Sri Lanka - Small and medium industries projects : case studies

DRAFT A) W 1 - I 7 NOTES ON WOMEN IN DEVELOPMENT NO. 17 (Case Studies) SRI LANKA SMALL AND MEDIUM INDUSTRIES PROJECTS This case study is ore of a series prepared expressly for discussion by World Bank staff in workshops on women in development. It is in no sense an evaluation of the project, and describes only those of its features which are relevant to the concerns of the workshop. Office of the Advisor on Women in Development World Bauk December, 1981 Workshop on Women in Development SRI LANKA SMALL AND MEDIUM INDUSTRIES PROJELTS Credit No. 942-CE Table of Centents Page I. COUNTRY AND PROJECT ZACKGROUND . . . . . . . . . . . 1 - 5 II. CONTEM" FOR UOMEN . . . . . . . . . . . . . . . . . 5 Socio-Cultural Perspective . . . . . . . . . . . 5 - 7 Women's Need to Work . . . . . . . . . . . . . . 8 Access to Education . . . . . . . . . . . . . . 8 - 12 Labor Force Participation . . . . . . . . . . . 12 - 15 Unem ployment . . . . . . . . . . . . . . . . . . 15 - 16 Labor Law . . . . . . . . . . . . . . . . . . . 16 - 17 III. PROJECT . . . . . . . . . . . . . . . . . . . . . . 18 Obj ectives . . . . . . . . . . . . . . . . . . . 18 Components . . . . . . . . . . . . . . . . . . . 18 Coordination and Monitoring . . . . . . . . 18 - 20 Laplementatior . . . . . . . . . . . . . . . . . 20 - 23 Second Shi rroject . . 2 . . . . . . . . . . . . 23 IV. ANE : Tables . . . . . . . . . . . . . . . . . . . 24 -29 I. COUNTRY AND PROJECT BACKGROUND 1. The island nation of Sri Lanka occupies about 65,607 square kilometers and has an estimated population of 14.9 million (mid-1981). Based on the rainfall pattern, the island can be divided into two distinct zones: the wet zone in the southwest quadrant, and the Ory zone covering the rest of the island. A narrou transition band between the dry and wet zones is sometimes characterized as the intermediate zone. About three-quarters of the populatio. reside in the wet zone. As the result of goverrrent efforts during the past few decades, the growth rate in the dry zone has far exceeded that for the wet zone. This trend is likely to continue. 2. The Sinhalese, the major ethnic group in Sri Lanka, constitute about 72 percent of the population and are primarily Buddhist by religion. Other etlinic groups include the Sri Lanka Tamils (11 percent), Indian Tamils (9 percent), and the Moors (7 percent). The Tamils tend to be Hindu; the Moors, Muslim. 3. Sri Lanka's population is growing at the rate of 1.7 percent (1971-198 About three-quarters of the population-live in rural areas. The proportion of urban population has increased steadily from about 12 percent in 1901 to the cu; t 23 percent but much of the increase has been due to the growth and re-classification of small rural towuz 4LLv urban areas. Sri Lanka has largely avoided the problems of urban congestion and decay due to the relatively slow growth of the major metropolitan areas. - 2 - 4. Following independence in 1948, successive governments took measures to satisfy basic needs and achieve social justice. These measures included free education, free national health schemes, food subsidies, land development and settlement schemes. Consequently, today Sri Laika has a relatively well developed social infrastructure that mitigates against extreme manifestations of poverty. When using the Physical Quality of Life Index as an indicatc-. Sri Lanka ranks highest among the low income countries and compares favorably with many ipper middle-income and high income countries'- In 1978, the average per capita income was about USS200; 40 percent of the population had annual income levels below US$50 per capita, 5. During the decades in which Sri Lanka was making substantial progress in the social fields, the rate of economic growth was slow. Slow economic growth was aggravated by rapid population growth in the 1940's, 1950's, anid 1960's and the influx of school leavers and higher education graduates into the labor market. Employment opportunities were drastically curtailed from the 1960's as a result of deteriorating economic conditions that continued into the 1970's. The poor economic performance during these years was due largely to inadequate investment in the key productive sectots, deteriorating terms of trade, and inefficiency of public and private sector firms nurtured in a highly-protected.environment. I/ Sri Lanka, University of Colombo, Status of-Women (Colombo: The University, 1979), pp. 614-5. - 3 - 6. The present Covernment, in power since mid-1977, recognized that the acceleration of economic growth was a prerequisite for alleviating the serious unemployment problem. Almost immediately, it liberalized the foreign trade and payments system, unified the exchange rate at a depreciated level, 1/ and encouraged the growth of the private sector by lifting many price controls. The Industrial Sector Mission of April 1978 concluded that industrial growth in the private sector could be stimulated by strengthening the capacity of small and medium-scale firms (SIs). This emphasis is "warranted in v:ew of their (SMIs) predominance in private industry, strong links with agriculture and other sectors, relative labor intensity, and potential for diffusing industrial development and diversifying e'xports. Furthermore, specialized systems for assisting SMIs are needed due to their more limited access to credit and need for management, marketing and t,;chnical assistance." 