Daily Mirror: 23/08/2006"

FOR THE last two decades, microfinance has been seen as the answer to the problems of getting financial services to the poor in rural areas. A new ADB book questions that assertion and says that microfinance development is only one part of the solution. “While the development of microfinance is undoubtedly critical in improving access to finance for the poor and low-income households and their enterprises, it is inadequate to address issues of rural financial market development,” according to the book, Beyond Microfinance: Building Inclusive Rural Financial Markets in Central Asia.

The book, a culmination of more than two years or research and analytical work, studies how rural financial markets can be developed throughout emerging Asia by drawing upon the lessons and experiences of six Central Asian republics – Azerbaijan, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, and Uzbekistan.

“The book represents an attempt to redress a serious imbalance in the attention paid to rural financial market development that has been created by the overwhelming interest in and emphasis on microfinance during the last two decades,” says H. Satish Rao, Director General of ADB’s East and Central Asia Department, in his foreword to the book.

“The emphasis on microfinance seems to have generated a view that microfinance development could provide an answer to the problems of rural financial market development.”

The books points out that while microfinance targets very small businesses and the poor, rural finance as a whole encompasses rural microfinance and cuts across all economic strata. “Institutional diversity in rural financial markets, therefore, is a goal worth striving for across the region,” the book says.

For instance, while microfinance institutions are certainly needed to provide access to financial services by poor households and microenterprises, the book says that rural people, including poor people, need deposit and payment services as much as – if not more than – access to credit. Thus, commercial banking institutions will inevitably remain the predominant players in rural financial markets across the region for the foreseeable future.

At the same time, strong rural financial institutions are in a much better position to provide credit to purely agricultural enterprises.

There is also an important role for other financial institutions, such as leasing companies and investment funds, to play in rural financial markets. In localized markets, credit unions can provide strong competition on the basis of price and quality of service to commercial banks.

“Overall, developing economies need a range of financial institutions, including robust commercial banking sectors, that can expand into rural areas to serve the highly heterogeneous demand for financial services of rural dwellers,” the book says.

The book is edited by Mario B. Lamberte, former president of the Philippine Institute for Development Studies; Robert C. Vogel, Executive Director of IMCC; Roger Thomas Moyes, ADB Rural Financial Market Specialist; and Nimal A. Fernando, ADB’s Principal Microfinance Specialist.

| Permanent Link

RADA:

Post-Tsunami Recovery and Reconstruction - Joint report of the Government of Sri Lanka and its development partner, December 2005 [PDF 0.8 MB, low res.]

Government Agents remember – Tsunami response at the district level

In the aftermath of the Tsunami, Government Agents (GAs) acted as administrators for
relief operations. For many GAs, this was on-the- spot learning about disaster management, but across the country they showed their mettle and their commitment to their communities through efficient, competent response to the tragedy. The GA in Jaffna was serving out the last days of his tenure when the tsunami hit. “I rushed to the scene when I heard the news. The sea had come in about one kilometer… There were no police officers, no army officers - a large number of soldiers got caught in the tsunami while on guard duty in the coastal area.” As an experienced senior member of the administrative service, his was a text book response to a massive scale disaster. “True, we are in the public service, but if we follow rules and regulations we can’t do anything”. What stood the GA in good stead was his first-hand experience of carrying out rescue and relief operations in Jaffna during the war years. In 1995, 400,000 people were displaced and he led the support operation, providing temporary shelter, food and other necessities. “We trained the people, and they know now how to help, to react immediately - not only the officers, but also NGOs, and Cooperatives too.” Post tsunami, the GA rounded up the Grama Sevakas [village level government officers]. He closed roads to prevent looting; grouped volunteers into clusters and started combing the devastated areas for survivors. Entrenched in Sri Lanka’s rich community traditions is the sharing and giving of food. The GA sent messages via three wheeler “tuk tuks” calling for food and clothing. The temples in Jaffna also have large cooking utensils used for meal preparation during religious festivals. These too were brought in to prepare food for the displaced families. For all who survived the tsunami there was a total sense of loss. People were left without money, possessions, documents of identification, and had the gigantic task of carrying out final religious rituals for their dead loved ones. Understanding this need the Jaffna GA did not wait for banks to open or for government approvals. He moved swiftly to raise money from known shop owners to give Rs. 10, 000 to every family member removing a dead body from the hospital so as to cover funeral costs.

| Permanent Link

Island: 21/08/2006" By Shamindra Ferdinando

A top EU official Friday assured President Mahinda Rajapakse of a thorough investigation on alleged embezzlement of tsunami reconstruction funds by NGOs based in EU territory.

Niranjan De Silva Deva-Aditya, the majority leader of the Overseas Development Committee of the EU met Rajapakse at Temple Trees where he discussed a front-page report headlined Rehab. Chief slams NGOs over embezzlement of tsunami funds on the previous day’s issue.

"I am appalled," he told The Island , expressing the belief that the government would provide him with the required information. President Rajapakse promised to facilitate the inquiry, he said, adding that he was in touch with relevant authorities.

