Post CFA North-East economies grew but with a worrying trend
Despite investments agriculture declined by 10.3 percent

Despite growing above the national GDP growth rate during the post-cease fire era in 2005-07, the agriculture sector in the Northern and Eastern provinces have declined by almost 10. 3 percent, a fact that should receive the attention of government before planning investment strategies for the development of the war-torn regions, the Economics Director of the Government Peace Secretariat Rohantha Athukorala says.

"Even though the Eastern economy grew by 2 to 3 percentage points faster than the national average both in 2006 and 2007 contributing around 4.8 to 5 percent to national output, the declining growth in the Agricultural sector is worrying given that many companies, chambers and donor agencies worked on a multitude of tasks focusing on livelihood opportunities in the Eastern Province," Athukorala said addressing a conference organised by the Federation of Chambers of Commerce of Sri Lanka (FCCISL) recently.

He said a reason for the decline could be due to the decline in the fisheries sector.

In the East, in 2002, the catch amounted to about 72,000 MT of fish, which dropped to 22,380 MT in 2005. The sector recovered last year with a catch of 61,000 MT.

The North recorded a catch of 56,000 MT in 2004. It declined to 15,000 MT in 2007.

The reasons for the decline are the fishing restrictions imposed for security reasons and the devastating affects of the tsunami.

"However the good news is there is hope the agricultural GDP growth will be positive as the fisheries sector has now been revived in the East and with the relaxation of restrictions in the North, 2009 will bring about a revival of the agricultural sectors of the two provinces," Athukorala said.

Athukorala said many post-tsunami and post-liberation investments have been made to revive livelihoods in the East where vegetative cultivations have continued and fisheries restored.

"However, the negative growth of 10.3 percent in agricultural growth calls for a focused evaluation of the real impacts of the investments made by different stakeholders so that the country will benefit.

"If Sri Lanka is to drive the fisheries sector we must develop a complete value-chain with cool rooms, an ice plant, freezer trucks and canning plants. There is a good opportunity for us to be a strong player in the global market suggested while livelihoods are sustained and this will help bring real Peace to the country in the long term," Athukorala said.

Turn around…

The overall agriculture sector of the country grew by 7.5 percent in 2008, largely due to the revival of agriculture in the East, which was once knows as the rice-bowl of Sri Lanka.

Athukorala said the government’s Eastern Development Programme has so far invested almost Rs.75 billion into various sectors while a further Rs.121 billion will be pumped by 2010.

These inputs have resulted in increase in Paddy production to 717,869 MT a 4.1 percent and while the out put of Maize increased to 17,655 MT last year.

‘Fruit Villages’ have increased to almost 26, benefitting over 500 people and over 48,000 plants have been issued to them

The post-tsunami infrastructure and housing reconstruction led to the boom in the industrial sector in the North and East and contributed towards catapulting of the Industrial sector to a 32 percent growth."This is encouraging but what is required now is a road network to drive market connectivity so that market access will drive livelihood development and create true peace, which can be sustained," he said.


According to a recent study of the Government Peace Secretariat, between 2005 and 2007 the Northern and Eastern Provinces recorded GDP growth rates of 12 percent and 13.3 percent respectively, higher than the rate at which the country’s economy grew by.

During the ‘Peace Dividend’ years between 2002 and 2004 when there was a lull in hostilities because of the Cease Fire Agreement (CFA), the Northern Province recorded 11.9 percent GDP growth as against 3.6 percent during the proceeding five years.

The Eastern Province grew by 5.8 percent during the CFA period as against 4.9 percent during the five years leading up to the CFA.

The message of that study was to show that the agricultural sector would have a ‘natural’ revival as war-time restrictions are lifted, which is crucial for building and restoring livelihoods. However, with lack of market access and investments to establish a viable manufacturing sector, the economic benefits of peace would not be felt by the people.

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