IFAD/G.M.B.

Akash

Enabling poor rural people

to overcome poverty
in Sri Lanka
Rural poverty in Sri Lanka
Despite the fact that the country has been engaged in a 26-year
conflict that ended only recently, Sri Lanka has made significant
economic and social progress over the past 30 years. Economic
growth has been rapid, and the estimated 2010 GDP growth rate
is over 9 per cent among the top 10 in the world. Between 2006
and 2009, the poverty level fell by half to about 7 per cent. In the
past three decades, the country has made significant progress in
improving living conditions and access to basic services. However,
young people face an unemployment rate four times higher than
the population as a whole, according to 2010 estimates.
The great majority of the population lives in rural areas, though the country is
rapidly urbanizing. Almost a quarter of Sri Lankans live below the poverty line.
Four fifths of the countrys poor people live in the rural sector, and almost half of
the poor rural population consists of small-scale farmers. They are concentrated
in the Central, Uva, Sabaragamuwa and Southern provinces, where agricultural
growth has been sluggish, as well as in areas affected by the conflict.

Agriculture is the most important sector of the Sri Lankan economy, and small-scale
farmers produce most of the countrys agricultural output. However, their production
systems are hampered by neglect, poor economies of scale, low investment levels
resulting from poor financial services and inappropriate or limited technology.
Other factors limiting poor farmers livelihoods include fragmented landholdings, high
post-harvest losses, inconsistent pricing and trade policies, and difficulties accessing
lucrative markets.
While its contribution has declined during the past three decades, agriculture
accounts for almost 15 per cent of gross domestic product and a quarter of total
exports. It is the most important source of employment, providing jobs for around
one third of the workforce.

IFAD/G.M.B. Akash

As a developing island nation, Sri Lanka is particularly vulnerable to climate change.

The sea level is expected to rise by half a metre over the next two decades.
Climate-related impacts, already evident, include more frequent and more intense
floods and landslides, which cause extensive damage and loss to assets and
displacement of people, particularly poor people. With predictions of higher
temperatures and lower rainfall, output of paddy which is dominated by small-scale
cultivation is expected to fall up to 30 per cent over the next 20 to 30 years.
Rising sea levels could force communities to leave lower coastal areas of the north
and east, where the recent conflict was concentrated.

Eradicating rural poverty

in Sri Lanka
The government is working to reduce poverty through a combination of state-directed
policies and promotion of private investment. The goal is to spur growth in
disadvantaged areas, develop small and medium-sized enterprises, and promote
agricultural development.
Poverty eradication and general economic development in Sri Lanka is guided by the
10-year Mahinda Chintana Idiri Dekma, or Vision for the Future, which started in
2010. This policy calls for a participatory process of building the economy, involving
both the public and private sectors. Infrastructure is a major priority, and the
government aims to promote competition and accelerate growth in a way that will
help regions that have lagged behind.
The countrys agriculture policy emphasizes sustainable development with efficient
and effective use of resources. It aims to increase local food supply, incomes,
employment opportunities and exports by improving productivity of land and water
through modern practices and technologies. It calls for improving the productivity
of the plantation sector (which includes tea, rubber and coconut) as a means of
accelerating agricultural growth.
Rebuilding from the destruction resulting from the conflict with the Liberation
Tigers of Tamil Eelam, which ended in May 2009, is a major focus of poverty
eradication efforts. In addition to causing 70,000 deaths and displacing more than
500,000 people, the conflict devastated the food production capacity and purchasing
power of internally displaced persons, returnees, host families and other vulnerable
groups. Since the end of the conflict, the government has resettled tens of thousands
of internally displaced persons and has undertaken a number of massive

IFAD/G.M.B. Akash

infrastructure projects to reconstruct the economy.

IFAD/G.M.B. Akash

IFADs strategy in Sri Lanka

IFAD has worked in partnership with Sri Lanka since 1978. Over that period, more

Projects: 15

than 2.5 million people have benefited from 15 projects with a total value of around

Total cost: US$372.1 million

US$372 million. We work in three main areas: dry zones, where most poor people

Total financing from IFAD:

US$216.7 million

live; the estate sector (mainly tea and rubber) and surrounding villages, which have
pockets of extreme poverty; and coastal areas, many of them former conflict zones,
where people in poor fishing villages struggle to make a meagre living.
IFAD is concentrating on support to sustainable livelihoods and resource
management in these three areas. We are also working to establish a policy dialogue
on land tenure, decentralization and strengthening of the focus on rural activities
under the governments poverty reduction strategy. Our strategy is well in line with
the Vision for the Future, with its call for participatory development.
A new project, the Iranamadu Irrigation Development Project will be presented to
the 104th session of the Executive Board in December 2011.