2/ 1/ Output, employment, and investment recorded substantial increases in 1978 and 1979. However, the overall performance of the economy in 1980 marked a severe setback for the.Government's development program. Inflation, trade, and budget deficits increased dramatically in .1980 and foreign ?vchange reserves have declined to precariously low levels. Major public spending on infrastructure combined with unsatisfactory performance in the tree crop sector,public corporations, and-exports threaten the soundness of the economy., The Government has .already taken some steps to address these problems; further measures will be required. In spite of these unfavorable developments, the private sector responded favorably to the post-1977 liberalization measures. Output -value in private factory industries and small cottage industries grew by, respectively, 7.2 percent and 9.4 percent in the 1977-80 period. The data have been taken almost verbatim from Sri Lanka, Policies and Prospects for Economic Adjustment, May 15,1981, p.i and Sri Lanka. Second Small and Medium Industries Project, Appraisal Report, September 14, 1981. p. 3. 2/ Sri Lanka, Saall and Medium Industry Project, Appraisal Report, June 8, 1979, p. 4. 7. The Small and Medium Industry Project (Credit No. 942-CE), the culmination of the Governm.nt and Bank's discussions about approaches for strengthening the capacity of small and medium-scale firms became effective in October 1979 and included US$16 million in IDA funds. The Second Snall and Medium Industries Project, approved by the Board of Directors on October 13, 1981, provides US$30 million in LDA funds. 8. In 197G, the year before the start of the SMI Project, the manufacturing sector contributed about 13 percent to GDP and 10 percept to employment. The agricultural sector, though, accounted for one-third of GDP and over one-half of employment. Industry comprised a registered segment of 29 large public sector enterprises and 7,700 private firms (of which only 5 percent have plant and equipment with book value of over US$64,000), and of an unregistered segment of some 20,000 small and cottage industries. Contributions to the total industriz1 value added were divided almost evenly into thirds among public sector corporations, private and registered firms, and unregistered small and cottage iadustries. The registered segment depends much more on imported raw materials than the unregistered segment. Total =anufacturing employment is estimatcd at 400,000 of whom about tvo-thirds are in the unregistered segment.1/ 9. About 70 percent of- the,,re:Lt&ed SMIs are in and around Colombo, with secondary concentration Lu LLIe auiaa, Kandy, Matara, Jaffna, Galle and Kurunegala dl%:ricts. About 3u perccnt of the unregistered snall and cottage industries are in the Colombo district; the rest, widely dispersed among small towns and villages. Among the registered S,Is, the principal subsectors are textiles and garments, light engineering, paper 1/ Small and Medium Industry Project, Staff Aopraisal Reoort, pp. 3-4. -5- products, rubber and chemical products, food manufacturing and wood products. The aggregate of these subsectors account for 88 percent of employment and 84 percent of investment among registered SMIs. Among the unregistered sMal and cottage industries, the main subsectors are handloom textiles, jaggery (unrefined brown sugar), bricks, pottery, wcod and coir itens. SMIs also presently account for about 80 percent of employ=eat and 70 percent investment in private construction contracting. 1 II. CONTEXT FOI1 WOMEN 10. This section now turns to a brief consideration of various aspects of women's position and status in contemporary Sri Lanka. The aspects tbt have been selected for presentation here are those that, to some extent, influence the participation of female entrepreneurs in the project and the short- and long-term work options for women. Socio-Cultural ?ersoective 11. -raditional cultural and ideological ideas and values still strongly affect the tr.aping of social relationships in Sri Lanka, even in urban areas. Ethnicity, religious ideology, caste, and economic class create some differences in the status, position, and role of women in various parts of the country. In the literature, though, there is agreement about the division of labor by sex. According to a recent study that included'fieldwork in four different Parts of Sri Lanka, the married woman's basic obligations are preparing fcod, fetching water and firewood, pounding grain, weeding and harvesting subsistence crops, carrying reaped paddy to the edge of the threshing f1cor, transporting the grain to the granary, looking after the children, and keeping the house. The man is the head of the family and the chief contribu.or to the family budget. 1/ Small and Medium Industry Project, Staff Appraisal Report, p. 5. - 6 - In addition to her basic obligations, the woman may perform a supporting role by assisting in agricultural tasks, rearing cattle or chickens to obtain food or being herself a wage earner. Women tend tc earn income by being seasonal agricultural labo:ers, plantation laborevs, , producers for home industries unskilled factory workers. This study suggests that women spend about eighteen hours a day in carrying out their responsibilities. "As such the actual amount of labor and effort exrended by wome-a in maintaining family life far exceeds that of ran." -/ The study also concluded that women in the study areas play au active role in decision-making in all household matters (eg., money and children) when the extent to which the husband discusses matters with the wife is used as the in3icator. "Their involvement is particularly high in the Sinhala rural areas, where the .aves are never completely excluded ficm decision making ... It was among the Muslim Community, where women have not reached thq same educaticnal levels as in the other ethnic g:oups, that there was the largest percentage of women excluded from decision- making even in household matters." 2/ 12- Another recent study that also included extensive field work in different parts of the country looked at - inter alia - the degree of task segregation between the sexes and the c.rrespoadin ideas on men's and wo=en's work. It concluded that: 1/ University of Colombo, op cit. p. 11. 