Small retailers

Retail is not normally seen as a 'social sector', but for people living in rural areas it is vital. Communications shops can provide farmers information on market prices or sales opportunities, as well as allowing children living in cities to stay in touch with their parents. Clothes shops and general stores allow farmers to get provisions locally without having to leave their crops and pay for transport.

In many rural areas the challenge for a retailer is scale - there are not enough people to justify a shop and a shopkeeper. However, new ways to reduce unit costs are appearing, such as cheaper credit or lower cost equipment.

Nihal's communication centre

Nihal is a young man who has just started a new enterprise. There are 10 villages in his local area, but no phones or communications, so he has opened a shop that gives access to a phone, a fax, e-mail and the internet.

The shop has been open for 3 months and so far most of his customers use the phone lines for calling relatives. But Mr Nihal wants to introduce farmers to more services, like giving people weather reports (so they know when to harvest crops) and information on market prices, or doing typesetting and letter writing.

The shop was simple to set up. It cost Rs150,000 ($1,500) for all the equipment, which he got as an informal loan. The telephone line only took 2 days - it is a wireless connection. His revenues are already Rs55,000 per month ($550).

Communications centres are good business. New technology has reduced costs, as well as barriers to entry. SANASA Development Bank often provides loans for new communications centres.

Sumandha Limarachi's groceries and shirt shop

Mr Limarachi opened his shop in 1988. He now sells groceries in half the shop - run by his daughter. In the other half of the shop his wife sells and repairs shirts and lungis.

When he started his shop the only source of credit was a money-lender. He took a Rs 20,000 loan ($200) and paid back Rs250 every day for 100 days - an interest rate of 180%.

Now, to expand his shop he can go to a commercial bank. He has a good relationship with the bank and can offer land as collateral. His situation has changed - as he is now a successful shop owner, but Mr Limarachi says that more importantly the banks have changed. Before bank officers stayed in the branch and were not interested in people like him. Now people from the bank come to visit him and offer him loans. There are some money-lenders still working in near-by areas, but generally only lending to paddy farmers.

Social investing

In Sri Lanka, there is little need for external funding for retail operations. Shops can be started up relatively cheaply - premises costs are low and stocks are generally small. Returns are regular and many banks and microfinance organizations are willing to fund start-up costs. Where SME funding is less available, retail would be a good sector for a specialized fund or financial institution.

Funding support

Information sharing through communications centres

Communications centres are becoming ubiquitous. They could be a simple way to educate large numbers of people cheaply, either by fax or through the internet. Agencies could, for example, fax public health messages to villages, or training guides. Or they could provide web-sites with agricultural information and training. In time, a networked model might develop, whereby franchised communications centres become known for providing accurate and relevant information. This would meet the objectives of a funding agency and bring value to the franchisee.

Business and technical training

Mr Nihal started his business following a course on computers at a local private college. After the Tsunami, many people in the Ambalantota area received training particular skills and micro enterprise development. When linked to credit, this is a proven way to stimulate entrepreneurs.