Tag Archives: micro loan

The Generational Cycle of Poverty

The Generational Cycle of Poverty

For many Indonesians poverty is an endless cycle.  One of the devastating elements of poverty is that it is cyclical, and that many families endure cycle after cycle of financial shortfall. Those shortfalls have a lasting impact on families. When children get sick, families will do whatever they have to in order to get their loved ones to recover and become well. If a family doesn’t have cash reserves, they make financial decisions that often take years to recover from.  For those in jobs where there are minimal wages, the ability to recover is impossible.

The value of no-interest loans in the above equation is a very powerful thing. Firstly, it goes to directly help those people in financial mire, the very people who have no reserves, no back-ups, and no collateral to convince a traditional money lender to give them a loan. Secondly, micro lenders (such as Bamboo Micro Credit) offer their loans on an interest-free basis, making sure that the successful repayment of the loan is made without the vacuum-like effect of traditional loans where the interest accumulates in such a way that the financial struggle can be simply too hard a task for many people. Thirdly, a Bamboo loan has flexibility built into the life of the repayment. That means that in times of hardship, (especially when a family member becomes sick or weakened), the loan does not fall into a spiral of debt.

The power of these micro-loans is remarkable. The Indonesian person repaying usually succeeds in paying back all the money1. That has the flow-on effect of re-establishing a financial foundation for each person, along with their family and community of friends and colleagues. Small businesses are delicate at the best of times. An interest free micro loan gives stability in times of crisis, and it offers elasticity in times where finances and resources are already stretched to their limits.

The proof is in the results. The most fruitful ventures evolve where the flow-on effects of a micro-loan not only stabilise a living, they also give sufficient prosperity for Indonesians to safeguard their lives so that their children can be healthier, and experience the benefits of an education that their parents were unable to access.

The power of a micro-loan is amplified when the beneficiary not only profits in a small business enterprise, but he is also able to make provision for his family his children, and the next generation of his community.  Climbing out of poverty is (for some) a brief experience, followed by years of obstruction where they fall back into poverty. More than 68 million Indonesians are at risk of falling back into poverty2. Climbing of poverty is a truly wonderful achievement for some. Using that achievement to break the generational cycle of poverty is where the power of micro lending shows up as the single most effective non-government treatment for the reduction of poverty.

  1. More than 95% of loans taken out through Bamboo Micro Credit are repaid in full.
  2. According to the World Bank 68 million Indonesians are at risk of falling into poverty in 2015 and 2016.

Bamboo Micro Credit … it’s not a handout, it’s a hand up.

About the Author

Insert photo here

David Cook 

David Cook is an Indonesianist, a technologist and an academic interested in poverty, social justice, CSR and Human Computer Interaction. He is a Director of Bamboo Micro Credit.

Living Below the Poverty Line

Many people ask why I remain so interested in the good fortune of Indonesia. Some people even say that I’m obsessed with it.  Few people, however, get to see hard core poverty face to face. We can all say that we are aware of the problem, but few of us engage directly with a family living in poverty. There is a sense of scale that doesn’t quite translate when we simply read about the problem of poverty. Living in Australia, there are of course people living in poverty, and they have great needs. To some extent, the needs of indigenous Australians living in the remote parts of Australia are of such severity that it would relatively easy to look to Australia’s indigenous problem before taking the time to glance over the ocean at our nearest neighbour and see poverty in Indonesia.

For my part, the challenge is not to take an “either / or” view – but rather that we need to address both Australia’s poverty and Indonesia’s at the same time.  Perhaps in that sense – the idea that poverty occurs in Indonesia on a grander scale is a tough thing to grapple with.  In 2015, there are over 30 million Indonesians living on less than $28 a month. They work for less than a dollar a day. In countries like Australia of course, our poorest people are eligible for a range of social welfare assistance, from unemployment benefits, to travel concessions, to free health care in modern public hospitals.