The British member of EU Parliament said that he held several meetings with NGOs and Ambassadors of countries involved with tsunami relief, reconstruction and development efforts. "I was told that everything was fine," he said. But the recent statements attributed to RADA Chief Ms. Shanthi Fernando and the Central Bank caused apprehension, he said.

Depending on the information provided by the government, Deva-Aditya intends to have a public hearing in the EU parliament.

According to him the EU released USD 450 million to Sri Lanka and Indonesia after the tsunami and the international community sent USD 4.2 billion to the affected countries. Fielding questions, he said that during Friday’s meeting he discussed the peace process, the humanitarian crisis triggered by the latest bout of fighting and his decision to contest the Post of UN Secretary General.

RADA Chief Ms. Shanthi Fernando last week accused both local and international NGOs of large scale embezzlement of tsunami reconstruction and development funds.

Detailing shortcomings in the reconstruction strategy, Ms Fernando focused on the alleged irregularities involving the NGOs, recipient of considerable amount of funds.

According to the Bank Supervision Department of the Central Bank 256 NGOs had received donations and other funds amounting to Rs. 40.1 bn by way of credits to their bank accounts from various foreign and local sources during 2005.

A survey revealed that 73% of total foreign remittances were received by 30 NGOs, each receiving foreign remittances in the range of 1% to 12% of total foreign remittances.

Further, it was revealed that nearly 79% of funds received in the bank accounts of all NGOs during 2005 had been withdrawn. The 30 NGOs referred to above had withdrawn 85% of funds received in their bank accounts during the year 2005.

Against this background Parliament appointed a Select Committee to probe NGOs. The investigation is headed by JVP MP Vijitha Herath.

Initially 23 International NGOs pledged to construct 66,811 houses, Ms. Fernando said, claiming that finally they entered into agreements with the government to build 16,487 houses. By end of last year they completed only 1,232 houses, she said, accusing a certain NGO of making a grandiose plan to construct 26,000 houses. But this particular NGO completed only 264 houses by end of last year, she said. "We would like to know what happened to the funds collected by them," she said, emphasising the government’s right to know.

The RADA chief acknowledged that only 38 percent of the total number of houses needed by the tsunami homeless had been completed. According to her by the first week of August the government reached agreements with various NGOs for the construction of 29,971 houses. She placed the total number of homeless families at 35,363 while adding that of the total requirement 11,551 houses had been completed. According to her 6,946 houses were under construction.

| Permanent Link

Daily News: 21/08/2006" Manjula Fernando

COLOMBO: The European Union Parliament's Overseas Development Committee Coordinator Niranjan Deva Aditya said that International Non Governmental Organisations (INGOs) involved in the Sri Lanka tsunami reconstruction would be called before the EU Parliament in Brussels for a public hearing.

Aditya who is also a Rapporteur of the EU Development Budget which oversees aid for developing nations and a member of the Foreign Affairs Committee, met President Mahinda Rajapaksa yesterday to discuss allegations that several NGOs and INGOs have swindled massive tsunami funds allocated for reconstruction.

"Over $ 4.8 million was raised in the EU by these organisations mainly for Indonesia and Sri Lanka," Aditya told the Daily News, adding that he observed that the housing projects in Banda Aceh, was progressing smoothly during his recent visit to Indonesia.

"The Indonesian reconstruction drive is going on well. 68,000 houses have been built out of the required total of 140,000 houses," he added.

"But I was shocked to hear that only 1200 houses have been built in Sri Lanka. Are these allegations true?" The EU Development Committee representative said he expected at least 60,000 houses would have been completed in Sri Lanka by now. "I can't believe it. I want to get to the bottom of it."

If he finds that the allegations are true he will arrange the public inquiry in Brussels at which the INGOs will be required to answer the allegations against them.

A report on the commitments of INGOs and their progress have been requested by the EU representative through RADA and the Central Bank."I will be leaving the country in two days time and hope to take the report with me when I leave," he said.

He also said that INGO Heads, representatives of an International auditing firm and the Media would be among the invitees at the inquiry to be held in Brussels.

If the allegations are proven, the organisations are definitely going to have a `tough time in future with regard to their fund raising' in the EU and elsewhere.

"Mr and Mrs. John who contributed $ 100 would want to know what happened to their money," he pointed out adding that all international NGOs, World Vision, Oxfam, Red Cross and Save the Children etc. would be called to be present at the inquiry.

Aditya who had been meeting regularly the INGO heads, Ambassadors of tsunami affected countries for the past two years in a bid to monitor the tsunami reconstruction activities said the financial handling of these organisations should be posted on the Internet for everyone to have access.

Initially, 23 international NGOs pledged to construct 66,811 houses for tsunami affected in Sri Lanka. However ultimately only 16,487 actual building agreements were signed, Reconstruction and Development Agency (RADA) statistics revealed.

According to the Central Bank's Bank Supervision Department, 256 NGOs had received donations and other funds amounting to Rs. 40 billion by way of credits to their accounts from foreign and local sources during year 2005 alone.

