52nd Open Forum on Poverty

Tuesday, 31st March, 2015

Debt for Development? Understanding the effects of credit as a development
intervention
Concept Note
Every quarter, the Centre for Poverty Analysis (CEPA) hosts an Open Forum, as a platform for
professionals to discuss their research and/or experiences on poverty and related issues, while
disseminating knowledge to a wider audience outside the research community.
For a long time, donors and practitioners have used microfinance activities to alleviate poverty
by creating income and jobs. This practice was based on the assumption that by integrating the
poor into the economic circuit, microfinance was automatically promoting development. Since
the end of the war in 2009, microfinance institutions and banks have mushroomed in the
country, including in the North and East. How do we understand this phenomenon? Some argue
that the increased competition brings new financial products, lower interest rates and greater
access to credit. However, there have also been negative impacts, ranging from overindebtedness to the collapse of financial institutions. In recent years, donors have become more
concerned about the quality of their interventions. With the experience they have gained on the
limits of microfinance, local government authorities in a few districts in the North and East have
expressed concern about the link between indebtedness and various social issues, such as
suicides and the collapse of family relations. The media has reported several incidents
connecting debt and suicide as well. In this context, a dialogue about understanding credit and
financialisation in relation to development is important.
The purpose of CEPAs 52nd Open Forum is to discuss the idea of credit as a development
intervention and what it means for eradicating poverty in developing countries. It will provide a
much needed space to discuss the effects of access to finance for development. Specific
objectives of this Open Forum are:
to understand the role of microfinance as a development intervention in Sri Lanka;
to understand how microfinance is connected to the larger political economy of
development interventions;
to identify the conditions under which access to microfinance exacerbates
socioeconomic vulnerability; and,
to identify ways of addressing the negative effects of debt on individuals and
communities recovering from conflict and/or disasters.
More generally, the Open Forum will discuss the role of microfinance and the politics of financial
inclusion of the poor, inviting alternative ideas on the economic empowerment of marginalised
groups.