Why ‘Economic Reconciliation’ Needs More Attention, and it’s Not Just About the North & East

Much is often said about the merits and demerits of the government’s current focus on ‘development’ as the panacea for sustainable peace in Sri Lanka. One can argue that development, specifically bridging development disparities across the country, is a necessary but not sufficient CONDITION to achieving a truly ‘reconciled’ Sri Lanka. The importance of finding credible political solutions to address long-standing grievances and fostering relationships and ‘connections’ between communities, cannot be underestimated. But, by the same token, the economic imperatives often get less attention in the ‘reconciliation debate’. This article provides a snapshot to support this argument – that focusing on development and employment creation, not just in the North and East, but across Sri Lanka, and reducing development disparities, is indeed an important ingredient of a sustainable peace.

 

In the IPS State of the Economy 2011 report , on the theme ‘Post-conflict Growth: Making it Inclusive’, the opening section emphasizes that, “For Sri Lanka, emerging from a costly era of a long drawn conflict, rising socio-economic aspirations must be met to help restore and cement social harmony in its post-conflict development efforts”.

These thoughts must be seen in the context of reconciliation too. The debate on reconciliation needs to be extended to also include issues like ‘greater inclusiveness of economic opportunities for all people of Sri Lanka’. This includes two elements:  1) creating better economic opportunities islandwide and ensuring more inclusive access to them, and 2) strengthening the ability of people islandwide to take advantage of them.

On the former, we need to think about how economic activity in lagging regions can be promoted. It is not just the North and East that are ‘lagging’ but several other regions too. How can we encourage private enterprises in these regions, and provide greater employment, increase incomes, and enhance living standards? Just as an example of the disparity, between 2009 and 2010, the total number of industrial enterprises increased from 2,340 to 2,404 in the Colombo district, but only from 27 to 30 in the Anuradhapura district. In this new post-war phase, we cannot afford to reproduce the same imbalances in growth and development that we saw previously. Innovative Public-Private Partnership Initiatives like the Achchuveli Industrial Zone in Jaffna need to be propagated islandwide.

On the latter point, we need to ensure that all people of Sri Lanka are better equipped to take advantage of the new economic opportunities arising, and not be left out. This means strengthening their health and education. On the education front, we need to ask ourselves – ‘are we gearing our youth towards being able to access, equally and competitively, the new economic opportunities emerging?’. There is a lot of rhetoric on Sri Lanka moving towards a knowledge-based economy. Will this mean just the Western Province becoming a knowledge-based economy? Or can we drive this in an inclusive manner? Right now the gaps are not encouraging. In a previous School Census, it emerged that there was one school with A/L science stream for every 400 km2 in Mullativu and Vavuniya and for every 200 km2 in Mannar, while there was one for every 10 km2 in Colombo, 25 km2 in Gampaha and 45 km2 in Kandy. It also revealed that 80% of schools in Kilinochchi did not have science labs, while only 11% of schools in Colombo and 10% of schools in Gampaha suffered the same problem. Spatial disparities in education will be a key determinant of Sri Lanka’s ability to foster inclusive growth and a sustainable peace in post-war Sri Lanka.

Keeping an Eye on Youth Unemployment

As an article by the IPS highlighted, while general unemployment levels have come down over the last decade, they are still very high amongst youth (20 to 29 year olds). Unemployment is more of a problem outside the Western Province, and it is particularly acute for the more educated. While Sri Lanka’s general unemployment rate (according to latest available data) was a laudable 5.8%, the unemployment rate of those qualified in A/Ls was a staggering 11.2%. “That youth unemployment was one of the major causes of the North-East conflict as well as the several Southern uprisings should never be forgotten”. These were the thoughts shared by Dr. Anura Ekanayake, the former chief of Sri Lanka’s premier business body, the Ceylon Chamber of Commerce, at its AGM last year.

Bridging Regional Development Disparities

The pattern of GDP in Sri Lanka is changing, but very slowly. The Western Province still dominates the economic landscape, currently accounting for around 45.1% of national GDP (down from 50.8% in 2005) (see more here http://ipslk.blogspot.com/2011/06/2010-phenomenal-year-for-corporates-but.html). Other regions have not significantly increased their share of GDP in recent years. Regions outside the Western and North Western Provinces need to be economically empowered, and the ongoing government programmes like Maga Neguma, Divi Neguma, Gemidiriya, etc., will certainly make a significant contribution.

The government programmes over the last several years do seem to have had a significant impact on poverty reduction. Poverty rates in Sri Lanka have declined from 15.2% reported in 2006/07 to 8.9% in 2009/10. Yet, the breakdown of poverty rates according to regions paints a less bright picture. Disparities between regions in terms of the GDP share of the nation as well as the distribution of enterprise activity, would impact the disparities in poverty across the country as well. While the poverty rate in Colombo ranges at 3.6%, the poverty rate of Batticaloa is reported at a high 20.3% (an increase from 10.7% in 2006/07). It is not only that there appears to be a remarkable difference between these two districts, but the fact that the poverty rates in areas like Batticaloa (20.3%) and Moneragala (14.5%) being well above the national rate should be a cause for concern.

‘Economic Reconciliation’?

A paper by K.M. De Silva (1996) identified that the series of socio-political disturbances over the past several decades stemmed from multiple and multi-faceted grievances of both Sinhalese and Tamils[1], and that a key element of this was ‘the unequal distribution of the benefits of economic growth’[2]. For the people of post-war Sri Lanka, whether the access to, and benefits of, economic growth is equitable or not, could be a key determinant of a sustained peace or a key driver of renewed social discord some day.

When I meet and speak with a farmer, a small business owner, or an unemployed youth, from Batticaloa to Badulla, his main concern (and often the only concern, rightly or wrongly), isn’t necessarily ‘what will a durable political solution look like, in post-war Sri Lanka?’ – rather, it is first ‘what will my/my family’s income security and prosperity look like, in post-war Sri Lanka?’. I am not a reconciliation expert, or a political scientist, or an authority on ethnic conflicts. But through my work as an economist, travelling across Sri Lanka and seeing things often from an ‘economics lens’, I firmly believe that ‘economic reconciliation’ needs to become a stronger part of the current reconciliation discourse.

by Anushka Wijesinha

* Anushka Wijesinha is an economist with the Institute of Policy Studies (IPS), Sri Lanka’s apex socio-economic policy think-tank (http://www.ips.lk/staff/anw/index.html). Previously, he was Assistant Director – Economic Affairs of the Government Peace Secretariat, and has also worked with the World Bank, Colombo. He is editor of the IPS blog ‘Talking Economics’ www.ipslk.blogspot.com

The views expressed in this article are the author’s own, and do not necessarily reflect those of any organization the author is affiliated to.

[1] De Silva, K.M, 1996, “Sri Lanka: Ethnic Conflict, Management and Resolution”, International Centre for Ethnic Studies, Kandy, Sri Lanka.

[2] The other identified were ‘post-colonial language legislation prescribing Sinhala as the official language, perceived injustices regarding ethnic representation in public institutions, access to land and water, and devolution of power to regions’