2/ !bid, p. 586. - 7 - 7.different types of work are classified hierarchically: highly prestigious activities being exclusively men's work; the middle range types of work can be interchangeable between the sexes; and the activities lowesc on the scale, the degrading tasks, are eAclusively women's domain. This hierarchy is found everywhere -- nationally in the statistics on male and female participation in the labor market, and in the various research Tecations... In all research locations both men and women agreed that by nature men are better human beings than women, and that therefore logically their work and products must be of a higher quality than those of women. In all aspects women are considered the weaker sex: they are less strong mentally as well as physically: they are less reliable; and less capable of precise, difficult, dangerous and important uork. Because in general women themselves are convinced of their inferior capacities, their self confidence is weak as soon as they find themselves in a situation where their work can be compared with tht of men."-I/ 13. Travell:ng alone and staying away from home overnight is a major cultural constraint to women's participation In modern society. This constraint, based both on the need to protect women and their child-rearing and household tasks, applies more to younger unmarried women than to older married women. At present, rural women are more likely to be affected by this norm than urban women. "The women themselves consider lack of freedom as the main constraint to getting a job; that, tcgether with the bu*rden of their numerous duties as wives, housewives and mothers which must be fulfilled as well." 2/ I/ Els Postel and Joke Schrijvers (eds), A Woman's Mind Is Longer Than A Kitchen Spoon, (Colombo and Leiden: National Insitute of Business Management and Rejkuniversiteit Research Project Women and Developnent, 1980), pp. 27, 29. 2/ Ibid, p. 2&. 8- Women's Need to Work 14. The economic conditions of the past few decacies end the current situation in Sri Lanka have made it increasingly necessary for both rural and urban women to have access to a steady l;come of their own, There are several basic reasons why women themselves express such a strong need fo7r their own 1/ income. First, more women must convribute to the family budget as the cost of living rises. Second, some women have been cut off from their traditional economic sources as a result of modernization policies. (For example, women have been virtually excluded fr= agricultural modernization and have lost much of the traditional self-s-fficiency they had as subsistence cultivators. "... their participation in the decision-making and manogement of the farm .s decreasing... now they are gradually forced into the role of unpaid amily workers.")- Third, a growing number of women are the sole supporters f their families. And, fourth, many women feel that they cannot depend on men for financial support because their preferences for spending money do not always coincide with family needs. According to one of the research studies referred to above, women's priorities for spending money include food, housing, clothing, medical care, school books and uniforms, debts, transpo-tation and communication, and religious and soc'.1 activities.-3 Access to Education The emphasis placed on education in Sri Lan4a since the late 1940's has jeen an important catalyst for improving the status of women. In 1945, education was made free at all levels including the tertiary level. Despite the absence of compulsory education legislation, social demand led to 1/ Postel and Schrijvers, on cit, pD. 3-4. 2/ Ibid, p. 11. 3/ Ibid, pp. 5-6. -9- a rapid increase in the participation of boys and girls in the educational system. By the 1960's, near-parity had been achieved in educational opportunities for boys and girs. The more extensive participation of women in at least primary education during the past three decades has also resulted in a significant increase in the female literacy rate: from 46.2 percent in 1946 to 70.9 percent in 1971. The male literacy rat tr'-reased from 76.5 percent to 85.6 percent during the same period. - In 1979, the literacy rate was estimate - 80-85 percent. -/ By 1978, almost 96 percent of the schools were co-educational. 3/ 16. In 1975, 61.8 percent of the 6-11 age group (62.8 percent of girls) were enrolled in school; 53.7 percent of the 12-17 age group (54.0 percent of the girls); and 8.5 percent of the 18-23 age group (8.0 percent of the girls). A In 1978, 47.3, 50.',, and 37.7 percent of the students enrolled, respectively, at the primary, secondary and university levels were female.- Girls are especially affected by problems such as ethnic, regional, and socio-economic imbalances in the student enroll=ent pattern, insufficient and inadequate fa-ilities, and drop out. For example, in 1977 over 20 percent of Sri Lanka's schools had an enrollment of under 100 students. These small schools 1/ University of Colombo, on =it, p. 342. 2/ Sri Lanka Education Sector Me=orandum, Octeber 21, 1981, p. 2. 3/ University of Colombo, ide-, p. 261. 4/ Ibid, quoting UNESCO Statistics, p. 274. 5/ Ibid, quoting Ministry of Education Statistics, pp. 269, 299. - 10 - often have only prirary classes and are located mostly in more remote areas. Travelling to the nearest secondary school via poor roads and transport facilities creates more of a problem for girls than boys considering the traditional importance of protecting young unrarried women. 17. Children receive a six year primary education (pre-grade and grades 1-5) and a five year secondary education (grades 6-10). A public exam is then used to select students for the two year senior secondary course that is differentiated into arts and commerce or science. Another public exam is the basis for entrance to the universities aad other tertiary level institutions. Both exams are also accepted for entrance to vocational training or employment. 