HAMBANTOTA 2.0

October 1904. Leonard Woolf, having successfully completed his Civil Service Examinations, was assigned to Ceylon as a O cadet in the Ceylon Civil Service. He sailed to the unfamiliar land carrying a volume of complete works of Voltaire, to be first sent to Jaffna and then to Kandy. In 1908, he became an Assistant Government Agent in the Southern Province. He administered the Hambantota District.

Thanks to Woolf we have a complete account of how things went in Hambantota, more than a century ago. We do not have such a farreaching narrative on any other district of the time, with the exception of Colombo and Kandy. It does not come just from official records. Woolf went far beyond his official capacity to document the day to day lives of people; how poverty-stricken they were; how they had been exploited by the powerful; how law and order or even religion brought them no relief and how powerless humans were to fight the harsh climate conditions of the dry zone, through his meticulously kept diaries and of course, the exemplary novel ‘Village in the Jungle’.

Woolf might not have imagined that the district’s living conditions would remain mostly unchanged for the next eighty years. Even by 1990, Hambantota’s poverty was relatively high.

The poverty headcount ratio was 32%, the secondhighest on the island. That means a third of the families lived below the poverty line. The roads were in poor condition. Economic opportunity was limited.

As a district with low annual rainfall, it experienced frequent and prolonged droughts. Despite these unfavourable conditions, nearly 60% of the district’s population depends on agriculture due to their lacking other means of income. The area was economically isolated.

Frustrations poured over several times. An insurrection in 1971 erupted from there. Many rebel leaders including the 26-year-old Wijeweera were from the district. Trouble erupted again in 1988-89. Thousands of people died in these insurrections. It was abundantly clear the people wanted change; better opportunity.

When change did come, its unfurling was beyond the wildest imagination of a speculator. Today, Hambantota district has the second-largest international airport on the island (at Mattala) and the second-largest seaport (Magampura). Talk about connections! Hambantota is now three hours drive from Colombo, with E01 Southern Expressway directly connecting it to the capital. The railway line has been extended to Beliatta from Matara; remarkable because it is the only newly built line after the occupying British left. Soon the line will connect Magampura Mahinda Rajapaksa Port in Hambantota, and phase three will reach Kataragama.

Once, largely neglected Hambantota is now attracting tourists and has several top hotels including ones managed by Shangri La and Hilton. Its tourist attractions include Sooriyawewa International Cricket Stadium, Mirijjawila Botanic Garden, Ussangoda National Park and Ranminitenne – tele cinema village. Except probably Colombo, which has been the commercial capital for at least three centuries, no other district has such infrastructure.

However, it’s unclear what the government had in mind when they transformed this isolated district with all this infrastructure. The country has spent dearly on that. To take a few examples Magampura Mahinda Rajapaksa Port was funded with two commercial loans from China together topping $ 1.12 billion. Mattala Airport cost another $ 250 million. The Southern Expressway’s extensions to Hambantota cost an estimated one billion dollars. When such colossal amounts are spent, the expectation is that the development would pay back in time. It’s those returns that repay the loans.

Investments have generated opportunities. The poverty headcount in Hambantota district has dropped to 1.2% by 2016 – the second-lowest in a district after Colombo. The poverty gap index has dropped to 0.1% – the lowest in a district. It’s no exaggeration. Sri Lanka’s story of beating poverty has been penned in Hambantota.

However, given the level of infrastructure investment one should expect a far higher return – not just for the district, but for the country. Do we see that?

While disaggregated data for Hambantota’s contribution is unavailable, the Southern Province which includes the district generates 10% of Sri Lanka’s GDP. This is in line with the 12% population share of the province, but surely below its share of national infrastructure investments. Hambantota district is yet to produce a matching return for the delivery pains.

Is there anything more one can do at Hambantota? Yes. To start with, creating industries and markets. These should be logical steps that must follow an infrastructure boom. Industrialisation must happen at scale – taking full advantage of the infrastructure and mapping Hambantota to international supply chains.

The industry sector was largely ignored in post-independence planning. Industries account for 26% of GDP. In our rush to promote the service sector, we have ignored the contribution industries can make in a developing country.

For decades, we have offered excuses like China and Bangladesh having cheaper labour. Human resources are costlier in Sri Lanka. Our infrastructure is poor and energy prices are too high, for competitive industrialisation, we suggested.

We now have solutions for all these. It is high time we stop giving excuses and start seriously building industries – electronics or otherwise. This is exactly what our neighbours in South India are now doing.

Why cannot Hambantota be Sri Lanka’s industrial city like Shenzhen became to China? Or to take a closer to home example, Coimbatore to India? That will not happen automatically. A Special Economic Zone with attractive incentives for foreign investors will be an ideal solution. The necessary ingredients are already available.

Then, there should be a viable business model for Mattala Rajapaksa International Airport (MRIA). Karnakata state in India has two airports at the East and West borders of the state. Bangalore, has always been the hub, but there were passengers to Mangalore, the second state capital eleven hours away across the Western Ghats. In the early ’90s, Mangalore was only a domestic airport with flights only to Bangalore and Mumbai, those too on three days of the week. The rest of the time the airport was closed, as they may do now at MRIA.

Three decades later, Mangalore is an international airport with two runways that handles one million passengers annually. Interestingly the same number is forecast for MRIA. Air India Express is the only airline to connect it to the outside world, but that serves multiple destinations: Abu Dhabi, Bahrain, Dammam, Doha, Dubai, Kuwait and Muscat.

Middle Eastern workers, from the state and from nearby Kerala, find it more convenient than Bangalore. The same can be true for MRIA. We may find a niche market that would find it useful. Perhaps it could be a good transit point to South Indian and South-Eastern migrant workers travelling to the Middle East. Expectations beyond this may be unrealistic unless there is an entirely different strategy under a seriously more market friendly government.