Microcredit helps Aceh's women rebuild lives after tsunami

from Yahoo News

by Sophie Boudre

LAM KUTA BLANGMEE, Indonesia (AFP) - Two years after the tsunami killed 168,000 in the Indonesian province of Aceh, microcredit is helping thousands of people, mostly women, rebuild their lives.

Pioneered by Bangladeshi Nobel Peace Prize winner Muhammad Yunus, microcredit is essentially a small loan extended to a poor person lacking the collateral required by regular banks to help them start or expand a small business.

Few Acehnese have heard of Yunus or his Grameen Bank, but his microcredit methods are spreading across the province where tiny loans are helping women set up small but thriving businesses.

In tsunami-devastated Lam Kuta village on the west coast of Aceh, Salmia said she nearly doubled her income selling cakes after taking out two loans of one million rupiah (100 dollars) each through a community microcredit scheme.

"I bought pans, a mixer, everything I needed to make cakes, including sugar and rice flour," the 36 year-old kindergarten helper told AFP, pointing to appliances stacked on the floor of her kitchen.

Every evening she makes cakes and rissoles and drops them off at nearby stalls the following morning.

"At the end of the day, I pick up the money. I make 500,000 rupiah (50 dollars) per month," Salmia said with a smile.

Across the road, when the tsunami killed her husband, a child and wiped out their house and well building business, Abida, 50, had to start from scratch while bringing up her nine remaining children alone.

"Everything was gone but our land so I had no money to buy sand, cement, moulds to make the well rings again," she explained, adding that "with so many children, you need to keep going."

So a year ago, Abida and nine other women gathered upon the invitation of French non-governmental organisation Triangle Generation Humanitaire to pool small amounts of money, which are shared on a weekly basis between members.

Triangle provided initial capital of 75,000 euros (97,500 dollars) shared between nine groups of 10 people who each week put 50 cents into a joint fund.

"The idea was not only to restart the local economy but also to reinstate social links lost with the tsunami," project chief Abel Bove explained to AFP.

Each week the group picks a member who goes home with the cash from their donations and, more importantly, one of them can ask for a loan of up to 200 dollars.

With many houses being rebuilt, Abida has successfully restarted her husband's business and now employs two men.

All the members had been able to reimburse the loans, Bove said, adding that women were usually more reliable.

"Those meetings at home are a woman's business," laughed Bove.

"Men participate but sit close to the door while women take off their jilbabs and do the talking," he said, referring to the mandatory headscarf for women in the staunchly Muslim province.

S.M. Ahsan Habib, who manages funds from the US-based Grameen Foundation, which aims to provide 25,000 Acehnese with access to microcredit before June 2009, agreed money was safer in women's hands.

"If you give it to men they'll just spend it at the coffee shop or to buy cigarettes," he told AFP.

Acehnese women often bake and sell cakes or own a small stall next to their house, so "they don't need to learn how to do business. What they need is capital," said the Bangladeshi microcredit expert.

Aceh, which is gradually implementing Islamic law, has a dormant network of Sharia banks offering loans which are interest-free but have a profit-sharing mechanism instead.

"If you make a 10 percent profit, 30 percent of this profit goes to the creditor while you keep the remaining 70 percent," explained Said Hisyam, the manager of the Institute for Finance and Capitalization at the Agency for the Rehabilitation and Reconstruction of Aceh and Nias (BRR).

In May 2006, BRR established an 8.5-million-dollar fund along with the Asian Development Bank to capitalize some 140 licensed financial institutions in Aceh and enable them extend microfinance to 100,000 people so far.

One of those rural banks is working with a group of women in Lam Cot village on the outskirts of Banda Aceh.

Ita, 26, and her mother Saudah make kekarah cake, a crispy, moon-shaped local specialty.

Ita borrowed 500,000 rupiah which she paid back in 17 weekly installments.

"It really helps," Ita said.

"I can stock up supplies such as rice, oil and kerosene and make more cakes so I make more profit."