Indonesia: IMC micro-credit programs build a common bond among tsunami survivors

By Sara Terry

Brick makers. Seamstresses. Goat breeders. Market vendors. Construction workers. Different occupations drawn together by a common bond: all these groups -- and several others -- are part of International Medical Corps's (IMC's) micro-credit program in Aceh, Indonesia.

The comprehensive program, which includes job training, business planning and low-interest loans, was set up in the wake of the tsunami that devastated the region last December. In addition to the deaths of some 130,000 Acehnese -- and the displacement of some 400,000 others -- the tsunami also wiped out entire local economies, making it difficult, if not impossible, for survivors to find a way to earn money to support themselves.

"Micro-credit has done wonders in other countries in the world," says Bernardo Roa, IMC's project officer for livelihoods and community development in Aceh. "Although the conditions here are totally different because of the tsunami. What we are seeing here is an IMC model for micro-credit."

As part of its livelihoods program in Aceh, IMC plans to make 60 micro-credit loans over the next two years, with an average loan amount of $2,000. Unlike many micro-credit programs in other parts of the world, which often target women, IMC is reaching out to men and women alike with its loans as a way of creating new sources of income and encouraging community development.

At the heart of the micro-credit program is a commitment to loan to groups, or cooperatives, as opposed to individuals, to help encourage community involvement. In an extra measure of the kind of support needed to rebuild Aceh's devastated local economies, says Roa, IMC staff are actually helping locals to identify possible job markets, then training them specifically for that work, and organizing them into cooperatives, which then qualify for IMC loans.

In the town of Lamno, for example, IMC is training young people in construction trades such as masonry and carpentry, and will then help form the workers into a cooperative that will build community centers and other projects.

"By working this way, we're able to refine the cooperatives," says Roa. "It has a greater impact on the community."

With each cooperative, IMC staff help locals write business plans and develop long-term goals. Before a loan is given, cooperative members are required to show their own commitment to the group through "savings mobilization," which involves each member contributing to a savings account for the group on a weekly basis. The contributions are small, only 50 cents or so a week, but nonetheless are an important part of building the cooperative and learning fiscal discipline.

Among the cooperatives currently in the process of applying for IMC livelihood loans is a group of brick makers in Banda Aceh, who want to buy a furnace to increase their brick production because of the huge demand for building materials in the wake of the tsunami.

In Sigli, a cooperative has organized to create an ice-making plant so that fish can be transported for sale.

Several groups of women have come together to create sewing and embroidery cooperatives that sell work in the local markets; their loan will help buy sewing machines that were lost in the tsunami.

And in Banda Aceh, a group of 190 food vendors at the open-air Stui Market have organized to apply for a low-interest IMC loan that will mean they no longer have to borrow money from moneylenders, who make loans in the morning that must be repaid in the afternoon at a 14% interest rate.

In keeping with IMC's commitment to build programs that can be turned over for local control and operation, Roa says that the 60 cooperatives that will be funded over the next two years will be organized into their own governing body, which will then oversee and administer an ongoing micro-enterprise program for the Aceh region.