Renewed interest for economic resurgence in North | Sunday Observer

Renewed interest for economic resurgence in North

27 May, 2018
Dr. Ahilan Kadirgamar
Dr. Ahilan Kadirgamar

Sri Lanka’s former-war wrecked Northern region is witnessing signs of economic resurgence with greater political will being demonstrated by the Central Government and the shifting of focus by the local Tamil leadership towards development, as the Provincial Election also nears, observes a top regional researcher.

In a candid interview with the Sunday Observer recently, Dr. Ahilan Kadirgamar, a political economist based in Jaffna, highlights that the lack of vision demonstrated by the Tamil political leadership for developing the Northern Province - nearly a decade since the war ended, has thus far resulted in ‘jobless growth’ and crippling indebtedness. However, he points out that 2018 could very well be the year of change as the people are now increasingly demanding political authorities to address their economic grievances.

Excerpts of the interview:

Q. What is your analysis of the economic situation in the Northern Province since the end of the war?

A. The economic conditions in the province after the war have been on a downward trend in terms rural livelihoods, incomes and indebtedness. It has become a fairly serious crisis both socially and economically. On the other hand, politically, after the war-the region was under the iron grip of the Rajapaksa Government which did not even provide space for people to even think as to how they want to move forward. It was all top down.

The donors over the last many years have also mainly focused on infrastructure development as opposed to generating livelihoods and employment. What we have had so far can be called ‘jobless growth’ in the North.

Although the Provincial GDP growth in the North has increased in numbers, it has not translated into meaningful economic growth for the people and their incomes.

Even though the Provincial Council was elected in 2013 raising much hope, their term is now coming to an end and to date there is very little that they have done. So, not only the Government but also the Tamil leadership has done little towards meaningful reconstruction.

The Provincial Council was a good opportunity for us to rebuild or at least provide the vision for development of the North, but they did not achieve anything on the economic front.

Q. So, why do you think the Tamil political leadership governing the Provincial Council has not delivered on the economic front so far?

A. There does not seem to be political will. Further, there seems to be a lack of capacity to think through economic issues. Of course, the funds allocated to them was not enough. Financial devolution has been limited in Sri Lanka, but beyond that there was neither vision nor priority given to economic issues.

If you look at the years from 2009 to 2013, Government data shows about Rs. 260 billion investment in the North. So, it is not that there were no funds, but it was the lack of vision, direction and priorities that failed to spur livelihoods.

Q. Given the results of the Local Government election held in February, how would you assess the current pulse of the Northern population?

A. Well, the recent election has been a wake up call for various actors in the North. The dilution of the vote base of the Tamil National Alliance has indicated that politics as usual is not going to work. Increasingly, the Tamil population in the North is frustrated about the economic situation and those tremors are reflected in the election results. It’s not just the Tamil National People’s Front, which only got 20% votes in Jaffna and very little in Wanni, that has risen, but other independent actors have also entered politics. So, the Tamil population is looking for a different kind of politics particularly on economic issues.

Many of the candidates at the elections did not speak of issues that a Local Government Authority can address, but merely made the same old ideological statements. But now that the Councils have been formed, some of them are trying to address economic concerns within their powers. I am also starting to see this reverberate to the Provincial Council, where they are also suddenly interested in the regional economy during the last few months of their term.

Q. So, does this mean things have started to change and there is now a renewed focus on development?

A. Yes, exactly. There is now an interest in development, which is partly because the budget has also given some confidence, particularly allocations of resources for the North. The indebtedness crisis and moves to address it has also raised the people’s interest. So, I believe there is a shift in thinking from the last eight years. But, we are going to need much more meaningful support, from various quarters including the donors.

Q. What is expected from the donors and other stakeholders at this point in time?

A. Most donors could be thinking of exit given that the post-war period will touch 10 years by May next year. I would argue that there needs to be another major push given this opportunity for development. So, donors should also commit to greater support and the Central Government should deliver on its promises for greater resources.

The funds allocated for 2018 came directly through the Central Government. However, the provincial system should also be strengthened with greater resources next year, so, that they will have ownership of development.

