Whole Settlement

By Kris Herbst


The residents of Menur, a small kampung (settlement) on the Indonesian island of Lombok, have discovered a new spirit of hope and ambition by designing, financing, and building their own community.

They have constructed a neat cluster of 32 modest houses, connected by brick paths winding through boulders and green shrubs, on a small rise surrounded by patty fields.

Ratna Refida, a James P. Grant-Ashoka Fellow whose perseverance led to the creation of Menur, stands next to a root-bound rock that commemorates its completion. Behind her, women and children gather in a central courtyard.

Menur's residents built their kampung using an innovative "whole settlement" approach that creates a healthier environment, strengthened communal ties, and an opportunity to escape poverty through development of business enterprises.

The island of Lombok remains one of Indonesia's poorest regions, despite its proximity to a booming tourist economy on the neighboring island of Bali, which looms on the western horizon. When drought triggered rice crop failures this past year, some Lombok residents began eating dried cassava to survive.

Menur is occupied by poor, dry land farmers, and is part of the village of Darek. Prior to building their new community, Menur's residents lived a precarious economic existence, renting water buffalo to cultivate fields, and facing hunger when crops failed or prices plummeted. Like many of Indonesia's rural poor, they lived in rough, flimsy structures. Lacking sanitary facilities, they used a nearby river as a toilet, with attendant health problems from polluted waters.

Thirty-two families worked together to select the site for Menur, clear the land, and participate in its design and construction, which was completed in 1996. In the process, they have discovered an interest in self-improvement through education in their spare time, upgrading village facilities, creating business enterprises, cultivating a variety of fruits and vegetables, and engaging in various forms of mutual support. Lethargy is giving way to ambition, and Menur's residents now can see a future for their themselves and their children, according to Niam, the kampung chief.

Niam, the village chief (left, yellow shirt) talks with Ratna Refida (right) and villagers in the village bruga, a covered platform used for meeting and relaxing Menur owes its existence to an innovative arrangement, known as triguna (three-way credit) that allows village residents to collectively apply for a bank loan. The loan covers the cost of land and housing construction, with money left over for seed capital that residents can use to start small business enterprises.

Menur's success has made it a prototype for community development. The ideas on which it is based have spread to five additional sites in Lombok and several sites in the neighboring islands of Sumbawa and Bali. By creating healthy, forward-looking communities in rural areas, the residents may no longer feel compelled to migrate to overcrowded cities in search of a better life.

Battling Uphill

Although the concept of whole community development has proved successful, Ashoka fellow Ratna Refida's initial attempts to establish the idea were an uphill battle. Getting a housing loan anywhere in Indonesia is difficult, and the size of loans is small, due to banks' limited reserves. In rural areas, banks do not extend loans to poor people, viewing them as a poor credit risk because they have tenuous financial means and little or no education in financial matters.

Even the government housing loan bank by passes rural residents, whose income is seasonal and fluctuates with crops and catches, preferring instead to deal with the urban poor who have full-time jobs with minimum salaries, collected at regular intervals. Consequently, accumulating savings and investing for the future are alien concepts to most poor rural residents.

Indonesia's government and non-governmental programs that upgrade housing in Indonesia have generally served only the urban poor. Government aid to rural areas has focused on infrastructure improvements, such as improved roads and access to electricity, that benefit the relatively rich rather than the poorer majority. It took Refida more than two years, beginning in 1994, to persuade community members, government agencies, and private organizations to support her concept of a rural settlement program that addresses housing, environment, income generation and other human needs and is financed by bank loans. One government official told her that he would cut off his ear if she could make it work.

But Refida was fortunate to find a kindred spirit in the Minister of Housing, who supported the idea of making bank credit available to the rural poor. He wished to see Refida's idea established as a prototype in one kampung per village, so that it might spread to other kampungs.

Early Lessons About the Value of Cooperating

As one of eleven children, Refida grew up in a large family that was not well off, but whose members helped each other. In her youth, she worked as a volunteer at orphanages. Refida studied economic management in university, reasoning that it would help her get a job that would allow her to earn enough money to help disadvantaged children. After graduation, Refida founded a development organization that helps children in villages and remote areas overcome poverty through informal education. She observed that the poor conditions in the villages, including unhealthy housing and sanitary conditions, hurt children's ability to learn.

