The Indonesian earthquake of May 2006 hit the province of Yogyakarta hard, and left more than 600,000 people homeless. More than a year later, hundreds of thousands of people are still living without proper shelter. The Yogyakarta government has only been able to provide housing to 30% of residents with destroyed homes.
In response to this crisis, Relief International launched an innovative Shelter Emergency Loan Fund (SELF) in late 2006. Now, the program is coming to fruition, allowing earthquake-affected families to rebuild their homes and livelihoods for themselves.
During RI’s initial assessment of the disaster, the organization became aware of a strong tradition of microfinance in the region of Yogyakarta. Through the SELF project, RI funds and supports indigenous microfinance institutions (MFIs), which then disburse small loans to clients. The exchange allows earthquake victims to rebuild more quickly and effectively on their own, rather than waiting for government support that may never come.
The SELF program aims to make low-interest shelter reconstruction loans available to approximately 200 households (about 1200 individuals). Early this year, RI made a thorough assessment of competitors, and gave loans of $50,000 to two local microfinance institutions (MFIs) on May 31, 2007. Those institutions then began disbursing funds to clients on June 1, and had disbursed 30 loans to families and households by June 30. In July, RI re-opened the competition and selected a third MFI. That institution began providing loans to clients in August. RI will continue its search for a fourth and final MFI.
The MFIs are supported and trained by RI, and RI oversees the process to ensure efficiency and transparency. Upon request, households can request technical and building assistance from RI’s partner organization, the University of Gadjah Mada Architecture School.
In providing access to loans and financial advice that are not normally available to the poor in Indonesia, RI supports the economic self-sufficiency of individuals, as well as the wellbeing of their community infrastructure.
Livelihoods Program – Ceramic Industry
Kajen, a tiny village on the island of Java, hosts a vital ceramics industry that makes up 10% of the surrounding region’s economy. The 2006 shook the area and crippled many of its businesses.
In response to the emergency, Relief International is rebuilding artisan workstations and teaching villagers technical skills to help bring businesses back onto their feet. All of this will soon happen at a Common Service Facility (CSF). The CSF will be a local meeting place where artisans and producers will come together to solve problems and find solutions to everyday issues facing their villages and families.
And because of the success of RI’s SELF program, the two programs are being linked. RI is giving no-interest loans to local Indonesian micro-finance institutions to provide micro-credit loans to home-based businesses. The synergy created by the combination of these two programs will help to propel the target population to self-sufficiency.