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Reforms Sri Lanka needs to boost its economy

Idah Z. Pswarayi-Riddihough's picture
 Joe Qian/World Bank
The Colombo Stock Exchange. Credit: Joe Qian/World Bank

Many Sri Lankans understand the potential benefits of lowering trade costs and making their country more competitive in the global economy. The majority, however, fear increased competition, the unfair advantage of the private sector from abroad and limited skills and innovation to compete.

Yet, Sri Lanka’s aspirations cannot be realized in the current status quo.  

While changes in trade policies and regulations will undeniably improve the lives of most citizens, I’m mindful that some are likely to lose. However, many potential gainers of the reforms who are currently opposed to them are unaware of their benefits.

Implementing smart reforms means that government funds will be used more effectively for the people, improve access to better healthcare, education, basic infrastructure and provide Sri Lankans with opportunities to get more and better jobs. Let me focus on a few reforms that I believe are critical for the country.  First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.    

First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services.

Horticulture offers hope for growth and jobs in rural Afghanistan

World Bank Afghanistan's picture
Also available in: دری | پښتو
Until the late 1960s, Afghanistan was a major exporter of horticulture products, particularly dried fruits. Photo Credit: World Bank

Afghanistan is struggling with unemployment and poor economic performance because of drastic reductions in foreign aid and continued social instability. While efforts have been made to improve the private sector, including several sectors like mining and manufacturing, the gains have been modest as Afghanistan remains beset by conflict and instability.
 
Yet investments in agriculture, particularly horticulture, have produced tangible returns as unique weather conditions are favorable to growing produce that are in-demand in local and regional markets. 

An example can be found in Mullah Durani, a farmer from Mohammad Ali Kas village in Qarghaee district in eastern Laghman Province, who converted his field to growing grapes for fruit consumption in 2015 that is paying off in creating jobs and boosting income. “My land has generated eight times higher returns, while I can use the local workforce on my own farm instead of sending them to cities to work for others,” says Mullah Durani. “I have also been able to create seasonal jobs for a number of villagers during harvesting.”
 
The key to his success, he says, was choosing the right variety of grapes instead of grains. “My recently established vineyard produces grapes at a time when there are almost no domestic fruits in the market and in return, I get higher market prices,” he points out. “This year I sold about $4,000 worth of grapes from 2,000 square meters of land.”
 
By converting his field to growing grapes, Mullah Durani received investment support and technical assistance from the Afghanistan Ministry of Agriculture, Irrigation and Livestock under its National Horticulture and Livestock Project (NHLP). The project is funded by the Afghanistan Reconstruction Trust Fund (ARTF) and helps farmers in selected districts adopt better production practices.

Towards a cleaner Bangladesh: Safe water, sanitation, and hygiene for all

Qimiao Fan's picture
 
 The World Bank
Bangladesh has made progress in recent years in the field known as WASH -water, sanitation access, and hygiene. Image courtesy: The World Bank

Community-Led Total Sanitation might be the greatest Bangladeshi export you’ve never heard of.  In countries across Asia, Africa and Latin America, a consensus has emerged that the best approach is Community-Led Total Sanitation, which is widely credited with changing people’s behavior around the world to no longer defecate in the open, which has greatly improved global health.

Bangladeshis can take plenty of pride in these far-away accomplishments. That’s because it is Northern Bangladesh - more specifically the Mosmoil village in Rajshahi district - that pioneered this approach seventeen years ago. Its success at home led to its widespread adoption abroad.

Safe drinking water is a right and proper sanitation is dignity of the citizens. Proper management of freshwater ecosystems and access to safe water and sanitation are essential to human health, environmental sustainability and economic prosperity. Water and sanitation are at the core of sustainable development critical to the survival of people and the planet. Goal 6 of Agenda 2030 not only addresses the issues relating to drinking water, sanitation and hygiene, but also the quality and sustainability of water resources worldwide.

The ‘Global Water Supply and Sanitation Assessment’ by World Health Organization (WHO), United Nations Children Fund (UNICEF), Water Supply and Sanitation Collaborative Council (WSSCC) reported that in 2012 about 40% (2.6 billion) of the world’s population was without access to safe water. Approximately 4 billion cases of diarrhea each year causes 2.2 million deaths, and majority of them are children under the age of five. This situation in Bangladesh is also challenging. A study by Water and Sanitation Program (WSP) wing of the World Bank reveals that Bangladesh incurred a loss of Tk295.48 billion in 2010 due to inadequate sanitation, which is 6.3% of the GDP.
 
