Poverty In Sri Lanka
By Michael Hardy
The rapid growth of Sri Lanka’s economy since the war ended last May has given many people an unprecedented sense of optimism about the future. Drive around Colombo and you see a prosperous capital city reaping its peace dividend. Business is booming, the stock market is soaring, and tourism is on the rise. However, the country’s recent success can blind us to the obvious reality: Sri Lanka is still a very poor country.
How poor? According to a 2009 estimate by the International Monetary Fund (IMF), Sri Lanka’s GDP per capita is US $2,041, which makes the country the 119th wealthiest in the world out of a total of 180 countries.
While its GDP per capita places Sri Lanka well ahead of India ($1,033) and Pakistan ($1,017), it still means that the country ranks in the bottom third of all countries — literally the “third world.” The wealthiest country, as estimated by the IMF, is Luxembourg, with a GDP per capita of $94,418, followed by Norway, Qatar, and Switzerland. Singapore is placed 23rd with a GDP per capita of $34,346 and the Maldives is placed 93rd ($3,893).
But GDP per capita doesn’t tell the whole story, because it doesn’t show how wealth is distributed within a country. According to government figures, 15 percent of Sri Lankans live below the official poverty line of Rs. 3,087 a month. The World Bank puts the figure higher, at 23 percent. The UN estimates that 45 percent of Sri Lankans live on less than Rs. 226 ($2) a day. Poverty is concentrated in rural areas, as well as the North and East, which suffered for decades during the war.
Moreover, the country remains stunningly unequal, with the richest 10 percent of the people holding nearly 40 percent of the wealth and the poorest 10 percent holding barely over one percent. Based on the Gini Index of wealth distribution, Sri Lanka is the 27th most unequal country in the world — more unequal than Cambodia (50) Thailand (51) and India (79).
Wealth in Sri Lanka is also stratified geographically, with the richest families mostly clustered in urban areas and the poorest often living in remote rural regions. Although the official poverty rate is 15 percent, that rate is much higher in Uva and Sabaragamuwa Provinces, where between a quarter and a third of all people live below the poverty line, according to the Centre for Poverty Analysis (CEPA). In contrast, the more urbanized Western and Eastern Provinces have poverty rates below 10 percent. Because of the war, there are no accurate statistics on the Northern Province. According to Priyanthi Fernando, the Executive Director of CEPA, the tea estates are some of the poorest areas of the country.
“Small tea holders in the South are doing well, but tea holders upcountry aren’t doing so well,” Fernando said. “There’s been very little opportunities for people who rely on farming to improve. Most households in these areas have a mixed portfolio of livelihood — they don’t rely on one thing. But if your portfolio depends on rain-fed agriculture alone, the chances that you are poor are much higher. If you depend solely on the rain you are much more vulnerable.”
The government’s principal poverty-alleviation programme is Samurdhi, which was founded by President Ranasinghe Premadasa as the Janasaviya programme. On March 25, the government raised the minimum monthly Samurdhi allowance from Rs. 175 to Rs. 1,000. 1.6 million people receive some form of benefit from the welfare programme, which costs the state Rs. 798 million per month. According to Fernando, Samurdhi plays a crucial role in helping the poorest people in the country meet their basic needs.
“One of the big criticisms is that Samurdhi isn’t targeted properly — that it only reaches a small percentage of people who need it,” she said. “However, the most recent data from Badulla shows that the targeting has been largely successful. The people getting Samurdhi are mainly the poor, but there are many poor not getting it. It isn’t going to rich people. The Samurdhi benefit is multiple. It’s not just the grant — there is a savings component, and a loan component. However much it’s criticized, most NGOs, when they want to count the number of poor people in the country, they use the Samurdhi criteria.”
The consequences of widespread poverty can be seen everywhere in Sri Lankan society. Malnourishment is a fact of life for millions of people. A recent study by university researchers showed that out of a sample of 330 mothers in the Kalubowila, Nagoda, Matara, Ratnapura, and Balangoda hospitals, 38 percent of newborn babies were not the proper size. 17 percent of the babies were not the proper weight.
However, there is reason to believe that with the war over Sri Lanka may begin to pull itself out of the poverty that has shadowed its history. According to Fernando, the statistics show that poverty is decreasing. With the exception of Nuwara Eliya and the Uva Province, most parts of the country are seeing improvement — especially places like Hambantota and Puttalam. However, even a cursory glance at Sri Lanka’s economic statistics shows that the country still is a long way from being the “economic power house in South Asia”— the goal of President Mahinda Rajapaksa. Unless more attention is paid to rural poverty, millions of people are at risk of being left behind by the soaring economy. If Sri Lanka becomes a power house, these will be the people knocking loudly on the door.