Sri Lanka

Situation and cooperation

Tuktuks on a coastal road in Colombo, Sri Lanka

The political environment in Sri Lanka has undergone fundamental changes since the beginning of 2015. It came as a surprise when Maithripala Sirisena won the presidential elections in January 2015. Mahinda Rajapaksa, who had been the head of state since 2005 and had progressively undermined the principles of democracy and the rule of law, was forced to admit defeat. The coalition of parties that had supported Sirisena as a candidate stood at the parliamentary elections in August 2015 as the United National Front for Good Governance, winning by a narrow margin.

Immediately since taking office, Sirisena has begun to deliver on the promises he made during his election campaign. He has carried out a constitutional reform reversing regulations which had been introduced by President Rajapaksa. Presidential powers have been cut and important responsibilities transferred back to the Parliament. The independent commission on appointments to top legal and administrative positions, which Rajapaksa had abolished, has been reinstated. In the former civil war areas Sirisena has appointed civilians to replace military governors. And, what is more, the new government has stepped up anti-corruption efforts.

Journalists and staff of non-governmental organisations report noticeably improved working conditions. Several NGO representatives have been released from prison.

Human rights

In late September 2015, the Office of the United Nations High Commissioner for Human Rights (OHCHR) published a report on the human rights situation in Sri Lanka. The report explicitly recognises the efforts made by the new government to restore democracy and the rule of law. At the same time, it shows very clearly that the path to lasting peace and stability will be a long one.


An informal settlement on the outskirts of Colombo, Sri Lanka

In 2014, the population in Sri Lanka had an average annual per capita income of the equivalent of 3,460 US dollars. According to the World Bank classification system, that makes Sri Lanka a lower middle-income country. The country was ranked 76th out of 189 on the most recent UN Human Development Index (HDI).

The share of poor people has significantly decreased over the last few years. In 2013, 6.7 per cent of the population was living below the national poverty line. In 2002, it had been 22.7 per cent. However, income is very unequally distributed between the urban and rural populations. A large part of the country's total economic output is concentrated in the region around the capital Colombo. But in the central highlands and the former civil war areas in the north and north-east of Sri Lanka many people are living at subsistence level.

Economic situation

Textile factory in Colombo, Sri Lanka

In recent years, the economy of Sri Lanka has been growing steadily by six to eight per cent. The economic upturn is closely linked to the end of the civil war. Farming is being resumed in the regions previously affected by the civil war. Textiles, tea and rubber exports have increased, and tourists are returning to the country in growing numbers.

The government under President Rajapaksa had plans to develop Sri Lanka as a regional trading hub in South Asia. To this end large infrastructure projects were launched with foreign support, such as the construction of a deep-water port and a new international airport. As part of its anti-corruption efforts the new government is reviewing the award procedures for some of these large projects and in some cases has introduced a construction freeze.

If the country is to attract investors on a permanent basis, however, much remains to be done. Governance and transparency need to be improved, bureaucratic obstacles eliminated and regional differences reduced. The efficiency of public institutions must be increased, as must the competitiveness of the Sri Lankan corporate sector.

Development potential

Tea pluckers in Sri Lanka

Sri Lanka’s prospects for further positive development are good. Its geographical location is favourable, and its workforce relatively well trained. Furthermore the government, the private sector and sections of the population are ready to face the competition of international markets. The sectors that are important for the country’s economic development, such as tea production, textiles, leather processing and tourism, must be further developed and new sectors opened up so that the country remains competitive at the international level.

A prerequisite for sustainable development is a reconciliation process that fosters the peaceful coexistence of all religious and ethnic groups.

Priority areas of German cooperation with Sri Lanka

The primary goal of German development cooperation with Sri Lanka is to foster political stability in the country and to promote a process of national reconciliation after decades of ethnic conflict and violence. Cooperation is therefore concentrated on the priority areas of peacebuilding and conflict prevention with a regional focus on the former conflict areas in the north and east of the country.

In 2016, the Federal Ministry for Economic Cooperation and Development committed 14 million euros to Sri Lanka.

Peacebuilding and conflict prevention

Women riding bicycles along the main road in the village of Allankulam in Mullaittivu District in Sri Lanka.

In order to create lasting peace in Sri Lanka and prevent new conflicts from arising, special attention needs to be paid to developing the regions in the north and the east of the country which, so far, have been severely disadvantaged. German development cooperation concentrates on the following areas in particular:

  • Promoting small and medium-sized enterprises (SMEs)
    In the former conflict areas support is being offered to entrepreneurs regardless of their ethnic or religious backgrounds so as to strengthen social cohesion. Support is being provided for instance for loan application procedures and for investing in new technologies. New financial products for SMEs are being developed in cooperation with banks.
  • Vocational training in northern Sri Lanka
    Young people in the northern province are being offered needs-based training. A vocational school is being built in Kilinochchi, for instance, where the Tamil separatist organisation LTTE was formerly headquartered. Courses are to cover five different professional profiles with places for up to 620 students.
  • Promoting initiatives for social integration
    Various initiatives will help strengthen the political and social participation of disadvantaged groups and promote the engagement of civil society organisations. This involves advisory services for the ministries in charge, opening integration offices in selected districts and organising interfaith dialogue events.
  • Peace education
    To enable school students in Sri Lanka to live together peacefully in their multiethnic state, peace education and values have been incorporated into school curricula. Teachers are being specially trained. There is special support for learning Sinhala or Tamil as a second language. Furthermore, psychosocial support is being provided in schools.

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