Indeed, there is much to emulate in Bangladesh’s remarkable progress in recent years in the field known as WASH -water, sanitation access, and hygiene. Today, 98 percent of the population gets drinking water from a technologically improved source – water which comes from a manmade structure– up from 79 percent in 1990.  Bangladesh also largely succeeded in providing access to basic sanitation. It is estimated that only three percent of the population practice open defecation, down from 34 percent in 1990, thanks to behavior change campaigns and the building of many new toilets. 

But, much has yet to be done. Bangladesh has still a long way to go to meet the Sustainable Development Goal (SDG) of providing universal access to clean water and sustainable sanitation by 2030. The World Bank recently completed a study, the WASH Poverty Diagnostic, which examines the remaining challenges in ensuring access to safe water, sanitation, and hygiene. The findings are startling.

How does Bhutan’s Economy Look?

Tenzin Lhaden's picture
Bhutan Economic Update
Bhutan has maintained solid economic performance to date in 2017 but delays in hydropower construction may affect its economic outlook with growth expected to slow to just under 7 percent in 2018. 

Bhutan is one of the smallest, but fastest-growing economies in the world. Its annual economic growth of 7.5 percent on average between 2006 and 2015, placed the country 13th of 118 countries, compared to the average global growth rate of 4.4 percent.

This growth has been shared by a majority of Bhutanese, with extreme poverty dropping from 25 percent in 2003 to 2 percent in 2012, based on the international poverty line of $1.90 a day (at purchasing power parity). This is among the rate in South Asia and compares favourably to the regional poverty rate of 19 percent. Equally impressive improvements were made in access to basic services such as health, education and asset ownership.

The recent developments on strong lending growth, inflation, exchange rates and international reserves show that Bhutan maintains a solid and stable growth in the first half of 2017. Gross international reserves have been increasing since 2012, when the country experienced an Indian rupee shortage. Reserves exceed $1 billion, equivalent to 10 months of imports of goods and services in mid-2017 which makes the country more resilient to potential shocks. This is also very much in line with the requirement spelled in the 2008 Constitution which outlines minimum reserve requirements. The Bhutanese ngultrum, pegged to the Indian rupee, have been stable or slightly appreciating against the U.S. dollar.

Despite recent solid growth and macroeconomic stability, we need to carefully monitor its Development. According to the latest Bhutan Economic Update, the hydropower construction and the implementation of the 2016 Economic Development Policy are expected to support this solid growth during the next few years. However, with confirmed delays in the completion of two hydropower projects, the contribution of the hydropower sector to growth will be lower than the originally projected. Therefore, the World Bank revised down its growth forecasts in 2019/20 by a few percentage points to 7.6 percent, still among the fastest in the world.

Fresh thinking on economic cooperation in South Asia

Nikita Singla's picture
 Aamir Khan/ Pakistan, Sreerupa Sengupta/ India, Sanjay Kathuria/ World Bank, Mahfuz Kabir & Surendar Singh/ Bangladesh) Photo By: Marcio De La Cruz/ World Bank
Young Economists sharing the stage with Sanjay Kathuria, Lead Economist and Coordinator, Regional Integration (Left to Right: Aamir Khan/ Pakistan, Sreerupa Sengupta/ India, Sanjay Kathuria/ World Bank, Mahfuz Kabir/Bangladesh & Surendar Singh/ India). Photo by: Marcio De La Cruz/ World Bank


That regional cooperation in South Asia is lower than optimal levels is well accepted. It is usually ascribed to – the asymmetry in size between India and the rest, conflicts and historical political tensions, a trust deficit, limited transport connectivity, and onerous logistics, among many other factors.

Deepening regional integration requires sufficient policy-relevant analytical work on the costs and benefits of both intra-regional trade and investment. An effective cross-border network of young professionals can contribute to fresh thinking on emerging economic cooperation issues in South Asia.

Against this background, the World Bank Group sponsored a competitive request for proposals.  Awardees from Bangladesh, India, and Pakistan, after being actively mentored by seasoned World Bank staff over a period of two years, convened in Washington DC to present their new and exciting research. Research areas included regional value chains, production sharing and the impact assessment of alternative preferential trade agreements in the region.

Young Economists offer fresh thoughts on economic cooperation in South Asia

Mahfuz Kabir, Acting Research Director, Bangladesh Institute of International and Strategic Studies and Surendar Singh, Policy Analyst, Consumer Unity Trust Society (CUTS International) presented their research: Of Streams and Tides, India-Bangladesh Value Chains in Textiles and Clothing (T&C). They focus on how to tackle three main trade barriers for T&C: a) high tariffs for selected, but important goods for the industries of both countries; b) inefficient customs procedures and c) divergent criteria for rules of origin classification.

