One of Wadah Foundation’s programs is community economic development (PEM). The goal is to improve the standard of living of the assisted community through the economic sector by optimizing the resources owned by the community itself. To that end, in 2018, Wadah Foundation launched an Usaha Bersama Simpan Pinjam (UBSP) program in all assisted areas, including 4 communities in Sikka, East Nusa Tenggara. The four communities are Wolongpaut, Wolomude, Wuring Lembah, and Pomat.
To join the UBSP program, members are required to deposit principal savings, mandatory savings, and voluntary savings, the amount of which is agreed upon by the UBSP group members. The money collected is used as collective capital to be loaned to members and returned in installments over 10 months with a loan service of 1% per month. If the amount of money collected is too much to lend to one borrower, then the remaining money can be lent to other participants who more need so that there is no more money left in the cash.
Loan disbursement is done using two models: waiting list and lottery. With the waiting list, each UBSP member is free to determine when to borrow, and the loan distribution is adjusted to the time determined by the member. Meanwhile, with a lottery, each member is invited to draw a lottery so that the loan is given according to the order of the lottery number, starting from the smallest to the end.
*Left photo is Wolomude UBSP group – Right photo is Wolongpaut UBSP group.
For this program to run well, Wadah Foundation assists the board and members with the principle of kinship, where each member is assisted personally by providing emotional support and financial management skills needed so that the loan funds can be used appropriately, usefully, and not in arrears. In addition, members are also provided with business management skills training.
In its six years of journey, UBSP in the Sikka region has experienced growth, both in terms of members and savings. For example, in the Wolongpaut community, the number of members at the beginning of its establishment in 2018 was 9 people with an initial deposit of Rp. 10,000. The loan amount disbursed at that time was Rp. 90,000. By 2024, the number of UBSP members in the Wolongpaut community had increased to 27 people, and the amount of savings to Rp. 15,000-Rp. 20,000. The size of the loans also increased to between Rp. 2,000,000 and Rp. 3,000,000. The increase in loan size to 2-3 million was influenced by the additional amount of principal savings of Rp. 100,000 and loan fees.
As a result, members and the community’s trust in the program continues to increase, as indicated by their compliance in not defaulting on installments. This is also a confirmation of the importance of emotional and motivational support and socialization on how to utilise the loan for business development, as well as training on family financial bookkeeping provided by Wadah.
*On the left is the coconut grating activity, in the middle is the thread rolling activity, and on the right is the weaving activity.
So what do members use the UBSP loan for? Some members who met during the impact survey of the Wadah program in Sikka said that the UBSP loan funds were used for children’s education, additional business capital, and business development. They also recognized that UBSP brings enormous benefits to themselves, their families, and their communities. Therefore, they continue to be committed to strengthening and increasing their role in UBSP which has had a positive impact on their economic condition. With UBSP, they can access capital to fulfil household needs, and open or develop businesses without being burdened by technical or administrative requirements as applicable in banks.
One of the mothers met during the survey could not hide her happiness by expressing “I am very grateful to be a member of UBSP, so that I can buy school clothes for my children, pay school fees, and use the loan to buy weaving threads so that I can sell the weaving products to pay the installments.” From her weaving activities, in one week she can sell at least 1 piece of cloth with a price range of Rp. 200,000-Rp. 500,000. The money from selling the cloth is used to meet household needs, develop the business, and pay the installments.
UBSP has been an effective program in improving the welfare of members and communities in Wadah’s assisted communities. With transparent principles and sustainable assistance, this program can continue to be developed to become a sustainable pillar for community economic growth to realize the dreams of the community in achieving a better life.
*Left photo is of the Pomat UBSP group – Right photo is of the Wuring Lembah UBSP group.
Author: Ghewa Yohanes
Editor: Paula Stela Nova Landowero