18. A common curriculum is offered to male and female students at the primary, secondary, and university levels. In grades 11 and 12, .though, girls are more likely to be enrolled in the arts and commerce stream (60 percent) than in the science stream (48 percent). If Data abou. :he subjects offered by male and female students who sit fo: the public exams suggest some degree of sex-based curriculum diversification,,particularly in the selection of vocationally-oriented courses. For e-:ample, An equal number of male and-tezale candidates offer science, social science,' commerce and accounts, but few girls offer subjects such as advanced mathematics, geometrical and mechanical drawing, and wood and metal handicrafts. On the other hand, girls opt for home science, short- hand, weaving, ceramics, art and music 2/ 1/ University of Colombo, oncit, p. 269. 2/ Ibid, p. 294. 19. A similar pattern is visible =t the u:.iversiry level as well. In 1978, 45.8 and 31.1 percent of the students admitted, respectively, to arts-and science-oriented courses were female. During the 1970's, the proportion of women admitted to the medical, dental and veterinary science faculties increased to almost half; to the agricultural and architecture faculties, a quarter; and to eng! eering, about 10 percent.- "Such disparities are obviously the cumulative result of social attitudes and stereo-types originating in child-rearing practices ... Education attainment is thtis influenced by cultural factors but the education system in its turn tends to reinforce sex-role sterco-typing in social and economic roles."i/ 20. The sex disparities and stereo-types are more striklng in the vocational education structure than in the general education structure. Vocational education !curses are organized by the Ministries of Education and Higher Education, other government ministries and, to a lesser extent, private agencies and voluntary organizations. There are no legal barriers that limit the access cf women to these courses (some institutions, though, have admission quotas - eg., School of Agriculture at Kundasale;. Several examples will be presented to illustrate the pattern. 21. Polytechnics (8) and technical institutes (10) offer full - and part-time courses leading to diplomas and certificates in technical contiercial, and craft courses. In 1978, 72.9 percent of the full-time cor-ierce students were women: 21.2 percent of the technician students; and 4.8 percent of the trades/cra. - students. In :";e came iear, apprcyi=ately 60 and 85 percent of the students enrolled in teachers' colleges anc. schools 1/ University of Colombo, o: cit, p. 302. 2/ !*=id., v. 2L. - L4. - of nursing were women. The proportion of women in paramedical courses such as physiotheraphy and radiography is much less: respectively, 33 and 35 percent. - Table 1 (see Annex) illustrates the differentiation by sex in the nonformal vocational education courses offered by the Ministry of Education in 1978. The National Apprenticeship Board, creatrd in 1971, is the main national agency for Lraining industrial workers. Its program is open to men and women but "wamen a;;rentices have been limited to only 14 of 117 courses offered between 1973 and 1978 and have never exceeded 5 percent of the total enrollment. The Board has succumbed to the pressure of exployers and has hardly made any headway against the barriers created by te sex-based division of the labor market."2/ Private firms ar.- increasingly providing short-term on-the-job training programs for women, particularly in the garment and electronics industries. "Modern iidustry promotes exploitative training for routine jobs but in juxtaposition there is under-utilization of available facilities and in the National Apprenticeshi Board Prograrmes." 3/ Labor Force Participation 22. The data in this section assesses the changes that have occurred in-the labor force during the period, 1953-1971. Unfortunately, the 1971 census data is the latest that has been analyzed in detail. The trends are quite clear but still remain to.ba updated for the past decade. 1/ University of Colombo, op cit, pp. 319, 329, 339. 2/ Ibid, p. 431. 3/ Ibid, p. 417. - 13 - 23. The labor force in Sri Lanka expanded from 2.6 million in 1946 to -.9 million in 1971. During the 1960's, the female labor force increased by 64 percent; the male labor force, by 21 percent. In 1971, women constituted 26 porcent of the labor force; men, 68.4 percent. Most mt-a (75:6 percent) and uomen (82 percent) live and work in the rural sector. Between 1963-71, though, the proportion of the female urban labor force increased from 13.4 to 16 iercent. In 1971, the proportion of married women in the labor :orce (51 peicent) was considerably hi,her than their proportion of the female populatton (35.8 percent). 1/ "The marked increased in the activity rate of women between 20 and 35 years of age since 1963 is pethaps the cumulative result of rising educational levels and consequent higher aspirations, weakenirg social constraints and increasing economic need for more than one wage earter in a family." 2/ It should be noted, though, th4t women with no :ormal education had the highest participat:.on rate among working age women in 1971 (30.8 percent)..3/ 24. In 1971, just over one-half of the labor force was employed in the agricul:ural sector, one-third in the service sector, and the remaining in the indu;trial sector. Most (70 percent) of the rural female labor force were workini in agricultural jobs; the rest, in manufacturing and service positions. Most (over two-thirds) of the female urban labor force were 1/ "This lot proportion of economically active womtn is the result of a computat on based on the definition of working women as those 'tngaged in "gain. ul" occupations measured in terms which are not related to househol( duties or which are home-based and part-time and not reported as 'emplcyed.' " University of Colombo, op cit, pp. 447-8. 2/ Ibid, p. 453. 3! Ibid, p. 457. - 14 - in service jobs but the relative proportion of women in manufacturing jobs has increased in recent years. 