Sreerupa Sengupta, Ph.D. Scholar at Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi discussed Trade Cooperation and Production Sharing in South Asia – An Indian Perspective. Reviewing the pattern of Indian exports and imports in the last twenty years, her research focuses on comparing the Global Value Chain (GVC) participation rate of India with East Asian and ASEAN economies. Barriers to higher participation include a) lack of openness in the FDI sector; b) lack of adequate port infrastructure, and long port dwell times; and c) lack of Mutual Recognition Agreements (MRAs).

Aamir Khan, Assistant Professor, Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad presented his work on Economy Wide Impact of Regional Integration in South Asia - Options for Pakistan. His research analyzes the reasons for Pakistan not being able to take full advantage of its Free Trade Agreement (FTA) with China, and finds that the granting of ASEAN-type concessions to Pakistan in its FTA with China would be more beneficial than the current FTA arrangement. The work also draws lessons for FTAs that are currently being negotiated by South Asian countries.

Education is the way forward for Afghanistan

Mohammad Homayoon Rahmani's picture
Also available in: دری | پښتو
The Education Quality Improvement Program provides block grant support to the construction of school buildings and other facilities such as laboratories, libraries and computer labs. This improved studying environment has encouraged almost all families to send their children to schools in many districts of Balkh province. Photo Credit: Fardin Waezi/ World Bank


Someone wise once said that education is the foundation of a country’s progress. As every Afghan knows and feels, after four decades of conflict and violence, progress is exactly what this country needs to get back on its feet.
 
I have always had a deep interest in making my social context better and this is the reason why I joined the Education Quality Improvement Program (EQUIP), which aims to improve access and quality of education for Afghans. I joined the EQUIP team in the program’s second phase, which started in January 2008.
 
Through EQUIP, we have been working with communities to change their views and perceptions on education, especially in villages. I remember when I joined the team in 2010, many people would come and tell us they did not want to send their girls to school. But slowly EQUIP won them over.
 
Now, we can proudly say that we have the full support of communities everywhere in Balkh Province. For example, we have never had to buy land to construct a school in any district in Balkh. Every single time, it has been the people who bought or donated land and invited us to construct the building, even in the poorest regions.

Sri Lanka: Building a more resilient economy

Smriti Daniel's picture



At the launch of the Sri Lanka Development Update (SLDU), our Twitter chat #SLDU2017: Environmental Benefits of Economic Management set out to explore how Sri Lanka could meet the twin challenges of increasing its physical and financial resilience.
 
The panel comprised experts from the World Bank - Country Director for Sri Lanka and the Maldives, Idah Pswarayi-Riddihough; Senior Economist Ralph van Doorn and senior environmental specialist Darshani De Silva – and Kanchana Wickramasinghe, a research economist in the Institute of Policy Studies. Together, they unpacked the SLDU, discussed its key findings and fielded questions from across the region around its main themes.
 
The bi-annual report, notes key economic developments over the preceding months, placing them in a longer term and global perspective; in the Special Focus section, it explores topics of particular policy significance to Sri Lanka. 
 
Ralph started with the idea that Sri Lanka faces a window of opportunity during which key reforms could transform the country and its economy. He noted that Sri Lanka’s position in the global economy improved its global growth prospects, as well as that of its key export partners. Low commodity prices and the restoration of the GSP+ preferential trade arrangement with the EU had also combined to improve the outlook for the Sri Lankan economy.

For Idah, the country’s mood and the government’s commitment to change were critical to success:   
 
The panel delved into how natural disasters and extreme weather events posed a threat to Sri Lanka’s growing economy. In the short-term the damage was clear and serious, with losses amounting to several billions a year, as Idah noted in her blog. During the chat, she emphasised how Sri Lanka needed to be prepared for future disasters or it would cost the country enormously.
 
Kanchana pointed out that in the long-term, disasters could set back poverty alleviation efforts, especially in agricultural and rural areas, adding:
 

With the chat underway, questions poured in from an online audience who were interested in diverse issues – from managing Sri Lanka’s ongoing drought and its impact on the Northern Province to what insights the SLDU had to offer other countries in the region such as India.

Engaging communities in the Golden 1,000 Days in Nepal

Kaori Oshima's picture
Field survey team in Nepal
A field survey team for the qualitative study holding a focus group discussion with women in one of the SHD project communities. Photo credit: World Bank

In Nepali, “Sunaula Hazar Din” means, “Golden 1000 Days” – which is a critical window of opportunity between conception and the age of two years that, with good health and nutrition, can mitigate the risks of malnutrition that hamper a child’s long-term physical and cognitive development.

Sunaula Hazar Din (SHD) is also the local nickname of the Government of Nepal’s recently completed “Community Action for Nutrition Project”, implemented by the Ministry of Federal Affairs and Local Development and  financially supported by the World Bank from 2012 to 2017. The project aimed to improve practices that contribute to reduced under-nutrition of women of reproductive age and children under the age of two and to provide emergency nutrition and sanitation response to vulnerable populations in earthquake affected areas.

