Aceh Grameen Credit Project, Indonesia

In an attempt to rehabilitate the Tsunami-affected people of Aceh, Sister Beth Del Fierro and Sister Marjanela Sotto approached Grameen Trust to set up a microcredit program in Aceh following the Grameen Bank model, soon after the Tsunami attack in 2004. GT explored the possibility through a fact-finding mission and eventually signed an agreement with the Grameen Aceh Cooperative to implement Grameen microcredit program through its BOT program.

The Aceh Grameen Credit Project (AGCP) was formally launched by Grameen Trust in July 2006 with the financial support from Grameen Aceh Cooperative. As Aceh was worst hit by Tsunami in Indonesia and many people were struggling very hard to rebuild their lives, this area was selected for project operation. Grameen Trust deployed one of the experienced Grameen staff as the Project Director of AGCP. The Project Director recruited and trained the local staff on Grameen methodology to implement the project on the ground.

2008 has been an important year for AGCP, as it opened its second branch in Takengon. In order to serve the poor residing at the coffee growing area of Takengon, a feasibility study was conducted in 2007. Following this fact finding mission, Grameen Trust has signed an agreement with the Whole Planet Foundation (WPF) in January 2008 to implement microcredit program in Takengon by opening the second branch of AGCP. WPF has pledged a total of US$ 780,141 for Takengon branch of AGCP. The first loan disbursement at Takengon branch has taken place on November 11, 2008.

Unlike other BOT projects, the local environment was not at all favorable for the initiation of such a program. The staff of AGCP had undergone tremendous challenges at the initial phase, as the targeted population was just recovering from the mental trauma of such devastation. The difficulty was more accentuated as the presence of many international NGOs made people of this area used-to with charity. It was a difficult task to motivate people who were living on charity to join the credit program. However, the staff has been successful in making people realize that charity is not a lasting solution to rebuild their lives.

The poor people have been convinced that they need to engage themselves in income generating activities if they want to be financially solvent. The challenges that the staff of Aceh branch faced in 2008 has been the fund constraint. In order to solve the fund constraint Grameen Trust had an agreement with Koperasi Grameen Aceh Micro Finance (KGAMFI) in August 2008 to provide an amount of US$ 50,000 as bridging loan to Aceh branch.

The project progress at the initial phase has been slow due to the problems such as language barrier, immigration issues for international staff of the project, shortage of qualified manpower and lack of business opportunities for income generating activities in the area etc. The staff drop-out rate was also high, as INGOs have been providing higher salary as well as other benefits to their employees as compared to the salary range of AGCP and other local NGOs in Aceh. The project operation on the ground started in October 2006. Till December 2008, the project could reach 1557 members and disburse a total of US$ 277,895. Since inception, it has been enjoying 100% repayment rate.

In 2008, AGCP executed staff training workshop in May 2008. The training focused on the role of Field Officers for smooth functioning of the Grameen type program. The staff of AGCP, YAMIDA and MUSLIM AID attended the training program. Two high level officials from Grameen Trust conducted the training.