Micro-Enterprise Development in Indonesia: A Conversation with Five Talents Program Director Suzanne Middleton

Each of Five Talents' microfinance programs are tailored to meet the needs of the communities they serve. Here, Five Talents Program Director Suzanne Middleton explains how micro-lending, training and mentoring are transforming lives in Indonesia, where Five Talents partners with The GERHATI Foundation.

What makes the Indonesia program unique among our other programs in Asia, Africa and Latin America?
The Indonesia program is different to other Five Talents programs in two main ways. One, Five Talents was responsible for the development of this program from the very beginning, when the first request came from the Indonesian Anglican church for a micro-enterprise development program among the communities they serve. From board development and training to management and staff hiring and training, Five Talents has been the key partner from the start. Two, GERHATI's outreach is to predominantly Muslim communities. In fact, over 95 percent of the program recipients are Muslim.

If we were to take a walk through one of the communities served by Five Talents in Indonesia, what might we see, in terms of living conditions? What does the family unit look like in such communities?
Many of the communities suffer from poor or non-existent sanitation services, such as sewers or storm water drains. Access to clean water is often difficult and expensive. Many families – which, on average, consist of three to four children – make do with water from polluted water ways, and many suffer sicknesses as a result. Communities are often marked by uncollected rubbish, which pollutes the water ways and areas surrounding houses, attracting rats and other health hazards. Poorer communities are usually in areas prone to flooding, which occurs sometimes multiple times each year.

We talk a lot about the importance of Five Talents' local partnerships with indigenous organizations. Can you explain why such partners are critical to the success of the programs?
Helping indigenous communities and churches to help themselves and achieve meaningful empowerment and self-determination is at the core of the Five Talents mission. Assessing what key indigenous people want to achieve for their communities and country is crucial to working out the best methods of helping them achieve this. Partnering with a local organization enables Five Talents to align values and objectives to a well-governed and well-managed program that knows precisely what it wants to achieve and who to target. A strong local organization is well-grounded in its own environment and is there to stay.

Our partners are always striving to meet the needs of the women and men in the program. What are some of the ways that the Indonesia program has been evolving to meet members' needs?
GERHATI strives to "unlock" the natural gifts and strengths that people have through skills training and provision of a forum that enables them to discover, with each other in groups, the many different ways, individually and corporately, that will enhance their income, knowledge and general quality of life. Basic skills, such as numeracy, literacy, hygiene, book keeping, etc., can be taught by trainers who also encourage dialogue and discussions that help the group learn to work together.

In your mind, what's the measure of success for a program like this? What do you look for when evaluating the program's positive impact on individual group members and on the community at large?
One of the biggest indicators of success is the expression of hope for the future by the individuals and groups that our partner GERHATI works with. When people, after participating in the program for only a few months, begin to see new opportunities and possibilities for their families in terms of education, new business ventures and income opportunities and healthier living, then we can feel assured that the program is on the right track and its mission and vision is being achieved.

Savings-Led Microfinance – It’s Not New, But It Is Transformational

A few years ago, The Economist highlighted a form of microfinance that Five Talents has been practicing for nearly two decades. The story, published on December 10, 2011, praises the savings-led model of microfinance, which involves groups of women and men who pool their savings before drawing out small loans from that pool in order to sustain and develop their micro-businesses. The savings approach to microfinance is much different than the microcredit model that is widely used.

We at Five Talents were delighted to see The Economist's coverage of savings groups, but we would like to make a few additional points that show how savings groups can also be an avenue for community transformation.

Five Talents has been working with this model for nearly two decades.  What is most compelling about the savings group model is that it can reach – and empower – the very poor. In other words, those people who are too poor even to have access to mainstream microfinance organizations that are giving loans of $60 or more.

Through this model, Five Talents has helped to facilitate loans as small as $7. There's the story of Leonie, a mother of eight children in the African country of Burundi. She joined 15 others to form a savings and loan association they called "Nyarumanga", which means, "Let's pray for each other." (In the above photo, the savings group is holding a meeting.)

None in the group had ever saved or borrowed, so in order to create some capital, they all labored together by carrying construction materials for a builder and pooled their pay. With Leonie's first loan of just $7, she bought salt and sold it for a profit in her community.

As it turns out, the primary beneficiaries of her success have been her children. "I can pay for school fees so my children can go to school," she told us. "All will go to school – I won't keep any at home because I was kept at home and I don't want that."

Group-led microfinance can also lead to significant social change. In 2007, Five Talents helped to build a community bank in a rural village in South Sudan. The village was subsequently burned down by a rival clan from a neighboring community, but the bank survived the pillaging. Later, the members who had savings in the bank became a force for reconciliation and brought the different clans together. Now the formerly rivaling clans live in peace and are using their savings to be productive and not destructive.

What's just as important as seeking to bring financial benefits to the poor is seeking to bring the social benefits of financial literacy, leadership development and unity. Thus, savings groups are engines for leadership development, empowerment and dignity – not just for financial gain.