1/ 25. Although the expansion and modernization of manufacturing industries have increased the vaSe employment opportunities for women, deteriorating economic conditions have led to the decline of small-scale establishments and traditional industries that have always employed large numbers of women. "In many villages in Sri Lanka women lack off-farm income-generating activities... An investigation into a small sample of training-cum-production centers in rural small industries revealed a high degree of female partic::pation and a low level of efficiency and productivity 2// and an air of genteel poverty, lethargy and depression.'"- Besides, rural women have very limited access to information, credit and marketing services.-3 26. Self-employment and family labor still characterize the traditiona and unorganized sector in agriculture and trade. Several recent surveys indica that the informal sector is teeming with self-employed or family workers in labor intensive industries such as the manufacturing and processing of food, tailoring, repair services, transport, and construction. Women figured prominently in unorganized traditional rural industries and men in Colombo's informal sector. - 27. Table 2 (see Annex) indicates the occupations in which women are concentrated, few women are employed, and no %omen are employed. Table 3 (see Annex) illustrates the changes in the employment status of women by 1/ University cf Colombo, op cit, p. 469. 2/ Ibid, p. 470. 3/ Ministry of Plan Implementation, Women's Bureau, Report of National Meetin. on the Role, Contribution and Participation of Women in Rural Development, September 14, 1979, p. 4. L/ University of Colombo, idem, p. 465. - 15 - major occupation groups for the period, 1963-71. "Two features of this employment structure have important implications for the status of women. The areas of concentration indicate that there is a tacit and sometimes even overt demarcation of the labour market into "masculine" and "feminine" jobs. Women appear to have easy access to traditional feminine or related occupations such as agriculture, nursing, teaching, weaving, coir work or domestic service, while negative attitudes limit opportunities in male preserves such as administration, management and technology. This division is extended to feminine tasks within employment areas as, for instance, weeding, transplanting and harvesting in traditional agricultuze, plucking tea and tapping and curing rubber in plantation agriculture, picking and sorting in mines, sewing, weaving, spinning and dyeing in textile industries, packing and labelling in industries, assembly work I- technical firms, and secretarial, clerical aad sales assistance in offices. The second characteristic of female employment is the concentration of women in the lower levels of the occupational pyramid........ The majority of women workers are found in semi- skilled and unskilled employment in agriculture, industry and trade and community services and in routine clerical and sales jobs. The majority perform pnysically exhausting tasks which require little or no education and skills, for less monetary rewards than their male counterparts. A minority have"reached the upper rungs but are largely,excluded from decision- making - the key to economic power and status." 1/ Unemployment 28. Rapid population growth and slow eccnomic developeacz have created major unemployment problems in Sri Lanka for several decades. From 1953 to 1975, the population between 15 and 59 years increased by 56 percent while 1/ University of Colombo, op cit, pp. 476, 480. - 16 - total employment increased by only 2: percent. Several surveys carried out between 1959 and 1975 reveal that unemployment has increased steadily over the years and that there has been a sharper increase in unemployment among women. For example, in 1971, one-third of the labor force and 41 percent of the female labor force between 15 and 24 were unemployed. The surveys also confirm that the unemployment rate increased with educational attainment. The educational level of the unemployed is higher than that of the employed. 1 29. Unemployment is a special problem for educated women. It is more difficult for women with a secondary or higher education to find employment an it is for men of the same educational attainment. The educational level of the unemployed female population is higher than that of the male unemployed population. Young women entering the labor market are constrained by their narrow range of vocational skills and lack of mobility, and by employers' perceptions of them as future mothers and homemakers. "The extension of employment opportunities is... considered to be of marginal importance by policy makers and employers who tend to view women largely as secondary earners in the context of acute unemployment in Sri Lanka." 2/ Labor Laws 30. In November 1978, the Women's Bureau of Sri Lanka was established in the Ministry of Plan Implementation.- Its general goal is to publicize issues of concern to women and better integrate their activities into national development plans. In relation to labor laws, the Bureau is focussing on the issues of equal pay for equal work, maternity benefits, and night work. 1/ University of Colombo, op cit, pp. 480, 487. 