Credit Unions Help the Poor in Remote Sumba
The operation of credit unions in the villages on Sumba Island in East Nusa Tenggara Province have opened fresh opportunities for local people to improve their welfare and for their children to access higher education.
In cooperation with the Sumba Cooperatives Coordinating Agency, the West Sumba Area Development Program, has been able to facilitate the establishment of three credit unions in Southwest Sumba District and one credit union in West Sumba District.
The four local credit unions have won the hearts of the local people through the commitment and accountability of their managers and officers.
The largest is the Letekonda credit union, which already has about 600 members with assets reaching 1.2 billion rupiah (about USD $100,000) by mid-2013. The other three credit unions each have between 200 and 300 members and their combined assets reaching about 750 million rupiahs (USD $65,000).
Most local communities cannot access the banking system because banks only operate in the faraway district capital in Tambolaka or larger cities like Waikabubak. For many years, local people had to rely on loansharks when they needed extra money for their families. These loansharks charged very expensive interest rates and trapped many villagers in dire poverty.
The credit unions only charge about 3% monthly interest rates from their members who need money for things like medical costs or educational fees.
”My daughter Stefania is currently able to study at a university on Java Island,” said Alfonsus Zudi proudly. He decided to borrow additional money from the Letekonda Credit Union in his village when Stefania, a Wahana Visi’s sponsored child, enrolled to the college and needed extra money for transportation, enrollment fee, and other needs.
”I personally knew the loan officers of Letekonda, and I was only charged with 3% monthly interest for the money I borrowed,” Alfonsius said. He was grateful for the low-interest financial assistance.
He has been paying off his loan with the money he earned from cultivating seaweed.
Mama Yoel shared a similiar story. Although she is a single parent, Mama Yoel has been able to pay for the education of her three children. Two children have graduated from college while the youngest is still attending.
”I have received loans from the Letekonda credit union. The interest rate is very low and reasonable,” said Mama Yoel. ”I have been paying the loans with the money I earned from seaweed farming.” She became a seaweed farmers with training provided by World Vision.
*Written by Margareta Sagala, Wahana Visi Indonesia, Sumba Barat operational office | Translated by Hendro Suwito, Senior Editor World Vision Indonesia