BORROW AND THRIVE: VISION SPLENDID

Better starve than borrow                            

In 2007 knockabout guitar-strummer, tour guide and sometime barista Zulfikar (Fikar) could usually be found serving guests at Bukittinggi’s Bedudal Café, a backpackers’ favorite in the West Sumatra city.

Enter former public servant Peter Johnston (left) seemingly just another footloose Australian trying to understand Indonesia. But this encounter would change not just the two men’s lives but those of hundreds of Indonesians.

Peter was no wide-eyed newbie. His archipelagic wanderings began in 2004.  He’d formally studied the language in Yogyakarta.  So when he harangued against inequalities it was clear his concerns were not freshly found.

He figured the poor were forever shackled to poverty without capital. In his homeland the state welfare system where he’d worked as an administrator and social worker, helped with schemes to kick-start people’s lives. But this was Indonesia where indifference to the plight of the lowly was endemic in banks and government.

So how could the folks in the Lucky Country next door help their less privileged neighbors without being patronizing?  Click light bulb moment: Microcredit.

Great idea – but bars everywhere sweep up grand schemes along with the fag ends and plastic trash come closing time.

Despite his scepticism Fikar kept his mind open.  Over three days and a few more coffees the two men devised a small no-interest loan scheme to help poor entrepreneurs start a business.

It would be called Bamboo because, Fikar reasoned, the plant is strong, resistant, sustainable and multipurpose.  His mother had even used it to make clothes during the Japanese occupation of the 1940s.

But then, as usual, the Westerner left.

“I thought it would all be forgotten once Peter moved on,” he said at a Bamboo board meeting in Bandung.  The Australian members used their own money to pay for travel and accommodation.

“In any case, I had no experience of banking and the credit system – only its faults.”  He’s involved in a long legal case fighting a company that allegedly upped its interest rates without consultation.

What he did have was local knowledge and understanding of the hand-to-mouth way the poor in Indonesia live and the pressures on family budgets.  A smart kid, the youngest of ten children born in Bukittinggi, his ambition was to become a lawyer.

Reality hit: No money, no study.  Plan B – use wits.  He picked up English from the tourists, rapidly became fluent and opened a guide business, Lite n’ Easy. When the haze from burning forests drove overseas visitors away he learned how to fix computers. It was a fickle life.

“I had zero capital and rented a motorbike,” he said. “I was just stuck.”

is mother His mother had warned hiom never to go into debH

His mother had raised him to beware of debt.  “Better you don’t eat than borrow,” she’d said, “avoid loan sharks.”

These are the high-interest unofficial credit suppliers that cruise the meat and vegetable markets, They typically charge Rp 200,000 (US $ 17) to lend Rp 1 million (US $ 83) over 40 days) keeping small businesspeople afloat, or savaging them in a sea of debt - depending on your economic philosophy.

For Fikar there was no ambiguity – but much doubt about the chances of undermining a harsh lending system embedded in the culture.

“I wanted to do something to help the poor get out of their debt cycle,” he said. “There’s no leadership from the government – it’s just about impossible for small people to get ahead.

“I’m a bit of a rebel and despise a bureaucracy that seems to believe that if you can make it more difficult, then why not?  How can you fight an elephant?”

The answer came when Peter made good on his promise with a draft for AUD $500 (Rp 5 million). Fikar, 40, was astonished:  “I told my friends to pinch me

“I lived near the market and regularly passed a café that never had food on display after midday.  I knew the owner and wondered how he could live like that.  So I asked what he’d do with a no-interest loan.

“Of course he wanted to know who was behind it. Why would Australians want to help when Indonesians refused?

“Eventually we lent him Rp 1.5 million (US $125) which he spent on building stock.  Now he has a bigger shop and his wife has a sewing machine which she uses to make money.”

So Bamboo Micro Credit was born.  It’s now an independent secular foundation taking donations from Australians and channelling these to borrowers through Fikar in Bukittinggi and agents in Malang (East Java) and Bandung (West Java).  Hundreds have been helped as the loans are repaid and the money recirculated through new clients.

“We are all smart in Indonesia, we are not buffaloes,” Fikar said. “We have so much potential but are being held back because the banks don’t want to know anyone whose collar is not smooth.

“Not everyone is right for a BMC loan.  They must have plans for a sustainable business, so inevitably some people hate me, but I’m not going to be bothered by their negative energy. We now charge an administration fee of ten per cent but the loans remain interest free.

“We’ve lost a little – but more than 90 per cent of borrowers repay.  If they default their friends and family won’t get loans in future, so there’s social pressure. Yet we have to be tolerant and understand there are other demands on families’ budgets, like paying for weddings, funerals and Idul Fitri celebrations.  Sometimes we have to accept a slow payer so knowing the culture is important. Most applicants are women.

 “I urge people just to be honest and tell me if there are problems with repayments.  Misfortune can happen to us all – but don’t hide from me.  I’m not Dracula.

“The Australian board doesn’t interfere and I only consult Peter if there’s a tricky decision to make.

“Now I think I might get to university.  Then I can really understand the law and use that knowledge to protect the poor.”

The Birdman of Bunulrejo

Even as a small boy Farit Hermansya was an accomplished gunman.

Together with his mates and an air rifle he’d travel to forests near Blitar in East Java and shoot every perching bird within range.

“I killed hundreds,” he said.  “The numbers are countless.”

Then one day he had an epiphany. He’d winged a bird.  It looked in the little one’s eyes knowing it was about to die. There was a brief contact between two living creatures.  Instead of wringing the bird’s neck he tried to save its life.

Farit failed, but at that moment he turned from killer to conservationist and began breeding exotic birds, mainly little finches and parakeets.

It’s a hobby gaining popularity as Indonesians get more disposable income, with many coming to Farit’s home in the Malang kampong of Bunulrejo.  Not all buyers had cages, so he reckoned business might prosper if he supplied both bird and lodging.

His business plan called for Rp 5 million (US$400) to buy wood and tools.  But where to find such a sum?

“I knew it was pointless going to the banks,” he said.  “They want security like the certificate for my home or motorbike.  I have a friend who works as a debt collector – he warned me against even trying.”

But a neighbor told him about a non-government community development organization called Daya Pertiwi that also acted as a Bamboo Microcredit agent.

Farit, 29, scaled back his plans by buying tools second hand and scavenging timber.  He was given a ten month Rp 1 million (US$83) no interest loan which he’s repaying at Rp 100,000 a month.

A big cage can cost Rp 170,000 (US$14) but most average half that sum.  The birds are more expensive with orange colored plumage fetching Rp 650,000 (US$52).

“I don’t expect there’ll be a need to borrow again once this loan is repaid,” said Farit.  “I can expand with the extra money I’m now earning. I tell every buyer not to kill.  I still feel guilty about the birds I’ve shot.”

(Disclosure:  The author is an occasional advisor to Bamboo Microcredit.)

(First published in J Plus The Jakarta Post 1 March 2015)