Paper
Reconstruction and Development of the Microfinance System in Nanggroe Aceh Darussalam (NAD), Indonesia
How can microfinance in Indonesia recover from the devastating effects of the tsunami?
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This paper describes a project that aimed at reconstructing and developing the microfinance system in Nanggroe Aceh Darussalam (NAD), Indonesia. The project had a cooperative outreach component that aimed to report on preparations for establishing Pilot Savings and Credit Cooperatives (BQs) in the districts of Aceh Utara and Bireun.
The paper discusses:
- The devastation that the tsunami caused in 2004 and the present need to move from relief to rehabilitation and reconstruction;
- The partnership between the Bank of Indonesia (BI) and German Technical Cooperation (GTZ) in providing technical assistance with a focus on microfinance;
- The project emphasizes the strengthening of five private rural banks (BPRS) and the establishment of a new one.
The paper discusses details of:
- The identification of locations for new BQs and the initiation of two pilot BQs;
- The establishment of the pilot BQs and their cooperation partners and service providers;
- The movement towards a sustainable system of BQs in Aceh.
The paper concludes by presenting recommendations for enhancing the BQ sector in Aceh that include:
- Establishment of new BQs as autonomous, single-purpose financial institutions with the legal status of registered savings and credit cooperatives;
- Self-help-groups (SHGs) as starting points for creating or enlarging BQs;
- A broad membership of shareholders;
- Small share sizes to increase outreach;
- Support at primary and secondary levels to cover establishment costs and investments in working capital.
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