Microcredit in Ubud

In general, micro scale traders in Bali have faced great difficulties accessing credit. Since the Bali Bombing in October 2002, this situation has deteriorated still further. Because their assets are very small and the procedure for a loan application is too complicated, they are reluctant to approach banks. With few choices, many micro traders are forced to borrow money from “market usurers” at extremely high interest rates. Typically a usurer charges from 10 – 15 % per month in interest, plus a 6 – 10 % administration fee.

With this scenario, RC of Bali – Seminyak has signed an MOU with the Yayasan IDEP to establish a “Cooperative” and assist micro traders in the Ubud area. IDEP has designed and is now implementing a program that will bring the benefits of community based economic development programs to a wide range of Balinese people. The program is being run with support from many of Ubud’s key community members including the Ubud PKK (Local Women’s Community Management Group), and representatives from the Gianyar Consumer Department, and the Bali Hati Foundation who all understand the urgent need to do some direct action for Ubud’s poorest people.

This Cooperative is designed to get micro traders out of the trap of high payment terms to market usurers that run their operations in most of Bali’s market places. It is a practical solution that offers small scale traders an opportunity to receive micro loans at affordable interest rates, combined with a community based co-operative shop, which sells basic household staples at dramatically reduced rates. The Cooperative will also be a direct channel for our public awareness programs about waste management, health and nutrition and small business development capacity building. This program’s headquarters are based on Jl Tebesaya, Ubud.

The RC of Bali – Seminyak has “loaned” IDEP US$ 2,500 to begin their first Ubud Cooperative. These funds will be paid back to the Club over a three-year period. If this program proves to be successful after the first year of operation, the Club will seek further funding to establish yet another Cooperative.

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