Microfinance and Livelihood Development in Poor Coastal Communities in Eastern Sri Lanka

<p>Various organizations are involved in micro-financial programmes in Sri Lanka. There is limited knowledge on the impact of microfinance on the livelihood improvements among poor coastal communities who were affected by Tsunami in Eastern Sri Lanka. This study investigated the effectiveness of microfinance support for coastal communities&rsquo; livelihood development in Trincomalee. A survey was conducted using stratified randomly selected 99 microfinance beneficiary households in three identified coastal villages in three Grama Niladhari Divisions in Kinniya. The analysis was based on 2006 information as a benchmark. The analysis was conducted using a multiple linier regression with the factors determining the revolving fund efficiency (RFE). The study found an average of 39.5% and 14.2% increase in income and private savings, respectively in agriculture sectors. Although the poor and the poorest groups have been reached by microfinance institutions, 65% of their clients seem to be from the non-poor groups. About 90% of the young people reported lack of opportunities for modern livelihood supports. The RFE was 0.32% indicating that it was not well adopted in practice. This may be due to lack of responsiveness of the Community Based Organizations (CBO). The results of multiple regression analysis showed that age, education and family income and weakly facilitated RFE was affected significantly by private savings. To improve livelihoods of poor coastal communities, effective capacity building of CBOs on microfinance management, training and technical supports to young people in alternative non traditional livelihoods and creating market opportunities are important.</p> <p><strong>Key words</strong>: Livelihood; Microfinance; Coastal Communities; Eastern Sri Lanka</p> <p>DOI: <a href="http://dx.doi.org/10.4038/tar.v22i3.3706">http://dx.doi.org/10.4038/tar.v22i3.3706</a> &nbsp;</p> <p><em>Tropical Agricultural Research </em>22(3) (2011) 330-336</p>