Sustainability assessment of Mahaweli enterprise development project

The project has been implemented by the Employment, Investment and Enterprise Development (EIED) Division of the Mahaweli Authority. Evaluation covers the period 1988-3/94. The project has found that opportunities to create employment and raise incomes lie much more in the areas of microenterprise and contract farming than in large agribusinesses. In a stunning reversal of the project targets, only 15% of the jobs have been created by medium and large investments, while the remainder have been generated by microenterprises, small enterprises, and contract outgrower farmer arrangements. This reorientation has implications for sustainability. The Project Paper predicted that private sector activity, especially with these large and active investors, would reach such a critical mass that further investment and economic development would be self-generating; the project considered its role to be one of start-up support for large profitable enterprises. However, with most of the employment and income gains coming from large numbers of smaller enterprises, enterprises that typically start up and fail at a rate of 15%-20% per year, there is a continued need for services that support the start-up of new enterprises, and the growth of micro and small enterprises. This need to institutionalize services for micro and small enterprise development was foreseen in the project design, but assumed to be at a much lower level than has evolved. Between now and the end of the project, activities should (1) support the continuing emergence and growth of rural micro and small enterprises; (2) develop a network of strong and effective rural credit institutions; and (3) establish a framework for linking Mahaweli smallholder farmers to outside investors and markets through contract farming or outgrower arrangements. The task is largely an institutional development effort focused on sustaining the 12 Field Business Centers, the network of 66 Savings and Credit Societies, and some institutionalized capacity to facilitate outgrower arrangements. (Author abstract)