Village bank 'Usaha Bersama' a great help to women

Village bank 'Usaha Bersama' a great help to women

By Sarah Crass

CILACAP, Central Java (JP): Every morning in this Central Javanese village of Sidakaya, Pariman arranges the cellophane packages of dried fish on the wooden shelves lining the walls of the small shop she has owned and operated since 1988. Outside the shop's front door, hundreds of bandeng and kakap fish are spread out on a sun-drenched wooden platform. Bought from a fisherman just in from the morning's trip on the Indonesian waters, these fish have enabled Pariman to bring about remarkable changes in her life.

Pariman is a 35-year-old married mother of four. For years she dreamed about opening a fish shop, but such a business is only profitable if one deals in large quantities. To get started, Pariman estimated she needed about Rp 500,000, a sum well beyond her family's meager savings. Borrowing the money was out of the question as local lenders require up to 200 percent collateral, and she simply did not have it.

Fortunately for Pariman and thousands of women in similar situations, Yayasan Sosial Bina Sejahtera (YSBS) made a loan available to her through an Usaha Bersama (UB), a village bank. The goal of UBs is to assist people who have the skills and desire to start a business but lack the funds to do so.

The specific organization and rules of UBs throughout Indonesia differ, but participants usually form groups numbering up to 40. Each person determines how much she needs for her individual business and then as a group they borrow a lump sum from the UB. Every month, individual borrowers pay a three percent service charge to their group's treasury, and each group pays two percent interest to YSBS or the agency with which they are working. The remaining one percent is kept in the group's savings and is intended to eventually serve as operating funds. One important component of UBs is individual savings. Participants determine how much they can personally save each month and are required to meet their savings goals in order to remain in the program.

YSBS and other local non-governmental organizations use funds received from larger organizations such as Baltimore-based Catholic Relief Services (CRS) to help fund village banks. Acting as a CRS counterpart, the local non-governmental organization oversees management of the village banks, though participants themselves determine who receives loans and the amount they receive. This self-management encourages responsible loan repayment. Indeed, repayment rates in Indonesia are more than 90 percent and participants generally return the loans within three to 12 months.

Unlike many aid programs, village banks generate their own funds and, if successful, can eventually operate on their own.

"The beauty of UBs is that they can become self-sustaining and that should be the goal of all responsible development programs," says Nancy R. Mickelsen, Country Representative for CRS in Indonesia.

Fr. Charlie Burrows, the energetic Implementation Director of YSBS, believes UBs do even more than help people attain a level of financial security. The self-esteem UB members experience once they have established their businesses is beyond measure.

"If you can get people to appreciate themselves as individuals, not only will their own lives improve, they will have an immeasurable effect on others, most importantly, their children," he says.

Currently, CRS, through its local partners, provides services to 16,000 UB participants in five regions throughout Indonesia. Nearly 90 percent of the participants are women ranging in age from 18 to 50 with two or more children. They operate a variety of businesses from producing, preserving and selling food to pottery, handicrafts and making bricks.

For the poorest participants, income from their businesses ensures only the basics, such as food and clothing. But for others, like Pariman, the income may have a more far-reaching effect. She is able to use her profits to help pay for her children's education. And not only does she have the funds to see her own family's lives improve, she has contributed more than Rp 1 million to the village bank -- funds that are now lent to other women trying to establish their own businesses.