But Refida was fortunate to find a kindred spirit in the Minister of Housing, who supported the idea of making bank credit available to the rural poor. He wished to see Refida's idea established as a prototype in one kampung per village, so that it might spread to other kampungs.

Early Lessons About the Value of Cooperating

As one of eleven children, Refida grew up in a large family that was not well off, but whose members helped each other. In her youth, she worked as a volunteer at orphanages. Refida studied economic management in university, reasoning that it would help her get a job that would allow her to earn enough money to help disadvantaged children.

So in 1993, Refida established the Foundation for People's Settlement to develop a more comprehensive approach to community development. She enlisted her husband, who is an architect, to help design better housing and more healthy configurations for communities.

Winning Over the Bankers

Establishing a new community requires at least 25 families, who band together to qualify for a loan that pays for land and housing materials, with money left over for use as seed capital for business enterprises. To ensure that the loan amount is adequate, the borrowers must be careful to select inexpensive building materials and land.

In Menur, each family borrowed 6.2 million rupiah (about US$885). The bank agreed to collect payments once every four months – a schedule that is tailored to the seasonal nature of agricultural labor. The bank charged 8.5 percent interest, and established a payback period of either 10 or 20 years. Ten percent of the loan was set aside by the bank as a "solidarity fee" that ensures against default by one of the families.

This experience transformed the banks' view of its rural customers, whom it now considers to be more reliable than its commercial customers. The bank makes extra efforts to make its new rural customers happy. For example, a bank officer will come to the kampung to pick-up customers' payments, rather than make them travel to the bank in town, and the bank has donated funds to build a small mosque in Menur.

The 6.2 million rupiah loan pays 90 percent of the total cost of the materials (2.9 million rupiah) and labor (3.3 million rupiah) required to build a simple but sturdy, 36-square meter house. The houses of Menur have cement floors, brick lower walls, bamboo matting upper walls, tiled roofs, two main rooms, and outside kitchen facilities.

Common village facilities include a bruga (a raised, covered platform for meeting and relaxing), a spring-fed cistern, a separate well for bathing, and two communal toilets. Refida and Niam gave kampung residents instruction about how to use and maintain the new sanitary facilities.

© 1999 Changemakers