Barefoot banker a lifeline for poorest of the poor
Barefoot banker a lifeline for poorest of the poor
By John Ruwitch
JAKARTA (Reuters): Sri Widiawati is one of the most successful bankers in Indonesia's bustling capital, but she doesn't drive a fancy car, wear expensive handmade suits or work in a glitzy office.
She earns little more than US$1 a day, which is just enough to support her husband and two children while paying off a loan shark who conned her parents.
And her workplace is in the dusty back streets of the impoverished Jakarta neighborhood where she lives.
But in the two years since she became involved with Kesuma Tiara, a grassroots savings-and-loan cooperative, she has traveled light years -- professionally and personally.
On the business side, each month, the native of East Java oversees loans to some 240 women -- men are not allowed to borrow from Kesuma -- across three neighborhoods.
"I feel like I'm needed by the community," she said.
Her story highlights the victories of the unique "barefoot bank" she works for, set up in 1999 after the economic meltdown to help the poorest of the poor in Jakarta's sprawling kampongs.
It was the impoverished, anonymous slum dwellers who bore much of the brunt of the financial crisis that slammed Indonesia in the late 1990s and sunk millions below the poverty line.
The World Bank estimated Indonesia's poverty rate in 1997 before the crisis was 7.23 percent. By the second half of 1998, that number had jumped to 21 percent of the country's more than 200 million people and the economy has yet to pick up.
Kesuma Tiara has made impressive inroads so far in helping ease the economic pain afflicting its growing base of borrowers. Sri Alam, a 45-year-old shopkeeper, is a typical success story.
Before becoming a member of the micro-bank, she saved little and poured most of the cash she made back into her tiny kiosk, which sells snacks, cigarettes and other small household products.
Since then she has been able to boost the amount of items she sells and that has allowed her to put some money aside to spend on her family.
"I have been able to send my son to school," she said.
In line with Kesuma's regulations, depending on the loan size, she must immediately deposit Rp 50,000 to Rp 60,000 in a personal savings account with the cooperative.
Like similar micro-lending groups around the world, Kesuma Tiara gives small loans to those who otherwise have no access to capital or can only borrow from local lenders at high rates.
The organization thrives off already existing social connections. And because its borrowers generally do not have anything of value for collateral, its strict rules are enforced by the subtle pressures of social networks.
Kesuma Tiara initially recruited members from one of the local savings societies known in Indonesia as Arisan. Members -- usually housewives -- meet in each other's homes to pitch money into a pot, which they take turns "winning". The traditional Arisan groups evolved in the absence of consumer bank credit. Kesuma Tiara does not give handouts; borrowers who default on one loan -- which can range from Rp 100,000 to Rp 600,000 -- lose their privileges for good.
But unlike its often larger counterparts around the world, Kesuma was built from the ground up with the goal of helping the women who work for it as much as the women who borrow from it.
"Everything was designed by the women who run the bank," said founder Lea Jellinek, an Australian anthropologist who with a colleague brought the basic idea, about $100 of seed money and a tonne of will, to the Kemanggisan kampongs in West Jakarta.
In the two years since it was founded, Kesuma Tiara's clientele has grown from one group of 10 skeptical borrowers to 32 groups totaling 576 members.
The little details created by the women who run the cooperative have been critical to its successes, Jellinek said.
For example, Kesuma's bankers don't hold court in one place expecting those who want to borrow money to come and queue. Rather, they visit the kampongs and individual borrowers, mostly on foot. And they take punctuality seriously.
"You have to come to the poor," said Jellinek. "They don't have time to sit around waiting."
Kesuma Tiara does not charge interest. Instead, they charge up to 3 percent in "operational fees" on all loans, which conforms with traditional Muslim banking practices. The fees help finance a "social fund" to help those ineligible for loans.
"Lea's trying to build an institution. She's trying to build new financial management habits among poor people. She's trying to change people's financial horizons," said a Western consultant with 10 years experience in micro-credit.
Now Kesuma plans to take its formula to the rest of the city.
Down a narrow alley, sitting in the doorway of the home of a borrower, Jellinek speaks of the changes she has seen in Widiawati since they met in 1999.
When the financial panic swept Indonesia's economy down the drain, Widiawati lost her job as a grocery store cashier and spent the next year-and-a-half depressed and confined to a dank room by her husband who refused to let her find work.
Now, she strides through the poor neighbourhoods near her one- room home with pride and she explains with the confidence of a pro the conditions of a Rp 400,000 loan to a new borrower.
"You should have seen her two years ago."
To the women who work for Kesuma Tiara, Jellinek said, "This is as important as their families." (Additional reporting by Illiah Saleh)