Mahaweli enterprise development project

The project was implemented by the Employment, Investment, and Enterprise Development (EIED) Division of the Mahaweli Authority of Sri Lanka (MASL). The project"s Small-Scale Enterprise component was its most successful, generating 3,266 full-time jobs and 1,697 part-time jobs in self-employment, micro-, and small-scale enterprises vs. a target of 1,250, and moving MASL to increase its efforts to improve the Mahaweli economic base. EIED now considers its work in small and microenterprise development to be its primary concern; it has established 12 Mahaweli Business Centers (MBCs), which are now focal points for the private sector in the Mahaweli. The MBCs have provided their clients with business advice, TA, and training, and helped them to obtain credit; played a major role in coordinating with other MASL and government agencies to facilitate land transfers and leases for commercial purposes; and have been responsible for the formation and initial operation of the Savings and Credit Societies (SCSs) as well as for facilitating loans from banks to SCS members. EIED has also promoted contractor outgrower arrangements in the Mahaweli and MBC staff have played a facilitative role for both outgrower companies and contract farmers; these efforts have resulted in an extensive increase in the number of farmers employed through these arrangements and a consequent diversification of crops. Although the SCSs have provided some valuable lessons regarding formation time, group solidarity, and the role of guarantee funds for microenterprises, they still require further restructuring in relation to the Sri Lanka experience and to microenterprise lending experience elsewhere. Consideration should be given to linking the SCSs and the Mahaweli Venture Capital Company (MVCC). In addition, while the project"s management information system (MIS) is functioning effectively to meet most needs, inaccuracies still exist in the client databases -- largely underreporting problems. In addition and overall, the project has: generated full- or part-time employment for 13,807 people in micro, self-, medium, and large enterprises; instituted a land titling program which has begun issuing titles or leases to individuals; helped launch a fresh produce export cold chain; initiated a process of privatizing unused Government of Sri Lanka (GOSL) assets; and facilitated bank loans to 1,900 small entrepreneurs, business consultations for 6,219 persons (1,400 of them women), and entrepreneurial development training for 9,600. The following are lessons were learned. (1) Attracting medium and large-scale investors to the remote locations in Mahaweli seems far more difficult than stimulating local entrepreneurs. (2) Outgrower arrangement is a cost-effective way of promoting microenterprises and raising farmer incomes. (3) Sustainability of rural credit intermediaries must be carefully analyzed when forming or facilitating such an intermediary. (4) Business Centers offer a viable option for enterprise promotion.