ARF’s Microfinance Update: The Story of The Trishaw Men
To date, ARF’s micro financing program has been utilized by 64 people in Punge Jurong V and beyond. With this no-interest easy credit facility, tsunami survivors have started or re-started small businesses with between US $150 and $1,500 seed money. So far, there are only three (4.76%) borrowers who have fallen behind in their repayment installments.
The businesses utilizing the financing range in scope from vegetable sellers, roadside food vendors, small convection to fabric sellers. There are also home-based bakers, teachers, and four trishaw men, two of whom are briefly chronicled here.
Abdul Mutalib: From pedaled- to machined-trishaw
ARF currently support 23 small business operated by victims of the tsunami in Banda Aceh. The Micro finance (also known as Easy Credit Facility) is available to adult tsunami victims in Banda Aceh. Priorities are given to victims with experience in operating small businesses prior to the tsunami.
ARF hopes that eventually these victims (as a result of using credit to re-establish/establish small businesses) will be able to provide employment opportunities to other victims. Other victims who do not have experience operating small businesses but can demonstrate seriousness and soundness of plan will also be considered as recipients of the Easy Credit Facility.
However, due to current limitations, only villagers from the village of Punge Juriong will have access to the facility. Prior to the tsunami, majority of the villagers in Punge Jurong work as small traders in the local market. Many own small shop or roadside stall in Banda Aceh. ARF hopes to expand the credit service to other villages if and when adequate funding can be procured for such an operation.
The loans are given in the amount ranging from USD $100 to USD $1000, depending on the type and size of the proposed business.The length of the loan is two (2) years. At the end of this period, the principal is due in full.
The loans are provided interest free to the tsunami victims. The grantees are expected to return the principal loan amount, so that the money can be utilized by other victims (hence the name Revolving Easy Credit Facility). However, they will have to pay a minimal service charge that will be used to pay the agency that will be running the credit facility on behalf of ARF.
ARF act through YMI to ensure fairness in the distribution of the funding. ARF, YMI, and the Village Committee have had several meetings to discuss the proper distribution of the loan. It is agreed that, tsunami victims interested to participate in the scheme is required to submit a simple written business proposal. They can seek the assistance of local NGOs to help articulate their business ideas into a written form. As explained earlier, YMI and the village community will act as a clearing house for the application. Potential loan recipients will be interviewed to determine their seriousness and readiness to restart old or begin a new re. YMI and the Village Committee will serve as a clearinghouse that will advice ARF on their selection which will then be forwarded to BCC.
Below is the list of recipients for the first phase of the loan (click image to enlarge):