Sri Lanka is grappling with a critical challenge: the unchecked rise of illegal money lending. This shadow economy has entrenched itself deeply in both urban and rural areas, preying on vulnerable populations and destabilizing the nation’s financial system.

With an estimated value exceeding 100 billion rupees, this underground network undermines economic stability and perpetuates exploitation, operating with impunity due to the complicity of powerful individuals, including politicians, retired military officers, and senior police officials.

The Mechanics of Exploitation

Illegal money lending thrives on predatory practices designed to entrap borrowers in cycles of poverty. Among the most concerning tactics are the exorbitant interest rates imposed on loans, with monthly rates soaring as high as 15%, amounting to a staggering 180% annually.

Borrowers, often in desperate financial straits, are coerced into pledging valuable assets such as jewelry or property as collateral. In many cases, lenders seize these assets under dubious circumstances when repayment becomes impossible.

The funds fueling this shadow economy are often the proceeds of criminal activities, including drug trafficking, corruption, and bribery.

Furthermore, the entrenched connections these moneylenders have with influential politicians, law enforcement, and judicial figures shield them from accountability. This culture of impunity enables their operations to thrive, despite the devastating impact on ordinary Sri Lankans.

The Broader Consequences

The repercussions of illegal money lending extend far beyond individual borrowers. At its core, this practice creates a vicious cycle of debt, trapping countless families in poverty as they struggle to repay loans with exorbitant interest.

The broader financial system is also distorted, with illegal lending inflating interest rates and diverting capital away from legitimate institutions.

Moreover, this underground economy serves as a conduit for laundering black money, further entrenching corruption and criminal activities.

The International Monetary Fund (IMF) has highlighted the significant role of informal lending in Sri Lanka’s black economy, warning of its destabilizing impact on sustainable growth and financial stability.

Regulating Informal Money Transfer Systems

In response to these challenges, the Central Bank of Sri Lanka (CBSL) has initiated efforts to regulate informal money transfer systems, such as Undial and Hawala. These systems, widely used in South Asia and the Middle East, offer quick and cost-effective cross-border transactions but lack transparency, raising concerns about their potential use for money laundering and terrorist financing.

Key regulatory measures include mandatory registration for operators, set to be enforced by May 2025. This move aims to integrate these systems into the formal financial framework, ensuring accountability and oversight.

 Public awareness campaigns are also being rolled out to educate citizens about the risks of using unregulated channels for remittances and the legal repercussions tied to such practices.

Urgent Reforms Needed

Tackling the crisis of illegal money lending requires comprehensive and sustained action. Legal and institutional reforms must address the root causes of this issue. Key steps include:

Mandatory registration of moneylenders, ensuring that all operators are regulated and subject to oversight.

Capping interest rates to align with formal financial institutions and prevent exploitative lending practices.

Strengthening oversight mechanisms, empowering the CBSL to monitor and investigate lending activities comprehensively.

Tracing the origins of black money, targeting the illicit funds that sustain illegal lending networks.

Launching public awareness campaigns to educate citizens about the risks of illegal lending and their legal rights.

Protecting whistleblowers through anonymous reporting mechanisms to encourage the exposure of illegal activities.

Crucially, political will is essential to eliminate corruption and conflicts of interest within government ranks. Without a concerted effort to address these systemic issues, meaningful reform will remain elusive.

The Role of the NPP Government

The National People’s Power (NPP) government stands at a critical juncture. By prioritizing financial transparency and cracking down on illegal lending, the NPP has an opportunity to strengthen

Sri Lanka’s economic and governance systems. A zero-tolerance approach to corruption, including within its own ranks, is vital to restoring public trust and confidence in the country’s institutions.

A Call to Action

Illegal money lending poses a systemic threat to Sri Lanka’s financial stability, social equity, and rule of law. Addressing this crisis demands a unified and multi-faceted approach, involving government leadership, regulatory oversight, and active participation from civil society. The time to act is now

 By dismantling this exploitative shadow economy, Sri Lanka can safeguard its most vulnerable populations and lay the groundwork for a more equitable and sustainable future.

For the first time in its history, the Jaffna International Trade Fair (JITF) has become a platform to display the unity among Sri Lanka’s diverse communities, transcending ethnic divisions.

Held at the Muttraweli grounds in Jaffna, this year’s event celebrates the strength of collaboration and mutual respect through a common goal: fostering economic growth.

The event highlights how trade and business can serve as powerful tools for peacebuilding and reconciliation, with people from all walks of life contributing to its success.

The annual JITF, a cornerstone event in Sri Lanka’s northern region, commenced yesterday, showcasing the immense business potential of the country.

Aasim Mukthar, CEO of Lanka Exhibition and Conference Services (LECS), emphasized the fair’s role in connecting the Jaffna peninsula with the rest of the nation and the world. “The JITF is a bridge that links communities and promotes entrepreneurship across ethnicities,” he said.

Tracing its origins to 2002 during the peace process between the Government and the LTTE, the JITF was relaunched in 2010 after the end of the conflict.

