Six Steps in Porong Microcredit Program
http://svsl.lafadl.org/en/news/56-six-steps-in-porong-microcredit-program.html
As mentioned above, the program took two months for conceptual and technical preparation. This preparation is divided into six stages. The first is a field research to assess the program significance for the mud-disaster affected communities. The research, carried out in the end of May and early July 2009, is a continuation and deepening of community organizing which has been done by our community organizer (CO) in the last 3 years.
By taking sample of those from Kedungbendo village, it found out that: 1) many mud affected families still can’t afford to buy new houses and continue to live as tenants, 2) since the demand for full payment of compensation is not yet fulfilled and communities no longer receive compensation for renting house from PT Minarak Lapindo Jaya (MLJ), a “cashier” institution founded by Lapindo company whose improper oil extraction activities started the mud eruption, many households decided to live under the same roof to save money, 3) mud affected women bear heavier burden both to maintain their domestic works and simultaneously generate additional or even main income for the family whose revenue has been declining since the disaster, and 4) there have been new intergenerational problems emerging following the mud-induced displacement (for more detailed information about the research result, visit: http://lafadl.org). Those findings were complemented by identification of micro businesses existing or possibly promoted to the affected communities. The findings considerably shaped our current microcredit design.
Second stage is the socialization of our micro-credit program. In the end of July, we distributed the information through community leaders, who then spread the words to the communities. In early August, in several meetings initiated by those who are interested to participate in the program, we gave more detailed information about the program’s operational practice, such as group formation, lending rules, and terms of installments.
It took several days until community members managed to found their own groups as a requirement to access the credit. At this third phase, the decision to select group members, number of members, leader appointment, and frequency of their meeting were totally on their hands. They are the ones who made decisions related to group formation, especially in member selection, since the program rules that all group members would be responsible to make sure all credit installments are repaid. This rule requires them to select group members whom they really know, especially their characters and debt repayment record.
Once the women groups are founded, fourth phase began. It is a phase where we registered the groups, collect information about members’ existing business or plan, and how much money they would like to borrow. We distributed two forms of forms during this phase, namely a registration form for group members and credit application form which must be accompanied by signatures of support from the other group members. Verification of information collected from the forms was then the next phase. Primarily performed in an informal way, this verification asked the loan applicants about their business plan, how they would spend the money borrowed, their financial management, and how they would like to repay the credit.
After the verification phase completed, the final one follows, which is the loan disbursement. Joining the two women groups, there are 16 female members whose loan application are approved. They have very diverse business activities and plan, such as selling fried crackers, rice cakes, coconuts in traditional markets, handicrafts, salted eggs, cooking and home utensils, small food stalls next to railway, catering service, moslem clothes, and recycling business.