However, the story in Indonesia is far from similar. The people living as Indonesia’s 30 million poorest folk have nothing like the Australian social welfare safety net to help them out. Indonesians living in poverty can survive on a dollar day. They can survive, that is, until they get sick, or until a family member dies. They can survive by working in dangerous and toxic conditions, exposing themselves to health risks that take their toll over the course of a worker’s life. They can survive by living away from their families, their children, and their communities.

The need to lift people out of poverty therefore, is so much more than passing on donations. Repairing poverty is about finding sustainable opportunities for Indonesians so that they can build up a business, or open a small shop, or make something to sell that will give them more than just the food they need to survive. True poverty healing goes beyond the giving of money. It requires finding ways and means for people to explore their own business visions and giving them enough assistance to start their better developed journeys. Will there be some that falter and fail? Undoubtedly. But the value of an interest free micro loan from Bamboo is not a guarantee of a calculated handout to the next level, it is the empowerment of individuals and their families to build themselves a better future with dignity and passion.

Bamboo Micro Credit.    Its not a hand out… it’s a hand up.



About the Author.

David Cook

David Cook is an Indonesianist, a technologist and an academic interested in poverty, social justice, CSR and Human Computer Interaction. He is a Director of Bamboo Micro Credit.

A reminder of how far Bamboo Micro Credit has come.

The story of how Bamboo Micro Credit came to be reminds us of an important message in understanding why we should look to change the lives of others even from the smallest of beginnings

Bamboo was conceived from an idea by Peter Johnston in 2007. He had visited Indonesia regularly since 2004 and realized that there were many poor people there who had minimal income and that there was an absence of State funded financial support systems for people without income. He also noted, however, that many successfully operated small businesses. He became aware that finance for these businesses was difficult to access for the majority, unless they had significant assets. Banks were not interested in lending to poor people, who often resorted to seeking funds from illegal money lenders, who charged extortionate rates of interest. It was clear that relatively small amounts of money could make a significant difference to peoples’ lives.

Peter had many years of experience as a social worker and community facilitator and felt he could use his experience to develop a program to provide affordable loans to poor people in Indonesia. Indonesia is Australia’s nearest neighbour and while the island of Bali is well known to Australians as a tourist destination, the majority of the remainder of the country, its population of almost 250 million, its culture and religions are little known. It is a newly emerging democracy, with a growing economy, but it is still a developing country, with poorly developed Government support services for its population. Unemployment and under-employment are chronic features of the economy and it is estimated that approximately 20% of employable Indonesians are without full time jobs.

During a visit to West Sumatra in 2007, Peter met a local tour guide in Bukittinggi and respected community worker, Fikar, and between them, they agreed to put into place a trial program of micro credit to a small group of local people. Using funds initially donated by Peter, this trial proved extremely successful and Bamboo Micro Credit came into being. The name Bamboo was selected because of the ubiquitous nature of the wood and its remarkable flexibility reflecting the nature of the organization.

In 2008, another branch was established in Bandung West Java with the help of a local volunteer. This was discontinued in 2010, but in 2012 a partnership was developed with PESAT, an NGO established in 1993 which installs clean water and sanitation in villages around Bandung. This partnership, which expanded PESAT’s existing small micro credit operation, is funded by Bamboo and greatly increases the opportunities for Bamboo to offer loans to potential borrowers in rural communities.

A new partnership with Daya Pertiwi Foundation was more recently signed and Bamboo added a third location in Indonesia. Daya Pertiwi has extensive experience in managing micro finance and Bamboo funds are now targeted towards loans for the poorest people in Malang in East Java.

Whilst other possible partnerships are continually being explored, Bamboo continues to make new connections and form new relationships as the micro-lending organisation takes root as an organisation that makes a difference in the lives of some of Indonesia’s poorest people.

Bamboo Micro Credit – It’s not a handout. It’s a hand up.

About the Author.

David Cook

David Cook is an Indonesianist, a technologist and an academic interested in poverty, social justice, CSR and Human Computer Interaction. He is a Director of Bamboo Micro Credit.