Directly benefiting: 518,332 households

Ongoing operations
Dry Zone Livelihood Support and
Partnership Programme
Smallholder Plantations Entrepreneurship
Development Programme
Post Tsunami Coastal Rehabilitation and
Resource Management Programme
National Agribusiness Development Programme

Colombo

National Agribusiness Development Programme

This programme helps improve commercial agriculture by fostering joint ventures
between farmers and companies, allowing poor farmers to participate in agricultural
value chains as equal partners. Operating throughout the country except in the
Western district, it works with small-scale farmers (including women), landless
households and young people. The goal is to increase profits on the sale of farm
products, improve farm productivity, generate employment and increase incomes.
The programme also supports microfinance and training of young people in five of
the poorest districts (Ampara, Kegalle, Kurunegala, Puttalam and Ratnapura).

Total cost: US$33.0 million

IFAD loan: US$25.0 million
Duration: 2010-2015
Directly benefiting: 57,900 households

Smallholder Plantations Entrepreneurship

Development Programme
This programme works with participants in a resettlement scheme linked to
unproductive tea estates along with landless people in adjacent villages. It aims to
improve their livelihoods and access to social capital, community leadership and
entrepreneurship. The programme is supporting the governments policy of
improving the productivity of old tea plantation lands by providing longer-term
leases for poor people under outgrower schemes. It also helps them gain better
access to tea markets and services and supports new and diversified rubber-based
cultivation by smallholder outgrowers. Both the tea and the rubber components
address community development and institution-building, processing and
marketing, and rural finance and credit.

Total cost: US$39.9 million

IFAD loan: US$22.5 million
Cofinancing: United States Agency
for International Development
(US$5.5 million); Wellassa Rubber
Company (US$5.2 million)
Duration: 2007-2017
Directly benefiting: 8,700 households

Post-Tsunami Coastal Rehabilitation and Resource

Management Programme
In addition to the 31,000-plus people killed in Sri Lanka by the December 2004
tsunami, more than 400,000 people were displaced, and almost a quarter of them
were in fishing communities. More than 80 per cent of the national fishing fleet was
lost or damaged. This programme assists communities in recovering their assets and
re-establishing the foundation of their usual economic activities while they diversify
into new, profitable income-generating activities.

Total cost: US$33.5 million

IFAD loan: US$29.9 million
Duration: 2006-2013
Directly benefiting: 50,000 households

IFAD/G.M.B. Akash

The programme, one of two focusing on tsunami recovery, concentrates on

infrastructure (particularly housing) and strengthening communities to manage
coastal resources sustainably. Women are being helped in particular to participate
in social and economic activities. The programmes activities in the eastern districts
are coordinated with those of an Asian Development Bank coastal resource
management project.

Dry Zone Livelihood Support and Partnership Programme

Poverty rates are high in the arid districts of the dry zone, where many people have
little or no land. This programme enables poor rural people to gain better access to
land and water resources, services, technologies and market linkages for better
incomes. It benefits small-scale farmers, particularly young farmers and women.
Activities begin with a participatory assessment of constraints affecting areas from
production to marketing, in both rainfed and irrigated farming. Extension services
are being provided through hundreds of farmer field schools, where participants
develop solutions that they disseminate to individual farmers. Programme activities,
such as tank rehabilitation and infrastructure development, are demand-driven.
Self-managed savings and credit schemes are set up for people without previous
access to credit, and at least 80 per cent of the beneficiaries are women.
New and existing microenterprises are also supported, with at least 50 per cent
women beneficiaries.