LECS Chief Operating Officer Husnie Rauf noted, “We reintroduced the event as the Jaffna International Trade Fair to harness the entrepreneurial talent across Sri Lanka and rise as one family towards economic innovation.” Over the years, the event has grown into a robust platform, featuring more than 300 stalls annually.

The 2025 edition of the JITF highlights a diverse array of industries, including sustainable energy, tourism, agriculture, technology, and traditional crafts.

The fair’s commitment to inclusivity was evident in its support for emerging entrepreneurs and small businesses, with free stalls provided to initiatives like the Jaffna SOS Village entrepreneurship program, which empowers parents of children in care through skill-based income generation.

Craftsman Thampirasa Sureshkumar of Crafttary expressed gratitude for the platform, noting how his coconut-based craftwork has gained international recognition.

Meanwhile, traditional medicinal practices also took center stage, with Pasyale Ayurveda Osu led by Dr. Buddhika Prasanna Raddalgoda demonstrating cross-cultural collaboration. His team, comprising Sinhala, Tamil, and Muslim holistic practitioners, showcased their expertise to a multilingual audience.

This year’s sponsors include industry leaders such as DIMO, Adrian Solar Green, and Nippon Cement, alongside numerous silver partners. LECS officials expect over 100,000 visitors at the event, which runs until January 26.

 By fostering collaboration across industries and communities, the JITF has become more than a trade fair. It is a symbol of unity, offering a vision of a Sri Lanka where peace and prosperity go hand in hand..

Political sources reveal that Sri Lanka Freedom Party (SLFP) organizers are firmly advocating for contesting the upcoming elections under the iconic ‘hand’ symbol, citing its importance for the party’s political resurgence.

The SLFP continues to face internal divisions, with factions supporting different symbols. While one group proposes contesting under the ‘chair’ symbol, another strongly insists on reviving the ‘hand’ symbol, which has historically represented the party.

Many party organizers argue that formalizing the SLFP under the ‘hand’ symbol is critical for its future political strength. “To regain power and reestablish itself as a dominant political force, the SLFP must reconnect with its roots and identity,” emphasized an organizer.

The debate over the party’s electoral symbol has persisted for years, with conflicting opinions among the leadership and secretaries hindering any resolution. Despite these internal challenges, proponents of the ‘hand’ symbol believe it resonates more strongly with the party’s traditional voter base.

Organizers stress that unifying under a single symbol is essential for the SLFP’s electoral success and long-term survival. They are urging the party leadership to prioritize the issue and resolve it ahead of the upcoming elections.

With the elections drawing closer, the SLFP’s internal dynamics and decision on the symbol are likely to play a critical role in shaping its political future.

Sri Lanka’s Cabinet Spokesman, Minister Dr. Nalinda Jayatissa, has clarified that the government has not made any decision to cancel the agreement with India’s Adani Group for wind energy projects in Pooneryn and Mannar. Speaking at a special press conference today (25), the Minister emphasized that the Cabinet’s focus is solely on reviewing the proposed electricity tariffs for the projects.

Dr. Jayatissa stated, “The Cabinet has decided to review the tariffs to ensure they are more beneficial to the energy sector and the people of Sri Lanka. This does not imply that the projects have been cancelled.”

A committee has been appointed to examine the terms of the agreements, with the goal of optimizing their benefits while maintaining the country’s energy goals.

The Minister also highlighted the ongoing legal challenges surrounding the Adani wind energy projects. “Currently, five court cases related to these agreements are before the judiciary, with one scheduled for hearing in May. The government is closely monitoring the outcomes of these proceedings before making a final decision,” he added.

Minister Jayatissa reassured the public that any decisions regarding the agreements with the Adani Group would prioritize national interest and energy sector improvements. “Our objective is to implement these agreements in a manner that supports Sri Lanka’s energy goals while safeguarding the interests of our citizens,” he said.

The clarification comes amid growing public interest and scrutiny regarding the government’s energy policies and international agreements.

Sri Lanka’s apparel sector recorded export earnings of USD 4.7 billion in 2024, marking a year-on-year growth of nearly 5%, according to the Joint Apparel Association Forum (JAAF). The overall export value exceeded USD 5 billion, reflecting gradual recovery and resilience amid global and domestic challenges.

Performance Compared to Pre-Pandemic Levels
While 2024’s performance represents growth, it remains 10.3% below the USD 5.3 billion achieved in 2019, the last “normal” pre-pandemic year.

Export Highlights by Market:

• United States: Exports grew by 5.23% to USD 1.9 billion, though the figure remains 19.4% below 2019 levels, showcasing the potential for further recovery.
• United Kingdom: A robust growth of 7.65%, nearing parity with 2019 levels, driven by sustained demand for ethical and sustainable garments.
• European Union: Modest growth of 0.81%, with the sector maintaining a foothold in a competitive and regulated market.
• New Markets: Exports to new destinations grew by 10.13%, reflecting successful market diversification and direct-to-third-country shipping trends.

