Sanasa Development Bank at work in the East

There are many development projects running in the Eastern Province but none as unique as the work done by the SANASA Development Bank Ltd. (SDBL). It is a bank of cooperative microfinance. Its unique approach to development and high success rate made us investigate further into the Bank's activities so that other organisations too could get some tips on implementing development work.

SDBL Bank in Kalmunai

The SANASA Movement was developed out of a hundred year old cooperative movement in Sri Lanka and the SANASA Group now has seven companies plus their network. It is neither a private nor a public entity nor an NGO. It is a corporate bank promoting cooperative enterprise as opposed to public or private enterprise. The bank is owned by 3,700 cooperative grassroot societies. For the last 30 years, SDBL has been working in a consolidated business manner as a network. The network has 8,400 legally registered autonomous grassroot credit cooperatives that operate voluntarily under one vision.

The majority clientele of SDBL comes from underserved income and social categories of our community. The Bank's aim is to empower such communities by way of assisting them for self development aiming at poverty eradication. Through micro financing, the bank gives the underprivileged the opportunity to earn their living by developing their own businesses. The bank provides a very low interest rate of 8% - 12% for micro financing with a borrowing limit of Rs. 5,000- Rs. 50,000 depending on each borrower's capacity. The bank finds its target group of low income and medium income groups from all over the island including the Eastern and Northern Provinces.

Recently, SANASA Development Bank has dramatically expanded its outreach in the Eastern province through its 4 branches in Batticaloa, Trincomalee, Pothuvil and Kalmunai and through 26 microfinance delivery centres affiliated to those branches. SDBL has been able to serve a war torn community at their doorstep.

Clients in the Eastern Province

In Kalawanchikudi alone, SANASA Development Bank was able to reach 1,118 clients in less than 3 months, which is a huge success compared to regular banks. It is evident that there is a clear need for banking facilities or microfinancing facilities among the community in the East. The bank encourages the people in the Province to deposit in whatever capacity they can and provides loans to develop or start their own businesses.

'Eastern people are ready to take that step to rebuild their lives after decades of war. The microfinancing facility we provide is an immense help to them. We do not need to give them grants, which is a short-term solution. We should help people to stand on their own feet and think long-term. Now people are catching up fast as proven by our large clientele in the East. It is a huge achievement for us. We are even in a position to challenge some of the development thinking,' said Samadanie Kiriwandeniya, Assistant General Manager (International Relations).

Ms. Kiriwandeniya further stated that the microfinancing recovery rate was very high, almost 100% in some areas such as Kalmunai, even though the bank provides for the low income and medium income groups. As a bank, SANASA has a very good recovery rate and Ms. Kiriwandeniya states that the secret to this success is due to the close relationship it maintains with its clients.

'SANASA is entirely relationship based. Even though a project is over we continue to maintain our connections with that community through our network. For over three decades, our network has remained intact,' she said.

SANASA Development Bank has a network spreading across the country. It was because of this network that SDBL was easily able to enter the tsunami affected areas and make a dramatic impact in a very short period. According to studies done by the bank before military operations took place, there are functioning grassroot credit societies even in Kilinochchi and Mullaitivu. The bank hopes to set up branches in both these places as soon as war is over. Already there is a branch in Vavuniya and next year they hope to establish a branch in Mannar as well. Currently the bank is training human resources in the Eastern Province so that they have enough capacity to go into the Northern Province once the war is over. Thus they hope to adopt the same process as they implemented in the East.

SDBL is not solely working in the microfinancing area. During the tsunami, they were involved in providing many types of livelihood assistance to people. They opted to reach as much people as possible through projects such as sanitation projects. In places like Muthur where people were ravaged by war as well as tsunami, SDBL opted to go into housing. They selected deprived communities such as women who lost their husbands and were left with children and gave them livelihood assistance.

SDB housing projects in the tsunami affected areas of the Eastern Province

SDBL has not simply treated the 768 sanitation units and 262 housing units as simple relief projects or CSR. Instead, SDBL has presented a total solution (livelihoods training/microcredit/ deposit facility and microinsurance facility) to all the recipients. Their development work functioned smoothly mainly because of their networks, the strong relationship they maintain with SANASA primary societies, and their time-tested development strategies.

Many international organisations have shown interest in partnering with SDBL in development projects, but the bank is careful in choosing its partners. It looks for cooperative and socially oriented roots in its partners and will opt to partner at policy level instead of project level. It is able to collaborate with the government without conflicts since their projects are complimentary to government projects.

It is not without obstacles that SDBL has come this far. There are challenges that still exist when working in the East. The environment in the East is a challenge since there are security problems and people do not like to travel to get service from district branches. It is only the people living in close DS divisions who opt to come to Batticaloa and get the service from the SDBL branch. Others opt to get loans from similar loan schemes at rates as high as 34% rather than travel all the way to receive loans at 8% or 12%. Since the situation is not steady, some do not want to think long term as a community and are waiting for grant funds from INGOs rather than developing on their own. Finding partner organisations that have a long-term vision is also a challenge as most organisations want to see impact very soon.

Despite these challenges, the SANASA Development Bank is operating successfully, especially with regard to the Eastern Province. It is placed 50th out of the 640 microfinance institutions in the world and is being studied by international institutions as a model due to their success rate. They are hopeful that by the time military operations are over and the North is liberated from the clutches of the LTTE, they will be able to go into the Province and extend their help to deprived people to stand on their feet once again.

SDBL participated actively in the Workshop on Confidence Building and Stabilisation Measures that was organised by the Ministry of Disaster Management and Human Rights in Sigiriya last week with this objective in mind.