On May 19, Sri Lanka will celebrate the 10th anniversary of victory over terrorism. The 2009 victory promised the Northern Province many things. A flourishing economy and a peaceful environment were among them. Many development projects took off in the province following the victory, but not much to the satisfaction of the country’s think tank. The economic phenomenon of the war-affected province is yet to reach its ultimatum.
A study commissioned by the Central Bank of Sri Lanka urges a fresh approach to address post-war socio-economic challenges in the North by building on its existing regional capacity and resources. An independent committee to take forward its conceptualisation was established on the request of the Governor of the Central Bank of Sri Lanka. It was observed during meetings held in the North with the participation of the Governor, that the outcomes of post-war development programmes have been inadequate, particularly the crisis of indebtedness that has arisen from the lack of viable employment and incomes for the local population.
Authored by the committee and launched at the Jaffna Public Library Auditorium, ‘Economic Development Framework for a Northern Province Master Plan’ offers a blueprint to realise the potential of the North and contribute to the national economy.
The report argues that a post-war reconstruction strategy centred on building infrastructure, expansion of credit to promote self-employment and a narrow focus on private-sector investment has failed to meet the expectations of sustained economic growth with increased jobs and higher incomes. Poverty continues to be widespread and is further exacerbated by the indebtedness crisis.
Development goal
Dr. Ahilan Kadirgamar, a member of the independent committee, points out that the northern development was project-based. A number of isolated projects cannot fulfil the ultimate development goal. The report suggests a macro-economic outlook in terms of development.
As close observers of reconstruction efforts over the last decade, the authors – academics and professionals from the North – draw attention to the legacies of war on society and economy that underscore the imperative for a unique policy approach.
Reasons identified for these poor development outcomes include a reconstruction strategy that itself lacked a clear direction and ignored the prevailing low level of skills and capacity within the region; insufficient investment to transform the productivity of ‘small-sized’ producers and organisations dominating the economic base; and the continuing fragility of a population coming out of a protracted war which remains a barrier to their participation in development.
The change of administration in 2015 has seen a significant paradigm shift in Northern Province development, though much has to be achieved yet. The number of houses and the investment scale is much lesser than the expected goals.
As Prime Minister Ranil Wickremesinghe is now in charge of northern development as well, Dr. Kadirgamar keeps fingers crossed about the implementation of the draft framework. He also keeps fingers crossed on the Budget proposals in favour of the northern development.
The ‘Framework for an Economic Development Master Plan’ aims to be a realistic and dynamic tool to create a ‘blueprint’ for the future long-term growth and development of Northern Sri Lanka to 2030. The project spans another 10 years, yet the priorities have already been outlined.
After three decades of war, the post-war socio-economic challenges in the North were tremendous in terms of the destroyed and underdeveloped infrastructure, deteriorated social institutions and human resources that lagged behind the rest of the country. A post-war reconstruction strategy centred on building infrastructure, expansion of credit to promote self-employment and encouragement of private-sector investment, however, has not met expectations in delivering sustained economic growth, employment and increased household incomes.
Several factors have contributed to these results. First, development initiatives failed to systematically invest in transforming the productivity of ‘small-sized’ producers and organisations who dominate the Province’s economic base. Second, the forthcoming investment did not appropriately build on the existing skills and capacity within the region. Third, the continuing fragility of a population coming out of a protracted war has not been adequately addressed to enable them to meaningfully participate in development. And lastly, the reconstruction strategy itself lacked a clear direction, was not holistic in nature, and together with insufficient coordination, was carried out with a ‘project-based’ mindset which led to sub-optimal outcomes.
“The vision for 2030 involves a development model based on 10 years of slow and steady growth. The main source of income in the Northern Province is agriculture and fisheries. Palmyra, for instance, is a high-income generator. We can improve on it to expand the export market,” Dr. Kadirgamar notes.
The report also lays emphasis on the urgent need for a new vision and path for the economic development of the North which crucially, is grounded in a macroeconomic analysis of the Province’s resources, capacities and needs. A Framework to support such analysis has been developed and is structured around three inter-dependent pillars: the factors of production, the enabling environment, and the social foundations of development.
Significant impact
The factors of production examine the Province’s endowments of capital, labour, land and natural resources as the key inputs to increase production and economic growth. Recognising that the environment in which production occurs has a significant impact on its potential growth, the framework identifies the facilitative roles played by technology, infrastructure, regulations, institutions and markets as components that require attention. The emphasis is given to investing in people to ensure their ability to participate in development by strengthening the social foundations, particularly with respect to food and nutrition, living conditions, health and education.
Delivering a new strategy for economic development must be undertaken at a provincial level to ensure the best use of resources. The following sector-wise priorities and thrust areas are identified as possible ways forward.
Agriculture: Invest in agriculture to achieve household resilience and food security; increase profitable sustainable agricultural production through widespread productivity improvements and; reduce risks affecting sustainable agriculture e.g. water scarcity.
Industries: Focus on the development of small industries using local resources that build appropriately on existing skills and capacity. Suggested industries to focus attention include agro-based processing for value addition, craft-based industries, light manufacturing and renewable energy.
Services: Re-think and expand services to meet local needs in areas such as financial services, public transport, care services and water and sanitation. The long-term viability of IT and tourism should be explored further, with the caveat that supports from experienced firms from the South may be required to sustain growth.
“The women are another group neglected so far. They are double-burdened. They need to look after the dependents on one hand. On the other hand, they need to play the breadwinner role as well. We need to find economic solutions to redress their grievances,” Dr. Ahilan Kadirgamar explains.
The formation of a Northern Planning Bureau is also recommended to undertake long-term planning and coordination informed by the unmet specific needs of a war-torn society. Such needs include securing long-term development financing, labour market expansion, natural resource management and monitoring of development outcomes.
