by giving to the Maoris back their land and their fishing rights and is the subject matter in their schools while in our schools I am not aware whether Ceylon History is taught in our schools. It is because of Ceylon History being taught in our school during colonial time I came to Know of the Kandyan Convention . Why have a change in the constitution when it can be amendment our constitution has been amended only about 21 times but the Indian Constitution has been amended over 200 times even with such amendments the death due to communal violence averages over 3 per day let this not happen to our Country because of the 13th amendment which was forced down our throats by India by the so called Indo Sri Lanka agreement of 1978 which we Sri Lankans should never forgive or forget , which agreement main part of disarming the LTTE India did not full fill and as such has caused over 100000 Sri Lankan Lives, over 100000 Sri Lankans suffering loss of limbs, hands and eyes and several billion US $ financial Loss to Our Country Why do not a patriot organization go to the Supreme Court on the basis of article 126 (5) by which a petition in the Supreme Court should be completed within 2 months of filing a petition in the Supreme Court or making such reference and get this 13th amendment nullified naming TNA, India and LTTE fronts in several counties as respondents.
    Our Country cannot get investors to our country because of our President the moment he became President he made a declaration about climate change to please the west he did this twice recently when our per capita carbon emissions were one of the lowest in the world of 0.67 while I wish to state per capita carbon emission of 0.61 metric tons per year is very low compare it with Malaysia a developing Country (6.7) and the US a developed Country (19.78), is 10 times and 30 times more respectively and as such there should not be any concern regarding carbon emissions these are supported by the per capita carbon emission per year statistics

    from the internet .and also it can be stated from the data from internet it can be computed that even if we have 10 coal power stations the size of Norochoholai producing a total of 70 billion units per year, our per capita carbon emission per year will not exceed 70×109/21×106= 3040 Kg=3.04 metric tons assuming a population of 21 million and 1000Kg= a metric ton, as such there is no threat of carbon emission to our country by planning for accelerated coal power projects as many as required for our country. The President’s statement contravenes article 3,4,12, 27 and 33 (f) of our constitution and as such direct foreign investors are avoiding us like a plague and also his reliance on solar power can be established has the biggest fraud committed in our country’s history which also has destabilized our country’s economy.

  5. srilanka is poverty country but north and east are were worst. slfp present mr Rajapaska is the main caused then mr srisena was one of the cabinet in mr Rajapaks ministry,they killed onehundred thousand person tamil, and Sinhala who are against him and brother must in jail but he supported by president government,

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