The Brick Cartel Gets Going

K M Dharmasena directs the activities of the Palmadulla-based NGO called Foundation for Rural Community Development (FRCD). Before applying for SSGF funds, he involved the local authorities in Ambalantota to identify the needs of the affected rural community. This bottom-up approach ensured that the funds were infused into avenues where it would be yield optimal benefit. “We assisted people by arranging specialised training in tailoring (twelve beneficiaries), alternate cropping for farmers, brick-making and coir products (ten each),” says Dharmasena. “Then we helped them to set up their own community organizations and trained them to manage their finances.”

The efficacy of this training is demonstrated by the fact that all ‘revolving funds’ granted to FRCD’s CBOs boast a 100% repayment record. The CBO for alternate crops has even opened a savings account, the accumulations of which are intended to buy a plot of land on which to construct a community centre.

Like many others, the brick-making CBO has a constitution and bank account; it has a corpus of Rs 150,000 (US$ 1,470) for revolving loans. A committee meeting of the organisation reviews applications of potential recipients and decides on their creditworthiness. When granted a loan, the recipient has to sign an agreement with the CBO and nominate two guarantors. (Thus far, the committee has had no reason to invoke the guarantees, because recipients have been paying back promptly). They are aware that they are not entitled to a fresh loan until they have repaid the previous one.

Rasika Withanage, FRCD Secretary, says, “We fund them and move out; CBO members run the business thereafter. We merely play the role of auditor by checking their books occasionally… You’d be surprised at what can be accomplished when you empower people.”

U K Nandasena, a brick-maker who lost all his property in the tsunami, belongs to a five-man CBO that not only handles loans but also decides on product pricing. United by a common cause, the members have prevented a price war by forming a virtual cartel that sells bricks measuring 12” x 6” x 3” at Rs 9 (US$ 0.09) each. The laying of these bricks, which are larger than the traditional variety, involves less labour. Builders come to the production point to buy bricks. Each brick-maker sells bricks worth Rs 35,000 (US$ 340) to Rs 45,000 (US$ 440) every month and makes a profit of Rs 17,500 (US$ 170) to Rs 25,000 (US$ 245). This is significantly higher than the country’s annual per capita income of US$ 1,355.

Another CBO member, N Jayalath, re-commenced his trade with an initial grant of Rs 3,500 (US$ 34) and a loan of 3,000 (US$ 29), which enabled him to buy some raw material. Jayalath says, “Soon after the tsunami, there was a great demand for our bricks because they are stronger than cement blocks.” His dream is to own a clay-mixer that would increase productivity by over 150%. He hopes that his community will, using its revolving fund, buy such a machine that could benefit all the brick-makers in the village.