Q. There is a view that the Northern populace has strong connections to the Tamil diaspora and therefore more support can be forthcoming. What are your views?

A. In my own research, I have found that it is only a very small population in Jaffna who have strong connections to the diaspora resulting in regular remittances. In the peripheral regions of Jaffna, and in places like Mullaitivu or Kilinochchi, people don’t get remittances.

Q. The Government in its Budget 2018 allocated over Rs. 12 billion for the Northern economy and proposed a number of measures to develop the region. Would these initiatives be enough to uplift livelihoods?

A. Yes, 2018 is a crucial year and we are almost halfway through it. There are a number of budget proposals this year to address these issues. But just from this budget alone, we are not going to be able to address the larger economic crisis in the North.The Government’s initiatives to invest in the North this year are an opportunity but we need to have an integrated approach.

As far as the Government is concerned, there have been a lot of investments in co-operatives this year. The government is investing Rs. 1,500 million where Rs. 1,000 million is for producer co-operatives and Rs. 500 million to address the debt issues through credit co-operatives. But, there needs to be a capacity building for co-operatives. That is where the donors can support.

There should also be capacity building for the various provincial structures to prepare the way for the new Provincial Council after the current term ends in September. There needs to be a balanced development vision for the North. It is primarily rural, there are sections of society that are completely left out, youth pose a challenge and the women are a huge asset.

Q. The fisheries sector in the North had been affected by the Indian fishing dispute in the Palk Bay region. What is the current situation on this?

A. The Indian trawling problem that lasted for many years is now slowly coming under control because of the initiatives of this Government. The President came out quite strongly in 2015 to address it and then the Foreign Minister in 2016 held talks with the counterpart External Affairs Minister, Sushma Swaraj and the two fisheries Ministers.

The fishermen say there has been a reduction partly due to the vigilance of the Navy. There are also moves by the Indian side to decommission or convert the trawlers. But, nevertheless, if you look at the fisher communities over the last eight years, their co-operatives have declined. If their fish catch declines, their revenues decline. They normally give 5% of their revenues to run the co-operatives. When they don’t have the revenues for that, the whole structure starts to collapse. So, now this is also a time to rebuild those fisher co-operatives.

Q. What exactly is the strategy to develop the Northern region?

A. If you take fisheries in Jaffna for example, there are 119 fisher villages – which equates to 119 fisher co-operatives in Jaffna. We cannot invest in every one of those co-operatives. The strategy that some of us are proposing is to invest in the small federations called ‘Samaasam’ (Union) in each region. For example, Karainagar Island, the Mullaitivu coast, Vadamaarachchi East in Jaffna all have a Samaasam each.

So the strategy is to build those ‘Samaasams’ and through them strengthen the cooperative societies. If that is done, they can also provide credit to the fishermen like nets, ice and fuel and in turn the fishermen can auction their fish through the ‘Samaasam’. The Samaasam can also intervene to ensure that the fishermen fetch a good price. So, we have to think of new ways of addressing the economic crisis in the North by breaking them down into sectors.

Q. What are the plans proposed for the agricultural sector?

A. For the agriculture sector, the biggest external shock right now is the drought and water problems. We are proposing drip irrigation as the alternative. There have been pilot programs on drip irrigation including ones with the support of the Office for National Unity and Reconciliation, to assist farmers in Kilinochchi, Jaffna and Matara. With drip irrigation, water usage can be cut down to about 40% or 30% while fertiliser use can also be saved by about 50%. On the other hand, yield can go up by about 50% to 100%. But for all this, farmers have to be trained along with the introduction of the drip irrigation systems. It not only requires investment but also capacity building.

Q. Palmyrah trees are what characterise the North and these trees are seen in the region in abundance. What opportunities lie with Palmyrah?

A. Yes, Palmyrah is an important resource in the North, and it is actually the oppressed caste communities who have historically been involved in palmyrah-related work. It can also be developed as an export product. Right now, it is mainly limited to toddy and arrack etc. When toddy is not drunk, it is distilled into arrack. But the palmyrah fruit is another natural resource in the North. We can develop new foods, for example, even the palmyrah root (Panang Kilangu in Tamil) is nutritious for people who are concerned about gluten.

