. the advice given was that people had resorted to theft and robbery, because they had no a way of earning a livelihood. hence, to enable them to start self - employment projects, the king opened his treasury and allowed them to take whatever the money they needed for use as capital. after some time, the people realized that if they resorted to more theft and robbery, they could get more money from the king. as a result, instead of such felonies declining, they indeed started to rise in the kingdom. a similar example has been attributed to the chinese philosopher, confucius, who lived in the 5th century bc. one day, when he was returning from the river after a fishing expedition, a beggar, sitting by the side of the road, was reported to have asked him for a fish. “ i ’ ll not give you a fish. instead, i ’ ll tell you how you could catch a fish ” confucius is reported to have told the beggar. the moral of the story was that if the beggar was given a fish, he would get used to the free fish and beg for it everyday. then, it would have been a severe burden on confucius. so, he advised the beggar to depend on himself rather than begging from others. the experience in poverty alleviation throughout the globe has shown that safety nets in the form of outright grants do not work in the long run. hence, the safety nets that were introduced earlier were converted to “ safety ropes ”. those safety ropes were expected to provide a means for the poor to hang onto and then climb upward with the support given to them. thus came the era of microfinance which indeed was a safety rope through which the poor could cross the poverty line. such microfinance would help them to attain the goal of getting out of poverty, provided certain conditions are met. the training program conducted by cab teaches us these conditions which are needed for the sustenance of microfinance schemes. the experience throughout the world tells us that microfinance alone is not sufficient to eliminate poverty. this is because microfinance satisfies only the funding requirements of micro - enterprises. but, funding is only one aspect of a micro - business. prior to as well as subsequent to funding, there are a large number of other requirements that have to be satisfied. first and foremost, anyone desirous of starting a micro - business should have a good knowledge of the

lending banks. it is necessary that all the potential micro - entrepreneurs should be knowledgeable of preparing such business plans. if they cannot do that, they could engage specifically trained business plan consultants for the preparation of those plans at a fee. this was experimented in one of the development projects implemented by the central bank of sri lanka. in this particular project, bank financing was available for both micro and small businesses. one of the requirements of banks was the submission of a comprehensive business plan, acceptable to the banker, by the prospective micro - borrowers. but, none of the borrowers had the capacity to prepare them. as a result, the utilization of the moneys in the project became a problem. as a solution, it was decided to outsource the function to some business development consultants at a cost to the borrowers. accordingly, a number of youth who had studied economics, business studies and accounting for the gce advanced level were selected for training as business consultants. then, they were appointed to provide consultancy services to potential entrepreneurs for a fee. the lending banks also paid a certain commission to them for services such as loan recovery and follow up work. the program worked well and a new generation of fee - based business consultants was developed by the project. at the end of the project, most of these consultants, having used their own expertise, started their own businesses. another pertinent issue involved in microfinance delivery is how to reduce the transaction costs and make available the loans at the time they are needed by the borrowers. the transaction cost is simply the additional resources which a person has to spend, other than what is paid to the supplier, in order to complete a transaction. in the case of borrowing, transaction costs include any payment which the borrower has to make other than the payment of interest to the lender. such costs, therefore, comprise legal fees, application fees, loan processing fees, any bribes or commissions payable, stamp duties and other taxes and, finally the opportunity cost of the time spent for pushing the application through bureaucracy and the waiting time. this can be compared with a village money lender who is alleged to be charging an exorbitantly high interest rate. yet, the transaction costs involved in borrowing from a money lender is practically zero. hence, from an efficiency point of view, a village money lender is preferable to a microfinance institution with a high transaction costs. in sri lanka, in late 1980s, the central bank