Strategic Developments: Eravur Textile Zone
The Eravur Textile Zone is a pivotal initiative aimed at localizing fabric production. Spanning 300 acres, the zone is designed to accommodate facilities for textile dyeing, washing, knitting, weaving, and related processes. It is expected to significantly reduce foreign exchange outflows, cut production lead times, and enhance competitiveness.

“Localizing fabric production is essential for increasing competitiveness and meeting global market demands. The Eravur Textile Zone is a lifeline for the industry,” said Yohan Lawrence, Secretary-General of JAAF.

Challenges and Future Actions
Despite growth, the sector continues to face challenges, including:

• Downward pricing pressure.
• High energy costs: Recent electricity tariff adjustments are a positive step but further energy cost reductions are needed.
• Operational inefficiencies: Bottlenecks at the Colombo Port hinder smooth export processes.

Policy Recommendations:

• Enhanced market access.
• Enabling infrastructure projects like the Eravur Textile Zone.
• Transparent and predictable electricity pricing.
• Resolving operational challenges in logistics and ports.

Sector Outlook
JAAF’s analysis over the past five years shows a gradual recovery from the pandemic-induced dip in 2020, when exports fell to USD 4.1 billion, a 22% drop from 2019. The 5% growth in 2024 highlights resilience but underscores the need for strategic measures to strengthen long-term growth and competitiveness.

Sri Lanka’s apparel sector remains a vital contributor to the economy, with its focus on ethical manufacturing and sustainability driving demand in key markets.

The Build Sri Lanka Development Society (BSDS), in collaboration with Global Business Enterprise Brussels, Belgium, has relaunched its funding initiatives in Sri Lanka and the Maldives. The projects aim to provide 100% funding without requiring collateral or guarantors, offering a significant boost to Sri Lanka’s economy.

BSDS was initially launched in 2018 to position Sri Lanka as a premier investment destination by attracting foreign investments and joint venture partners. Despite identifying numerous promising projects, its efforts were disrupted by the COVID-19 pandemic, economic instability, and political challenges, which deterred foreign investors.

Renewed Optimism and Investment
Dr. Prabath Ukkwatte, a consultant for BSDS, expressed optimism, citing the reestablishment of political stability, the rule of law, and Sri Lanka’s improved economic outlook. President of BSDS, Jude L. Ukkwatte, announced that the organization has secured nearly €500 million in funding for nine projects across Sri Lanka and the Maldives.

“We are now looking to facilitate more funding for projects ranging from €5 million to €1 billion, focusing on attracting entrepreneurs and investors globally to build a better Sri Lanka,” Ukkwatte said.

Key Projects in Sri Lanka and the Maldives

1. Sri Lanka Projects:
   • Two Waste-to-Energy projects by O2N Lanka Ventures Pvt Ltd in Karadiyana (€225 million).
   • A biogas project by Lanka BioGas Oluvil Pvt Ltd (€65 million).
2. Maldivian Projects:
   • Renovation and upgrading of Medhufushi Island Resort (€25 million) and Fillitheyo Island Resort (€25 million).
   • Development of a new five-star resort, Seedheehuraa Island Resort (€75 million).

Promoting Investments and Business Opportunities
BSDS is also planning International Investment and Development Conferences in Sri Lanka to attract global investors. Previously, it organized the Asia Hotel & Tourism Investment Conference in Colombo, which brought together over 300 international delegates from 48 countries.

To further promote Sri Lanka as an investment hub, BSDS operates the Sri Lanka Business Channel on YouTube, offering English-language business news and interviews to engage the global business community.

For more information, visit www.buildsrilankasociety.com.

The Chairman of the Coconut Cultivation Board, Dr. Sunimal Jayakody, announced plans to cultivate three million coconut plants next year.

Dr. Jayakody highlighted that this ambitious target aligns with efforts to enhance coconut production and ensure the sustainability of the industry. The Coconut Triangle, a key agricultural region in Sri Lanka, will receive further support under the leadership of President Anura Kumara Dissanayake to strengthen these initiatives.

This development is part of broader efforts to boost agricultural productivity, support rural livelihoods, and meet the growing demand for coconuts and coconut-based products both locally and internationally.

Showers or thunder showers will occur at times in Uva and Southern provinces and in Ampara, Batticaloa, Matale and Nuwara-Eliya districts. A few showers are likely in Northern, North-Central and North-Western provinces and in Trincomalee district.

Showers or thundershowers will occur at several places in Western and Sabaragamuwa provinces and in Kandy district during the evening or night.

Fairly heavy showers about 50 mm can be expected at some places in Sabaragamuwa province and in Galle and Matara districts.

Fairly strong winds of (30-40) kmph can be expected at times over Eastern slope of the central hills and Northern, North-central and North-western provinces and in Matale and Hambantota districts.

Misty conditions can be expected at some places in Central and Sabaragamuwa provinces and in Galle and Matara districts during the morning.

The general public is kindly requested to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers.