Even before the devastating tsunami on December 2004 in Sri Lanka, over 25 percent of the population – 5 million people – were living below the poverty line. Sri Lanka‘s definition of poverty is slightly different from the common scale, they define the poverty line as an individual living with the equivalent of $12 a month.
There are an additional 3 million people living on less than $15 a month. According to the World Bank, the rural parts of the country are home to over 4 million people, which is nearly one third of the entire population. After the tsunami hit, over 38,000 people were immediately killed and hundreds of thousands more were put in danger of entering the growing levels of poverty in Sri Lanka after having their entire livelihoods wiped out. The tsunami reminded Sri Lanka, and the world, how vulnerable the rural poor are to natural disasters.
Today, Sri Lanka has largely improved in quality of life and reducing poverty. There are 1.8 million identified as impoverished, but the majority, 84.7 percent, live in rural areas. The amount of people living in poverty has more than halved in both rural and urban Sri Lanka, with a reduction from 16.3 percent in 1990 to 5.3 percent today in urban areas and from 29.4 to 9.4 percent in rural areas. Poverty has even reduced in the estate sector as well, going from 20.5 to 11.4 percent. This decline in poverty indicates that up to 2.6 million people have been rescued from poverty over upwards of 20 years.
Currently, nine out of ten people in Sri Lanka live in extremely rural areas and after a 20-year civil war, in the northern part of the country, 800,000 people were displaced from their houses and as a result their means of life have been jeopardized. Thousands of children were orphaned and there has been a drastic increase in the total amount of households headed by single mothers, which experience significantly more hardship earning money than dual-parent households. Over 40 percent of these rural poor are small farmers who are mostly concentrated in the Uva, Central, Sabaragamuwa, and Southern provinces.
Malnutrition is common among children in these regions because of slow-moving agricultural growth. There is a substantial lack of infrastructure such as electricity, roads, communication and irrigation facilities which limit opportunities for people to produce more of an income.
Fortunately, Sri Lanka, as a whole, has an opportunity to bring in foreign aid and investment to further build the economy up for the future. The government has the current goal 8 percent growth per year, which would involve the present 29 percent investment to increase to 35 percent of the GDP and even more in the years to come. Raising foreign direct investment (FDI) is critical because Sri Lanka will be more likely to receive foreign aid if it is a more attractive investment location. In order to get more foreign aid, the government needs to build better institutions as well as strengthen law enforcement so it can create a more business-friendly environment. The country has recently taken the right steps toward improvement and is on the right track to a better economy and removing the presence of poverty.
– Kenneth W. Kliesner