Total cost: US$30.4 million

IFAD loan: US$22.3 million
IFAD grant: US$339,200
Cofinancing: Canadian International
Development Agency (US$963,000);
Japan Bank for International Cooperation
(US$1.1 million); United Nations
Development Programme (US$1.5 million);
World Food Programme (US$1.1 million)
Duration: 2005-2012
Directly benefiting: 80,000 households

IFAD/G.M.B. Akash

Completed operations
Post-Tsunami Livelihoods Support
and Partnership Programme

North-Western Province Dry Zone

Participatory Development Project

Total cost: US$4.7 million

Total cost: US$18.0 million

IFAD loan: US$4.7 million

IFAD loan: US$8.9 million

Duration: 2006-2011

Cofinancing: German Agency for Technical Cooperation

(US$3.3 million)

Directly benefiting: 4,340 households

Duration: 1993-2000

Matale Regional Economic

Advancement Project
Total cost: US$14.5 million
IFAD loan: US$11.7 million

Directly benefiting: 12,000 households

Second Badulla Integrated

Rural Development Project

Cofinancing: German Agency for Technical Cooperation

(US$571,000); World Food Programme (US$245,000)

Total cost: US$21.2 million

Duration: 1999-2007

Cofinancing: United Nations Development Programme

(US$2.5 million)

Directly benefiting: 30,000 households

IFAD loan: US$14.0 million

Duration: 1992-2002

North-Central Province Participatory

Rural Development Project
Total cost: US$19.6 million
IFAD loan: US$8.5 million
Cofinancing: Japan (US$50,000); Swedish International
Development Agency (US$3.3 million); World Food Programme
(US$1.9 million)

Directly benefiting: 15,000 households

Small Farmers and Landless Credit Project

Total cost: US$17.8 million
IFAD loan: US$6.7 million
Cofinancing: Canadian International Development Agency
(US$6.5 million)

Duration: 1996-2003

Duration: 1989-1997

Directly benefiting: 24,000 households

Directly benefiting: 32,870 households

Kegalle Rural
Development Project

Anuradhapura Dry Zone

Agriculture Project

Total cost: US$11.4 million

Total cost: US$22.0 million

IFAD loan: US$8.0 million

IFAD loan: US$14.5 million

Duration: 1986-1995

Cofinancing: Asian Development Bank

(US$6.2 million)

Directly benefiting: 45,100 households

Duration: 1981-1988

Badulla Rural
Development Project
Total cost: US$18.1 million
IFAD loan: US$14.0 million
Duration: 1983-1993
Directly benefiting: 52,000 households

Coconut Development
Project
Total cost: US$30.4 million
IFAD loan: US$8.0 million
Cofinancing: Asian Development Bank
(US$12.0 million)
Duration: 1982-1987
Directly benefiting: 75,000 households

Directly benefiting: 23,100 households

Kirindi Oya Irrigation Project

Total cost: US$57.8 million
IFAD loan: US$18.0 million
Cofinancing: Asian Development Bank
(US$20.0 million); German Credit Institution
for Reconstruction (US$13.3 million)
Duration: 1978-1985
Directly benefiting: 8,320 households

Building a povertyfree world

The International Fund for Agricultural
Development (IFAD) works with poor
rural people to enable them to grow
and sell more food, increase their
incomes and determine the direction
of their own lives. Since 1978, IFAD
has invested about US$13.2 billion
in grants and low-interest loans to
developing countries through projects
empowering about 400 million
people to break out of poverty, thereby
helping to create vibrant rural
communities. IFAD is an international
financial institution and a specialized
UN agency based in Rome the
United Nations food and agricultural
hub. It is a unique partnership of
167 members from the Organization
of the Petroleum Exporting
Countries (OPEC), other developing
countries and the Organisation for
Economic Co-operation and
Development (OECD).

Contacts
Ya Tian
Country Programme Manager
IFAD
Via Paolo di Dono, 44
00142 Rome, Italy
Tel: +39 06 5459 2062
Fax: +39 065459 3062
E-mail: y.tian@ifad.org
Anura Herath
Country Programme Officer
Knowledge Facilitator
660/8, Peradeniya Road
Mulgampola, Kandy
Sri Lanka
Tel: +94 77 9204127
E-mail: a.herath@ifad.org
For further information on rural poverty in
Sri Lanka, visit the Rural Poverty Portal:
http://www.ruralpovertyportal.org

IFAD/G.M.B. Akash

Enabling poor rural people

to overcome poverty
International Fund for
Agricultural Development
Via Paolo di Dono, 44
00142 Rome, Italy
Tel: +39 06 54591
Fax: +39 06 5043463
E-mail: ifad@ifad.org
www.ifad.org
December 2011