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Cablegate: Usaid Support for Reconstruction of Eastern Sri Lanka

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RUEHKT/AMEMBASSY KATHMANDU 7394
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RUCPDOC/DEPT OF COMMERCE WASHDC
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UNCLAS SECTION 01 OF 02 COLOMBO 001109

SIPDIS

E.O. 12958: N/A
TAGS: EAID ECON PGOV CE
SUBJECT: USAID Support for Reconstruction of Eastern Sri Lanka

1. Summary. On November 8-11, Foreign Assistance Coordinator for
the Bureau of South and Central Asian Affairs/Office of Regional
Affairs (SCA/RA) Aisha Sabar visited USAID funded projects in the
Eastern Province. USAID has focused on fostering economic growth,
good governance, and reconciliation in the Eastern areas of Sri
Lanka freed from the LTTE in 2007. After nearly two years of
investment in the Economic Growth, sector, USAID programming in the
East is having a substantial impact on the creation of sustainable
jobs through investment in public-private partnerships. These
programs have assisted the establishment of an apparel factory,
increased dairy production, developed papaya cultivation, and
brought a new ice cream plant. USAID is also providing vocational
support to ex-combatants and implementing linguistics training for
local government officials. End Summary.
USAID Economic Growth Programs in the East

2. USAID is helping to create sustainable jobs and jumpstart
much-needed economic growth by working with Sri Lanka's private
sector. Using public-private partnerships to leverage private
sector funds at a greater than 2 to 1 ratio, USAID is creating new
business opportunities and jobs in aquaculture, horticulture,
ready-made garments, and other major sectors. Public-private
partnerships have focused on: 1) Increasing export markets in areas
of untapped potential; 2) Decreasing dependence on imports of
product that Sri Lanka is capable of producing on its own. All job
creation activities emphasize equitable participation from all three
ethnic groups - Tamil, Muslim, and Sinhalese.
3. Ambassador Butenis officially launched a new ice cream plant in
Batticaloa District, (primarily Tamil) as part of a dairy
revitalization project that is expected to increase the incomes of
4,000 dairy farmers and reduce dependence on imported milk products.
For this project, USAID partnered with Land O'Lakes, a U.S. dairy
producer, and CIC Agribusiness, a major Sri Lankan agricultural
company. This project alone is expected to increase national milk
collection by 9%.
4. SCA/RA Assistance Coordinator and USAID staff traveled to Ampara
District in Eastern Province to participate in the first papaya
harvest of a group of farmers supported by USAID's Papaya
Cultivation Project in Monaragala District in adjacent Uva Province.
As part of USAID's umbrella project entitled 'Connecting Regional
Economies,' this project will enable 3,000 farmers to grow hybrid
red lady papaya, with an anticipated additional monthly income of Rs
10,800. The project leverages funding and technical expertise from
Daya Group, a major Sri Lankan company operating in various sectors,
including agriculture, apparel, aviation, construction, and
microfinance. As a manager from the Daya Group explained, the
company had not previously invested in papaya for export. Through
the USAID project, the company is training and connecting farmers to
European and U.S. markets for fresh and dried papaya. Tamil and
Sinhalese farmers explained to the visiting State-USAID team that
they are now able to generate sustainable incomes and plan to
continue papaya cultivation as a source of income for their
families. Both projects-dairy revitalization and papaya
cultivation-are tapping into new areas of investment.
5. Another area for economic growth is in the garment sector.
Several garment factories have been established in the East, and a
Brandix official told Econoff that more garment factories could move
to the East due to competitive wage rates. SCA/RA Assistance
Coordinator visited Brandix Lanka Limited, the largest apparel
exporter in Sri Lanka. Brandix explained that the Government of Sri
Lanka through their Board of Investment is providing tax and other
incentives to companies to invest in the East. USAID is partnering
with Brandix to train unskilled workers as certified sewing machine
operators. Currently, 600 young Tamil, Muslim and Sinhalese are
being trained and then hired at the new Brandix apparel factor in
Punani, the first Brandix factory in the East. USAID is funding the
cost of training at a 1 to 5 ratio.

USAID Projects for Good Governance and Political Reconciliation

6. Through Section 1207 Department of Defense funds, USAID is also
helping to reintegrate 1,000 Tamil ex-combatants through a variety
of reintegration support activities, including vocational training,
education, and microloans for self-employment opportunities.
Vocational training centers run by different NGO's are being tapped
to provide training to former child soldiers and ex-combatants.
However, post training employment remains a challenge. During the
trip, the State/USAID team visited an impressive vocational training
center run by Sarvodya, a national NGO, where former child soldiers
are learning employable skills, such as motorbike mechanics and
mobile phone repair. This training is expected to support them to
reintegrate into the community. The vocational center, which
includes a dormitory, was funded by U.S. private sector funds.

COLOMBO 00001109 002 OF 002


Unicef supports the training.

7. SCA/RA Assistance Coordinator observed Tamil/Sinhala language
training for mid-level local government officials at the Ampara
Urban Council. Training participants explained, while the GoSL had
created incentives (e.g. promotion-related incentives) for
government officials to learn Tamil, few have had the opportunity to
receive proper language training. The training participants, all
women, said that after only two (out of six total) months of USAID
supported training, they are already better able to communicate with
Tamil-speaking citizens in their respective offices (e.g.
accounting, tax). USAID is also empowering and strengthening
Women's Rural Development Societies (WRDS) at the village level to
access local government and donor support for development projects.

8. Comment. USAID is undoubtedly providing important assistance to
foster economic growth in the former conflict areas of the East.
Post is planning a trip to the East to assess economic progress in
the East and whether GSL programs have been effective, which will be
reported septel. Meanwhile, USAID and post will work to maximize
the effectiveness of our economic and political assistance to the
East to provide opportunity and thereby address some of the root
causes of the conflict. End Comment.

Fowler

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