After nearly 30 years of conflict, the post-war socio-economic challenges in the North were tremendous. Destroyed and underdeveloped infrastructure, deteriorated social fabric, and human resources that lagged behind the rest of the country were just some of the issues that set the scene for the forthcoming development of the region. A reconstruction strategy centred on building infrastructure, expansion of credit to promote self-employment and a narrow focus on private-sector investment, however, have failed to meet expectations in delivering economic growth and distributing it in ways to make a real difference to people’s lives.
The task of reviewing the effectiveness of development strategies came to the fore following public meetings led by the Governor of the Central Bank of Sri Lanka on the burgeoning indebtedness crisis in the North in November 2017. Here, civil society repeatedly stressed that the driving force pushing communities towards a reliance on debt were the inadequate post-war development outcomes of viable employment and increased incomes.
Commissioned by the Central Bank and authored by an independent committee of academics and professionals from the North, the ‘Economic Development Framework for a Northern Province Master Plan’ launched on February 8, 2019 offers a forward-looking blueprint for the North’s development. By identifying the special challenges of re-building a war-torn economy that cannot be resolved by ‘one-size fits-all’ policies, it draws lessons for learning and suggests a new direction to deliver growth with prosperity and equity for the region.
As close observers to development efforts in the region, Committee members highlighted several factors that contributed to the prevailing poor outcomes. First, 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.
Secondly, development initiatives failed to systematically invest in transforming the productivity of ‘small-sized’ producers and organisations who dominate the Province’s economic base. In addition, forthcoming investment ignored the existing low levels of skills and capacity within the region. And lastly, 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.
A new vision and path for the economic development of the North is urgently required, and crucially, must be grounded in a macro-economic analysis of the Province’s resources, and capacities and needs of its communities.
The Framework considers current challenges and calls for a comprehensive approach that is structured around three inter-dependent pillars: the factors of production, the enabling environment, and the social foundations of development.
The factors of production examine the North’s endowments of capital, labour, and 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, together with their current status in the North, as components that require attention. Finally, 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.
Viewed through this lens, an economic growth path that is slower but more stable, and which invests in communities to strengthen their social resilience could be an appropriate strategy for the North. The focus of a new development model should:
· Invest capital appropriately into existing and new small-scale producers and industries to begin the process of productivity improvement
· Be labour-intensive to get as many people into safe, secure and regular work as possible
· Make extensive use of the large endowments of land and natural resources and essentially be agriculturally-led
· Support medium-term efforts for those able to take greater risks and move into higher value markets including exports
· Be dispersed fairly across the Province and among the different population groups to ensure regional and gender disparities are reduced.
This two-pronged strategy that focuses on strengthening the economic base while supporting initiatives for export development will create a stronger, more resilient economic foundation in the North, from which growth can be accelerated in the long-term.
In parallel, planning and implementation challenges specific to the North’s post-war legacy must be tackled to complement and sustain future gains. Leadership from within the North must drive forward a new economic development agenda, implementing actors should be re-orientated away from a ‘relief mindset’ and towards development programming, communities must be at the heart of development processes, concrete plans to develop the workforce need to be made, all the while planning for uncertainties such as climate change.
To make the best use of resources, economic development planning at the provincial level could explore the following suggested priority areas:
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 prevailing 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 support from experienced firms from the South may be required to sustain growth.
Form a Northern Planning Bureau to undertake long-term planning and coordination informed by the unmet specific needs of a war-torn society such as securing long-term development financing, labour market expansion, natural resource management and monitoring of development outcomes.
The Framework Committee launched this report not as an absolute answer, but as a tool to begin a regionally-led, inclusive and in-depth public debate on a future vision and development path for the North. And that this debate will lead to the commissioning of a Master Plan by the Government, bolstered by the political will to deliver it. While views and perspectives may differ, we can agree that the issues are complex, that there is keen appetite for discussion and that the conversations must start now.
To Download Framework Report:
Proposed economic growth trajectory for the Northern Province
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