2/ bid, p. 491. Also see Postel and Schrijvers, on cit, p. 34. - 17 - 31. For the most part, the same labor laws apply to both men and women. At the professional and higher levels of employment there is no distincticn at all between the sexes. However, among the unskilled and semi- skilled workers in agriculture, plantations and industry - uhere most women work, there is a wage differential. Wages in these sectors are determined oy Wage Boards, and published in the Labor Gazette. Minimum wages for women are about 65-80 percent of those for men.1/ 32. The Constitution of 1972 provided that appointments to the public service should be made irrespective of sex. Under a proviso to this section, though, it stipulated that specified posts or classes of posts could be reserved for either sex. Consequently, cducat; women had limited access to some positions in the public sector. Until 1979, when this provision was removed from te Ccnstitution, "the intake of women into the Administration Service "as restricted tc Z5 percent. Such limits were also imposed ou women entrants to the General Cleri.zal Service, Accountants' Service and Shroffs' Service."2/ 33. At this time, the Maternity Benefits Ordinance does not apply to women working in the informal sector. Some laws that were passed to protect women have now become constraints to their employment. For example, women are not permitted to work in factories and industrial undertakings between 10 pm and 5 am. This restriction does not apply to women in the professions and higher managerial posts. - 1/ Sri Lanka, Ministry of Plan Implementation, Women's Bureau, Promotion of Equality of Opportunity and Treatment by Re-inforcing -the Social Infrastructure, February 1980, p. 8. 2/ Ibid, 3/ Ibid, p. 2. - 18 - PROJECT Objectives The Small and Medium Industry Project has two major objectives: . to address constraints hindering the rapid growth and productivity improvement of SMls, especially in the following sub-sectors: rubber products, foundries and light engineering, garments and handloom products, construction and building materials, and agroindustries; and . to increase the SHI contribution to efficient and low cost employment generation, export expansion, and economic growth. These objectives will be implemented through two main components: credit and technical services. The project is national in scope but a significant portion of the growth is expected in Colombo and seccndary industrial towns. Attention will be given to strengthening services for SMIs outside Colombo. The total project cost over a four year period was estimated at US$28 million of which IDA would cover S$16 million. Components 35. Credit Component. Firms eligible for finance uw.der the project will be those with plant and equipment (original cost) of less than $64,000 betore the subloan, with a maximum subloan size of $64,000. An SKI Fund within the National Development Bank (NDB) will be established to refinance SY-I loans. The five major credit institutions (two public comercial banks, Bank of Ceylon and People's Bank; two locally controlled private commercial banks, Hatton National Bank and Commercial Bank of Ceylon; and Development Finance Corporation of Ceylon) will develop or expand SKI units at headquarters and in key branches with personnel trained under the project in SMI lending - 19 - operations. The credit institutions will be responsible for subproject appraisal, on-lending, and supervision. Attractive spreads, a modified credit guarantee scheme, and a special capital facility for entrepreneurs unable to meet the normal equity requirements will rrovide incentives to the credit institutions to expand SM.I lending activity. 37. Technical Service Component. The target groups for technical services will be firms with less than US$128,000 in plant and equipemnt. Most technical and management assistance will be directed to firms in SMI subsectors that have significant potential for local or export market expansion. The Industrial Development Board (IDB) will be the major provider of technical assistance uner the project. The IDB will upgrade its regional extension network, start a sub- contracting exchange to link small manufacturers with public procurement and private contracts, and build subsector-specific schemes, staff and facilities in three major SMI subsectors (rubber products, building materials, foumdries and light engineering). 38. In addition, the Ministry of Textile Industries (XTI) will establish a garment training center to provide training and plant level technical assistance in cutting and pattern-making, production supervision and euality control. The Department of Textile Industries (DTI) will promote and participate in a private limited handloom production and export copany %ith majority private shares. The private shareholders and board me=bers will 1e leaders in production and exports of high quality handloom fabric and fiished products. The company will select about 50 largely defunct handloom cooperatives and DTI centers in rural areas. The Department of Small Industries (DSI) will provide extension services to the white coir industry, pri=arily c-pcsed of private household industries. And, the National Institute of Managereme will provide short technical and management training sessions to small enterprises in the regions. - 20 - 39. This component will also finance outside consultants fcr policy studies, and training and advisors for NDB and the participating credit institutions. Coordination and Monitoring 40. The implementing agencies will carry out their specific activities and responsibilities autonowously within the broad framework of the project. At headquarters level, an SMI coordinating committee that will meet quarterly will be established. At the district and regional levels, regular meetings will be held between the managers of the credit institutions and IDB. Field staff will also be consulted. Implementation 41. Credit. During the period, October 24, 1979 to December 31, 1980, the NDI's S1I Fund approved 1,001 applications for re-financing amounting to US$6.8 million. Commitr.ent progress has been about one year ahead of schedule. Full commitment of the US$12 million was expected by late October (1981). 42. The average subloan size has been US$6,800. About 69 percent of the subloans were for less than US$4,400; 25 percent fell between US$4,400- 22,000; and 6 percent were above US$22,000. The interest rate to sub- borrowers was maintained at 15 percent. The average subloan maturity is about four years, less :han the anticipated five to seven years. (The maximum repayment period is ten years including a grace period of up to two years.) g .43. The major product groups that have been financed include food processing, building mar-r.als, and metal products. Within food processing, paddy milling has dc-L..zzed, representing 175 of the 223 subprojects approved in this subsector. Major building material lines have been bricks, with 1/ gational Development Bank of Sri Lanka, Reports and Accounts 1980, p. 14. - 21 - 107 subprojects; metal crushing with 54; and tiles, with 33. Table 4 (see Annex) gives a further breakdown of the tajor product groups fInanced under the SMI Project. 44. The geographical distribution of the SMI subloans has been wider than anticipated during appraisal. However, there is still heavy concentration in districts such as Colombo, Campaha, Kurunegala, Kandy, and Puttalam. Colombo and neighboring Gampaha District represent about 38 percent of the approved subprojects and 55 percent of the re-finance a=ount. Table 5 (see Annex) provides more details on the geographical distribution of the subprojects. 45. In a random sample of 100 firms financed, about 15 percent of the enterprises were owned and operated by women. Their enterprises included light-engineering, agro-processing, and the more traditional textile-related firms. 46. The state banks, Bank of Ceylon and People's Bank, have provided almost 80 percent of the refinancing under the project. This accounts for 909 (90.8 percent) of the subprojects that have already received loans. These banks have an extensi-ve network of branches throughout the country. Most people in Sri Lanka can reach one of the credit institutions within 1-2 hours by public transport. 47. The availability of the subloans was announced through various mechanisms such as advertising, newspapers, radio, within existing industries, and meetings of the Chamber of Commerce. Efforts to modif7 the loan eligibility requirements - from requ4ring collateral to using the project appraisal as the basis of credit decisicns - have met with some success. For approximately 80 percent of the subprojects that received loans, the assets of the project - 22 - itself we-re the only required collateral. The debt: equity ratio has averaged 54:46 in comparison to the expected 70:30. This implies an overall fi-ancial pattern of sponsors 46 percent, IDA refinancing 43 percent, and credit institutions 11 percent. Employment. The 1,001 subpro4ects that received loans by the end of 1980 generated approximately 9,000 new jobs. If this rate of job generation continues, approximately 15,000 new jobs will be creAted by the end of the project. Although hard sLt"'tics on the employment- generating effect of these enterprises have not yet been assembled, preliminary indications are that the cost per job created was in the vicinity of US$800. 1 Technical Services. Progress under the technical and marketing component has been slower, as expected, due to the need to locate suitable local consultants, construct facilities, and build staff capacity. S!I bank staff have parvicipated in various training activities. Over 200 SMI officers of the participating credit institutions have received local cr foreign training prior to or during the first year of implementation. Some 150 SI officers now are engaged full time in SMI lending operations at head office departments and key branches. Ten percent nf the trained SMI bank officers are women. The head of the SIl Department in the KDB is a woman. Technical assistance has been provided to product groups in which women dominate. The private handloom export company has been established. Among the fifteen significant manufacturers and exporters of handloom prodvcts who are members of the company, about half are women. The garment training 1/ National Development Bank of Sri Lanka, op cit, p. 14. - 23 - institute is row under construction and expected to be operation in 1982. Women represent over 90 percent of the labor force unk handlooms and garments. The Depaztment of Small industries, responsib-C for services to cottage industries, has made some progress in developing the white coir industry, hut most of its programs deal with promotion of handicrafts for local sale. The Second SMI Project. Approved by the Board of Directors on October 13, 1981, the Second SMI -Zoject will provide US$30 million in IDA funds in support of a US$52.5 million project. It will build on and strengthen the institutional arrangements established during the implementation of the First SMI Prcject. US$28 million will be provided for rartial re- finance by the %DB of SMI term loans made by the credit institutions. US$2 millicn will be provided for techncal and marketing 3ervices that will include training of SMI staff, improvements in SMI extension services, an S'I consultancy fund to tap knowhow of the local private sector in solving SMI probleus, and expansion of service facilities for light engineering SMIs. The Seccnd SNI Project will also give increased emphasis to exports and related supply development. The produc- groups that have been identified for emphasis include rubber products, wood items, gems and jewelry, han6loom textile goods, frozen seafood, white coir items, light engineering products, and cut flcwers and plants. Women are major participants in textiles, coir products, and marine products. .£'EX - 24 - 1/ Tdble 1 ISLAND FIGUrES FOR 1978 REGARDING FEMALE PARTICI?ATION IN TECHNICAL EDUCATON COURSES ORGANIZED SY THE NON FOImAL EDUC, .i')N E!'.ANCH OF THE MINISTRY OF FDUCATION Courser. "Wt. / fern:ls Cour. W-th Kh fernale:- Cour:el wi:b !:w fhr..c Covr,e -::h ro femalc pärcicip2:* np -ia:npr ersion partic.;at:an t:. 9f N. of N3. cf cf t:. c" :. . ::ts fr:s ú :emee ( e::. C_-:: r.:-: f:=cic: C:-.!::e rr.-:|c 41 Dres- r .5 45·9 RadI A:e.-Virg ard C:: :r. 45 b , : .:1 fa .er mik,nr i 7g 3 M ¡ .t':.c 23;: SI 819 rep: r.--: '43 e' Te: c·.: ::. 16 --:. C:a.ne i i c.:-. ' 2 253 P:1:.y 4: i *3 M:;.:: - - ..:r. i:a rk 3 5Z:p_:ndJ .d:rne:'rcg 21 4 .: ok.D C7 1.-m7; - e r! 2 . A- ,. . 3 :7 :::j . 2 10 2 :-. .-- r; 15 M :.:.g237 F :cs::ure . :5 ;a5 F:c.a c-::: - £> l NJr:C-. a:-: 4 -4' F::k r « t -'.:-.% lO 2: l sculp tre 3 14 G :.:- 1.9 C:::U rr:..kirg 10 Cc.r wc. 3 .41 Ar:ind r :J : - 163 Eket %,zrk 22 Tc,'.--:r:o 17 87 Cz;r wr E 54 a-. :::-<: 4 Wc:,rg £/4 itush(p,:n) -or6 .0 653 h:: =-.; 6>2 f3 Cc?2-t -.:; z:.d:cy.. P:ry .9 143 Set cc;::: 2.2 03 ;-: - R:::cn work 05 07 E -.::Mo -=-< 41 32 Mcn.r : .; . Papcr cråfcs 2 t2 Plcyri pr.t.-:: : 2 03. -tnn, :1-!=nceg 5 Accountancy 35 01 - M Ai.- .:. e Is Solr:e: Ministry of Educaion 1/ Taken from Sri. Lanka, Ministry of E'.an Iplementati-on, Women's B.-u, Promocicn of 'qualitv of Coertuni-v and Treatent by Reinforcin; the Sccial Infrastructure, 7e!ruary 1980, p, 135, 1/ Table 2 (I) Occupation is which wonn are concentrated (a) Census Retni.s (1971) Tea pluckers 90$ Spi:ncrs,wcavers,d)crs 82. 3 Nurses und Mithives 95.01 Agi 'ultIure and foir and1 no1t weavcrs 81.11 !) mst ic sct .e v.g.maids 56. 91 ani:ral husbandry Coir rope makers 71.3' Sienographers and typists 5S. A workers 47.8t Seinotressers ond erroidejers 70.01 leachers 51 .71% lieedi manufacturers 54.71 Re,teptionists 49.3's Rubber t.pprs and Vackers and labellers 51.31 Tclcphon: and telegiaph operators 44.11 nbber estate I'ttery and clay workers 47.N1 Wical, Ikotal and Vet erinary workers 41.91 labcAireis 39.6% fi:s-et wedvcrs 47..R Scijli uorkc.s 34.11 ijilois .id J:c>sm:*kers 14.4. Cv;opmer r .chinc oreratoss 733. Rul.bci and plastic prud-ct makers ).11 .ibrai ians 32.01 (except tyrcs) Chi01cAl pOLcSs ant related "1.:q (a) 1970 Employment Survey (Industries) Cinnamon workers 48.11 Carpcts, rungs, matting workers 92.01 Haiidressers and beauty shop workers 35.91 C r nrm.nt workers 78.61 Coco tcavrdamon s 4edi manufacturers 72.6t pepper cultivators 43.91 Safety match makers 67.51 Iivcstc%A 45.91 Oth--r te:Iles 62.ol Vvy vikers 57.51 ucMilit shell and charcoal %workers 50.81 T*1nkering workers 45.01 (:lnfcct lonery 42.81 Cordage, rope, twine workers 40.7S Caning anId preservig of food 1an1d vegetables 36.51 Periumes and cosmetics workcrs 36.31 Electrical repair shop workers 36.9% I'apel Loard box makcrs 31.51 1/ Taken from Sri Lanka, University of Colombo, Status of Women, pp, 473-5, ANEX Table 2 (Cont'd) (ii) O,cupations in which few wonien are employed Consus Returms 1971 Coconit cultivators 7.31 Stone citters, carv.rs 9. 11 Perfoiming arti,;ts 9.21 Ila cuilt ivator! 7.1 1% Painters 6.61 Authors,Journalists 6.91 Ru:ber cultivators 4,91 Tanners 6.41 hliolesale and retail trade proprietors o.91 Farm iunageis 2.3% Miners and quarry workers 6.21 legislators and administrators 6.5% Rubhr supervisura 2.3% Printers 2.(1 Cateieis and ladgingproprictors 5.6% Tea Stpelvisory 2.21 Production foinn 2.51 Sales and shop assistants 5.61 Fis;:.-nen 1.4% Electrical fitters 2.1% lcon1o:ists 5.41 -ore5try wo0hers 1.31 Jewellery and precious Layers 5.2% Co:onut supervisory 1.0% metal workeins ... Food and leverage process Ingers S.21 workers 1.2% Technicians 5.O ilood and Paper workers 1.1$1 Insurance, ical estate woikers, auctioneers 4.4% Construction wrkcrs 0.71 Accolultants 3.9% Stolptois, painters 3.91 Cleanis, catetakers 3.7% IPaught sImen 3.61 Lnginceis, Architects 3.4% ILairdressers 0.9% Traiisport workets 0.6% inn nachine opertors O.6S ANN X Table 2 (cont'd) (int) Ipations n which ito WLxAi are corployed - Census Returns 1971 lea estates superintendents Khtor vehicle uuchanic.L Judges Rubber estate buperintendents Radio and T.V. R-paiters Mining and Industrial Enginects Coconut estate Telephone and telegraph installers SurCvo!s stiperintendents Flectric linesijeji Station tIstLrs Jatawasara Supherintendeiars llectrwic fittels Rail,,ay engine drivers 'uer-genecrting mchi-te operators SignaIYn,guw rds Earth mving and relatutd machine operators Bus and lorry drivers CAnwit and terrazo workers Bus conductors N Stone raonts and bricklayers Taxi drivers I'laterVrs Boatnn Carlpiters, Joiners Ship wnrkers illucksmniths, Toolsiak.ers Postmen and telegraph wssengers P1hwiers Defence Services Welders. 28 Table 3 EMPLOYED POPULATION BY MAJOR OCCUPATION GROUPS AND SEX 1963 1971 Occupaticns Total Males Females Total Males Females Professional, Technical and Related workers 4.5 3.5 8.5 4.5 3.7 9.1 Administrative and Managerial workers 1.0 1.2 0.2 0.4 0.5 0.1 Clerical and Related workers 3.7 4.4 1.0 5.1 5.9 2.4 Sales Workers 6.7 7.9 1.9 7.5 8.9 2.1 Service Workers 8.2 7.7 10.0 5.4 5.4 5.7 Agriculture, Animal Husbandry, Forestry, Fishing workers 51.6 48.7 62.8 48,8 45.3 61.1 Production and Related Workers Transport and Operators and Labourers 23.1 25.5 14.0 25.4 27.9 16.7 Not stated 1.2 1.03 1.6 2.5 12.4 2.8 TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 SOURCE: Based on Census of :eylon 1963 and 1971, Department of Census and Statistics. Taken from Sri Lanka, University of Colombo, Status of Women, p. 477. - 29 - Table 4 SUBSECTOR DISTRIBUTION OF LOANS Number Amount Subsector Projects % Rs Million Z Food Processing 223 22.3 25.3 21.4 Construction Materials 203 20.3 28.1 23.7 Metal Products 118 11.8 11.1 9.4 Other Agroindustries 96 9.6 8.4 7.1 Garments, Textiles 89' 8.9 9.1 7.7 Wood Products 87 8.7 8.5 7.2 Rubber Products 19 1.9 4.8 4.1 Repair Workshops 31 3.1 1.8 1.4 Other 135 13.4 21.3 18.0 TOTAL 1,001 100.0 118.5 100.0 SOURCE : Sri Lanka, Secrnd Small and Medium Industries Project, ADvraisal Report, Septe=ber 14, 1981, p. 44. Table 5 GEOGRAPHICAL DISTRIBUTION OF LOANS Number Amount District Projects .2 Rs Million A. Colombo 253 25.3 5..9 44.6 Gampaha 124 12.4 13.1 1L.1 Puttalam 10 10.8 8.9 7.5 Kurunegala 104 10.4 b.1 5.1 Kandy 98 9.8 8.9 7.5 ,,atara 46 4.6 5.1 4.3 Badulla 40 4.0 1.4 1.2 Kalutara 29 2.9 0.7 0.1 Others 199 19.8 21.8 18.6 TOTAL 1,001 100.0 118.5 100.0 SOURCE: Sri Lanka, Second Small and Medi-m Industries Project, Appraisal Report, September .14, 1981, p. 45.