Bina Swadaya - Approach & Efforts

Approach & Efforts

Bina Swadaya has chosen micro finance as a tool to empower the poor in Indonesia. According to the foundation, Self-Help Groups (SHG) forms the foundation for micro finance development. It is because these groups teach them how to be self-reliant and how to conduct savings and credit activities which is essential for the poor in time to come when they begin their own micro businesses.

An example of such a SHG would be Arta Mekar Mulya Group which is located in Sidamulya village, the District of Subang, the Province of West Java where 91.5% of the village population are peasants where the majority of the land owners possess less than 0.5 hectares. The first successful project of Bina Swadaya in Sidamulya village was the pump irrigation project that was started in 1985. Its main objective was to increase the productivity of uncultivated wet rice fields and it was achieved when the rice production increased from three tons to right tons per hectare.

Since the sustainability of the pump irrigation project was a problem due to high operational costs, Bina Swadaya changed its approach in 1994. Its new objectives were to strengthen the existing SHGs and to increase the availability of the micro finance scheme to the villagers. And a rural bank, BPR Abdiarta Swadaya was established by Bina Swadaya as a course of action to achieve its new objectives. The majority members of Arta Mekar Mulya Group who were micro entrepreneurs and peasants now could borrow up to Rp. 400.000 without any form of physical collateral allowing them to expand their micro businesses or further improving their rice farming which will aid in increasing the productivity as well. The success of the SHG attracted villagers from other villages to become members of Arta Mekar Mulya Group and this greatly freed many villagers from heavy debts as now instead of borrowing from money lenders who charged exorbitant rates of interest, they can seek financial help from Arta Mekar Mulya Group. Another attribute of this SHG is that instead of only focusing on the well-being of its group members, the profits which were the fruits of their success were channeled to address other social needs of the village as well which resulted in shops, bridges and the establishment of other community infrastructures.