Next, odiyal flour (dried palmyrah root) may also have export potential. Out of odiyal flour you can make soups. There needs to be a lot of research and development on this front. The Palmyrah Development Board and the Palmyrah Research Institute are working on such research and development, but we need to accelerate such efforts to enable investment.

Q. What is the future of industries in the North?

A. Well, if you take a district like Mullaitivu where 10% of the households do not have access to electricity because they don’t live close enough to the grid, solar energy would be a solution.

So, to introduce solar, rather than importing the ready made solar equipment - if a basic solar panel assembly plant can be set up in the North instead, then it could be the kind of thing that will interest young people. Another idea is the assembly of very basic electronic goods.

If the donors or the Government could set up incubators so that the state first takes ownership and creates places where people can come and learn these technologies for some production, then others can replicate such production.

Q. How about opportunities for youth in the field of Information Technology?

A. IT and software development in the North are constrained by the limitations in education. With the war, we have become an educationally backward province. Although historically, Jaffna was considered to be advanced in English language ability and education, the three decades of war have undermined this legacy. So, there needs to be much more time and investment to advance education. But, we should be able to explore other kinds of small industries.

Q. What is the update on the housing reconstruction programs in the North?

A. We have been waiting for the housing projects to take off. However, in Jaffna most of the land is private land, and about 10% of the population are completely landless. They don’t even own 10 perches of land to make them qualify for a housing grant from the government. They are the bottom 10% of our society. So, when the bottom 10% does not get a housing grant from the Government, it is an unfortunate situation. There needs to be some initiatives by the Government to address that including the possibility of the acquisition of private land by the state as state land is scarce in Jaffna.

Over the last three years, the great demand for houses for the war-affected people has not been addressed. There have been proposals, but nothing has moved, not to mention the ‘disastrous’ 65,000 pre-fabricated steel houses proposal which was completely unsuitable for the North.

Q. In what ways can the proposed housing schemes assist people in improving their livelihoods?

A. The Indian Housing scheme for 50,000 houses through a grant of US$ 225 million created a huge stimulus locally, where fishermen and farmers who could not make a living, switched to mason work and wage labour. Every house built provided one man a year of direct income. That is, if it is built with local labour. So, if these planned houses in the future are also built in this way, incomes will circulate locally. If house construction items like roofing tiles and carpentry products can be sourced locally, it will create further demand for employment. This is the kind of stimulus needed to get people out of the indebtedness crisis.

Q. What would be the role of women in the development of the North?

A. The development of the North depends on women’s participation on contribution. If you look at University entrance, women are the majority. The same goes for state employment. However, there are also women with dependants, those taking care of elderly parents and children on their own. Therefore, opportunities should be created for them to lead a balanced life. Here, women co-operatives might be a way because women in such co-operatives can determine the duration and time of work.

Q. What is the status of youth unemployment in the North? Are you concerned about the drinking habits of the unemployed youth?

A. Youth unemployment numbers are very high in the North. The opportunities available for the youth are limited. If they go for day wage labour, they will have work on the first day and maybe not for the next two or three days. There is a lot of irregularity. With all the displacement and decades of war, people have been living an irregular life. Only if there is permanent or regular employment, young people will also gain the discipline of going to work every day and get into such a working culture. Some of the social problems are linked to such high unemployment, but in my view, issues like drinking have been overplayed.

Q. In conclusion, what should be the approach for development?

A. Indebtedness in the North is presently a major obstacle for economic development. There is also now a clearer picture of the various economic problems in the North, and the people are also keen to address such problems.

On the other hand, there needs to be much more support from the Government and the donors, but the people on the ground should lead the development process. A top down approach never works.

Pic: Susantha Wijegunasekera


In addition to all spheres that would stimulate economic resurgence, the re-activation of even the major industries should also be included as they would contribute to the development. These have been neglected for far too long, and even there has been state encroachment by certain organisations in the name of security and other unjustified reasons taking into consideration of the the period of occupation, in mos.