The project used a “Rapid Results Approach (RRA)”, where target communities formed groups of nine members that would collectively select and work on an activity to address malnutrition for 100 days. RRA focused especially on the “1000 days” households– namely, households with children under 2 years and pregnant and/or lactating women and also had community -wide interventions targeted to address malnutrition.  

To better understand the local dynamics around the SHD design and activities, a qualitative study was conducted, with support from the South Asia Food and Nutrition Security Initiative (SAFANSI).

The study team gathered the voices of various stakeholders, including the community members, facilitators, and the village and district-level authorities. Listening to the voices of these stakeholders makes development practitioners and project teams recognize how participatory designs may work as expected – or not – in a specific context.

When in the eye of a storm….

Idah Z. Pswarayi-Riddihough's picture
Abandoned fishing boats lay on the banks of the dried Siyambalankkatuwa reservoir in Sri Lanka's Puttalam District, Aug. 10, 2017. Thomson Reuters Foundation/Amantha Perera
Abandoned fishing boats lay on the banks of the dried Siyambalankkatuwa reservoir in Sri Lanka's Puttalam District, Aug. 10, 2017. Thomson Reuters Foundation/Amantha Perera
This year, yet again, flooding caused by heavy monsoon rains came and receded. Meanwhile, this year alone, more than one million people have been hard hit by the worst drought in 40 years.
 
The media, with few exceptions, have moved on to other topics and a sense of calm pervades. 
 
We are in the eye of the storm -- that misleading lull before mother nature unleashes her fury once again. 
 
In Sri Lanka alone, costs from natural disasters, losses from damage to housing, infrastructure, agriculture, and from relief are estimated at LKR 50 billion (approx. USD 327 million).  The highest annual expected losses are from floods (LKR 32 billion), cyclones or high winds (LKR 11 billion), droughts (LKR 5.2 billion) and landslides (LKR 1.8 billion). This is equivalent to 0.4 percent of GDP or 2.1 percent of government expenditure. (#SLDU2017). Floods and landslides in May 2016 caused damages amounting to US$572 million.   
 
These numbers do not paint the full picture of impact for those most affected, who lost loved ones, irreplaceable belongings, or livestock and more so for those who are back to square one on the socio-economic ladder.
 
Even more alarming, these numbers are likely to rise as droughts and floods triggered by climate change will become more frequent and severe. And the brief respite in between will only get shorter, leaving less time to prepare for the hard days to come.
 
Therefore, better planning is even more necessary. Sri Lanka, like many other countries has started to invest in data that highlights areas at risk, and early warning systems to ensure that people move to safer locations with speed and effect.
 
Experience demonstrates that the eye of the storm is the time to look to the future, ready up citizens and institutions in case of extreme weather.
 
Now is the time to double down on preparing national plans to respond to disasters and build resilience. 

It’s the time to test our systems and get all citizens familiar with emergency drills. But, more importantly, we need to build back better and stronger.  In drought-affected areas, we can’t wait for the rains and revert to the same old farming practices. It’s time to innovate and stock up on critical supplies and be prepared when a disaster hits.
 
It’s the time to plan for better shelters that are safe and where people can store their hard-earned possessions.
 
Mobilizing and empowering communities is essential. But to do this, we must know who is vulnerable – and whether they should stay or move.  Saving lives is first priority, no doubt. Second, we should also have the necessary systems and equipment to respond with speed and effect in times of disasters. Third, a plan must be in place to help affected families without much delay.
 
Fortunately, many ongoing initiatives aim to do just that.

And a river runs through it

Atul Agarwal's picture

Integrating the Brahmaputra’s innumerable ferries into Assam’s wider transport network

Anyone who has visited Assam cannot help but be struck by the mighty Brahmaputra. The river straddles the state like a colossus, coursing through its heart, and severing it two - the northern and southern banks. During the monsoon, so vast is the river’s expanse - almost 20 km in parts - that you cannot see the other side. So fearsome are its waters that the Brahmaputra is India’s only river with a masculine name; all the others have feminine appellations. Yet, just four bridges, including India’s longest bridge that was recently inaugurated on its tributary the Lohit - and one more under construction - span the state’s entire 900 km stretch of river.
 
Given this formidable natural barrier, most of Assam’s towns have developed on the river’s southern flank, where the plains are wider. With little connectivity, the northern side remains cut off from the mainstream, and is largely underdeveloped.


 
What’s more, the small communities living on the river’s hundred or so inhabited islands remain isolated. It can be quite frustrating to see a school or a medical center on the other side and not be able to access it! Only Majuli, the world’s largest riverine island and an administrative district by itself, supports schools and some form of medical facilities for its more than 100,000 residents.

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