Microcredit body trains members

Fri, 05/09/2008 9:38 AM  |  City

The administration is recruiting staff for cooperatives to manage microcredits disbursed through the Subdistrict Residents Empowerment Program (PPMK), an official said Thursday.

Head of the People Empowerment Board Budi Harjo said the administration needed to recruit and train management staff for the cooperatives, yet to be established, to assure the disbursement would be effective.

"We need at least six months for the recruitment process," he said.

Budi could not be sure how long it would take to train management staff but he said it could last until the end of the year.

He said subdistrict councils, like the existing PPMK organizers, would continue to manage the disbursement of Rp 200 billion (US$21,000) in funds until the cooperatives were ready.

The administration has distributed Rp 400 billion to all subdistricts in the city since 2002. The money has been rolling in microcredit schemes among residents.

The administration recorded around 28 percent of the money had not been disbursed due to poor administration and monitoring.

Management expert Budi W. Soetjipto from the University of Indonesia said quality assistance was important in keeping microcredit running in microfinancial institutions like cooperatives.

"If residents could manage their businesses properly, they would not have problems with repaying loans and could still earn profits for themselves," he said.

Research conducted by the university's center for management studies found four in every five microbusinesses folded due to poor cash flow management, said Budi. -- JP

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