Production Villages

Production Villages

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A programme for improving livelihoods through increased production

Neel Bandara Hapuhinne, currently the Director General of Manpower and Employment, took a large part in the development of the “Samurdhi Model Production Villages” programme, while Director General of the Department of Samurdhi Development. Intended to provide livelihoods for disadvantaged rural populations by improving labour skills and developing infrastructure facilities, the programme aimed, ultimately to remove the burden of livelihood support from the state. Hapuhinne spoke to OSL-THE Investment Magazine about the programme’s potential for developing the country.

Can you tell us, briefly about how you got involved in these production villages?

When I was the Director General of Samurdhi Development Department we had a very big problem of poverty. There should be a strategy for poverty alleviation. When we discussed this with our consultants and other people involved in this field, we identified production villages as the most influential and practical way of alleviating poverty in Sri Lanka.

What does a production village entail?

The villages we select for this particular project produce some item or product which is currently in demand by some sectors. There should be a very good local or international market for it. Only then do we decide to develop particular village based on their product.

What was your experience with these villages, how many did you set up?

We developed nearly 50 villages. I’ll tell share with you a few examples. There is one village in Matale called Udahapuhinde. Here the villagers produce sweets like aasmi, kavum and mung kavum. We started in a very small scale, but there was a very big demand for the product. Ultimately they couldn’t produce enough of the product to meet the demand. We got support from the Samurdhi Bank. Initially we had given LKR 10,000 to LKR 20,000. Ultimately, they needed around LKR 500,000 for their production equipment and delivery vehicles. It was a very successful story.

In Polonnaruwa, there were nearly seven combined villages that cultivate the bougainvillea plant. This industry is mainly handled by women. They were eventually in a position to produce nearly seven lorry loads of bougainvillea to Colombo and urban market.

In Ampara and Gampaha there are villages that produce nice saris, for which there is a very good demand. There is another village in Ampara that produces gourds. That was also very successful story. When we select a village, there should be a very good demand for their product. When you’re producing something with a very good demand, it is easily marketable. In some cases, we can use research and apply some modern technology. I think if you want to develop Sri Lanka, this is going to be a very good strategy in the future.

What about the skills of the villagers?

When you start to produce something, you eventually discover shortcuts and begin to improve your technology. That’s a very good thing. Rather than focusing on various products, focusing on one or two products is definitely easier to cater to.

How can you get foreign investors involved in this?

I think that depends on the demand. If some countries need some kind of product from Sri Lanka in bulk, like ceramic, then they can invest in this particular area. They can provide technical assistance, quality control and ultimately they will be the market. We need to emphasise the market. When there is a market, then we can definitely get foreign investors. It’s not a very modern concept. Many countries are doing this in mass scale production towns. But we in Sri Lanka can at least develop more than 500 production villages, mainly to produce flowers like orchids, roses because there is a very big demand for that.

What kind of remuneration did the villagers get out of this?

I have dealt with many Samurdhi recipients. There are three categories of Samurdhi recipients. One family gets LKR 1500, another gets LKR 2500, and the maximum amount is LKR 3500. Can an ordinary family live with the LKR 3500 maximum?
Families in production villages got an income more than LKR 50,000 per month. They said, “Sir, you keep your Samurdhi card, we don’t need this anymore.” They are really proud about this. If we really want to, we can do this.

That provides a big opportunity for both investors and the local community.

Of course.

What kind of technology are you talking about?

These are very simple technologies, but we can gradually add advanced technology. If we are going to produce agricultural products like food, then we don’t need higher, sophisticated technology. But if we come into a position to add that type of advanced technology, then profitability will definitely go up.

So how can we take this process forward in the future?

Samurdhi is the backbone because there are around 1,074 Samurdhi bank branches. They are dedicated to this. If somebody wants to get a loan, they can do so within a few hours. If you can believe it, the repayment rate is 98%. There is no bad debt. So this is a very good mechanism. It is a very good channel for distributing money. After borrowers develop to some extent, they can then go to commercial banks. But we should focus on safeguarding the incubator investors and incubator entrepreneurs. That is my personal experience.