It has been revealed that nearly 79 per cent of the funds received in the bank accounts of all NGOs during 2005 had been withdrawn, but according to RADA only 1,232 houses have been completed upto now.

| Permanent Link

Scotland on Sunday: 20/082006" SHIMALI SENANAYAKE AND SOMINI SENGUPTA

SURGING violence and a spate of killings of aid workers are stopping charities carrying out urgent humanitarian work in both government and rebel-held areas of Sri Lanka.

Twenty months after the tsunami in December 2004 brought the country a rush of charity from abroad, international aid agencies are being subjected to daily suspicion and hostility, as well as the deadly attacks.

Aid workers say they have been increasingly stymied in their efforts to reach areas hardest hit by civil war. In the eastern Ampara district earlier this year, Sri Lankan women working for foreign aid groups were singled out and warned to quit by Tamil Tiger rebels.

In the worst violence, 17 employees of an international aid agency were massacred this month in the eastern town of Muttur. Last May, a driver for the Norwegian Refugee Council was found dead 150 yards from a military checkpoint in northern Vavuniya, his body riddled with bullets. The killings remain unsolved.

A week after the driver was killed, grenades were lobbed at the local project offices of three aid groups in Muttur; one worker was wounded.

Earlier this month, a vehicle carrying members of the international Sri Lanka Monitoring Mission, which was created under a ceasefire accord in 2002, was pelted with stones as it tried to advance to Muttur to look into the condition of civilians displaced by fighting.

The killing of 17 employees of Action Contre La Faim, or Action Against Hunger, and the Sri Lankan military's refusal to grant immediate access to the site to independent investigators drew pointed criticism from the monitoring mission.

"It's very unwise of the government to stop us from entering these areas," said the chief of the mission, Ulf Henricsson, a retired Swedish general. "To stop us is to prevent an inquiry, and why do that if you have nothing to hide?"

Henricsson said the government had denied access to the area on the grounds that fighting was under way between Sri Lankan forces and the Tamil Tigers - also known as the Liberation Tigers of Tamil Eelam (LTTE).

Eric Fort, the leader of the aid agency's work in the country, said 15 of his colleagues, all Sri Lankans, had been found shot in the head in their office.

Two others appeared to have been shot in the back, as though they might have been trying to escape their attackers. They were all dressed in T-shirts bearing the agency's name. The agency worked on tsunami reconstruction and provided water and sanitation services for people displaced by war.

The government has promised a "free and fair" inquiry into the killings, aided by forensic pathologists from Australia, but it has ruled out any involvement of the United Nations or the International Committee of the Red Cross in the investigations, as Fort's group had urged.

Last week, Mahinda Samarasinghe, the Sri Lankan minister of disaster management and human rights, said the government welcomed international relief workers but was compelled to restrict their movement for the sake of safety. "We can't have any number of aid workers running around in conflict areas," he said.

So even as military clashes have displaced tens of thousands in the north and the east, aid agencies cannot get to many areas where civilians are believed to be in greatest need.

The threats to aid workers come as Sri Lanka plunges headfirst into familiar bloodshed. The 2002 ceasefire accord had brought a halt to decades of war between the separatists, who are Tamils, and the Sinhalese-dominated Sri Lankan government. The tsunami brought hopes of peace in the face of shared tragedy.

But by late last year, after a tsunami aid-sharing deal fell apart and a new government was elected with the help of Sinhalese hard-liners, the ceasefire began to unravel. Assassinations and tit-for-tat attacks followed, bringing the death toll up to 800 in the first seven months of this year.

Late last month, what began as a fight over control of an irrigation channel in the east grew into what now looks like full-scale war, with clashes in the east, as well as a rebel advance to the strategic Jaffna peninsula in the north. At least 50,000 Sri Lankans have been displaced in the past three weeks, according to the United Nations refugee agency, although reliable estimates are difficult because of lack of a access.

Even by Sri Lankan standards, the past two weeks have brought reports of particularly gruesome incidents. In one, the government accused the LTTE, of having killed 100 Muslims who were fleeing the fighting. The International Committee of the Red Cross on Wednesday confirmed two dead in the area.

Earlier this week, the Sri Lankan Air Force bombed a former orphanage inside rebel territory, where teenage girls were undergoing first-aid training. At least 19 girls were killed, according to truce monitors. "It was a LTTE training camp; this was firmly established before the bombing," said Keheliya Rambukwella, the Sri Lankan Ministry of Defence spokesman. "The question of age of the cadres really doesn't arise." The monitoring mission and the UN children's agency said they had found no evidence of rebel installations there.

In the resumption of combat, Tamils who do not side with the rebels have been singled out. Last Saturday, the deputy chief of the government peace secretariat, Ketheshwaran Loganathan, was killed by an unidentified gunman near his home in suburban Colombo. His killing came exactly a year after the slaying of the foreign minister at the time, Lakshman Kadirgamar. The two were among the most prominent Sri Lankan Tamils in the government.

| Permanent Link