Friday, March 25, 2011

Did you see the 500 Dimo Battas on Galle Face a few days ago?

I noticed the Dimo Battas on Galle Face on my way to the office a few days ago and looked into what this was all about. Of course the Daily News said it was a donation from Dimo, but as always that is stretching not just the truth it is stretching a lie.

Either way I went on to investigate the ramifications of it and I would like any reader who is privy to a more accurate level of knowledge than I who has only gleaned it from various News articles come up with the following points.

They distributed to member of the Self Employed Entrepreneurs Federation, as part of the DIVI NEGUMA program of the Ministry of Economic Development (the Basil and PB show) This was ostensibly for these entrepreneurs to use the vehicle to transport and sell the POSHANA MALLA being a selection of nutritious food items from Lak Sathosa.

Be that as it may, these people have to pay the People's Bank that is giving them the lease (Peoples Bank would have bought it from DIMO at a concessionary 500K)55 monthly payments of Rs 22,135 for a total payment over four and half years of Rs 1,217,425. I would hardly call this concessionary!!!

I can only hope that these people are sufficiently motivated enough to work hard to earn enough to make this monthly lease and then pay for the products that they are distributing, which if they have a reasonable margin at Lak Sathosa rates! can earn a living ( a net profit after lease payment of minimum Rs20,000) I have worked out that before making payments for insurance, repairs and maintenance but after paying for diesel they require a monthly gross profit of Rs50,000 in order to arrive at this basic living wage.

This assuming only one person does everything, that is drive the vehicle (needs a clean driving license) and also sell the produce. Once this becomes a two person enterprise, then it is just Rs10,000 per person making the proposition dubious. In practice rarely in Sri Lanka, have I seen the one person delivery/sales process.

Under the latter alternative of two persons People's Bank earns more in interest per month on the deal than the human being is in monthly earnings, a complete win win for the Bank and lose lose for the Entrepreneur.

The question is then asked, how many fail to pay the lease, and in order to realistically look into the feasibility of such a business venture, I would suggest that the IPS (Institute of Policy Studies) use this as a case study and with help from People's Bank follow the progress of these recipients over the period of the lease and work out the pros and cons of this project.

1 comment:

Anonymous said...

How can the Organizers of the event be so uncaring as to do this on Galle Face?

Do they know that with just 12 hours sea breeze those Battas which are prone to rust anyway will get a dose of sea salt film, that will jump start the damage, which the poor unsuspecting recipients will not know needs to be immediately washed off if they are to remotely stand a chance of longevity that exceeds the payment terms of the lease.

Oh What folly!!