So in 1993, Refida established the Foundation for People's Settlement to develop a more comprehensive approach to community development. She enlisted her husband, who is an architect, to help design better housing and more healthy configurations for communities.

Winning Over the Bankers

Establishing a new community requires at least 25 families, who band together to qualify for a loan that pays for land and housing materials, with money left over for use as seed capital for business enterprises. To ensure that the loan amount is adequate, the borrowers must be careful to select inexpensive building materials and land.

In Menur, each family borrowed 6.2 million rupiah (about US$885). The bank agreed to collect payments once every four months, a schedule that is tailored to the seasonal nature of agricultural labor. The bank charged 8.5 percent interest, and established a payback period of either 10 or 20 years. Ten percent of the loan was set aside by the bank as a "solidarity fee" that ensures against default by one of the families.

This experience transformed the banks' view of its rural customers, whom it now considers to be more reliable than its commercial customers. The bank makes extra efforts to make its new rural customers happy. For example, a bank officer will come to the kampung to pick-up customers' payments, rather than make them travel to the bank in town, and the bank has donated funds to build a small mosque in Menur.

The 6.2 million rupiah loan pays 90 percent of the total cost of the materials (2.9 million rupiah) and labor (3.3 million rupiah) required to build a simple but sturdy, 36-square meter house. The houses of Menur have cement floors, brick lower walls, bamboo matting upper walls, tiled roofs, two main rooms, and outside kitchen facilities.

Common village facilities include a bruga (a raised, covered platform for meeting and relaxing), a spring-fed cistern, a separate well for bathing, and two communal toilets. Refida and Niam gave kampung residents instruction about how to use and maintain the new sanitary facilities. Because each family contributed the labor to build its own house, it was able to set aside the 3.3 million rupiah earmarked for labor to buy two acres of land (at a cost of about 600,000 rupiah). After buying land, the remaining loan funds (2.7 million rupiah) were available to invest in business enterprises.

Menur's residents chose to invest their surplus loan proceeds in water buffalo and goats. In the past, a family would care for a pair of water buffalo that belonged to a better-off farmer, fattening them and then splitting the profit from the sale with the buffalo's owner.

Each family used proceeds for the bank loan to purchase a single, young water buffalo for about 600,000 rupiah. Now two families can put together a team of two water buffaloes to flog a rice field for another farmer, thereby earning about 20,000 rupiah per day, a much more profitable enterprise than simply caring for another farmer's buffalo. And they retain all of the profit from the sale of buffalo after they are fattened.

Menur residents put the income generated from water buffalo into a bank account so that it is available for loan payments, which consume about 50 percent of their income. They have invested some of the remaining funds in purchases of other animals, such as ducks, chickens, and pigeons, which enrich their diet.

Other investments include businesses that produce bricks, parts for the ubiquitous horse-drawn carts called "chi-domos," and bricks for housing construction. One Menur resident used the profits from a buffalo to set-up a small blacksmith shop in which he makes tools, oxen yokes, and parts for carts.

Menur residents, most of whom are illiterate, have invited instructors to come teach them to read and write, and to set-up a small library. They are planning an animal husbandry class, and to build a fish farm with space rented to others for chickens and ducks. Refida is helping to organize a women's group whose members will learn business concepts and how to read and write. These activities have created an environment in which the village children are more enthusiastic about going to school, Refida said.

The kampung's compact design makes more efficient use of land and encourages a more tightly-knit community. Refida is working with kampung residents to encourage mutual assistance. Neighbors share fruits and vegetables from their own land, creating a non-cash economy. They proudly display their crops to visitors, including bananas, papayas, mangos, coconut trees, water spinach, tomatoes, chili peppers, cassava, and peanuts.

Traditionally, high interest rates of 25 percent or more have made rural poverty a miserable trap in Indonesia. Landowners are sometimes referred to as "land leeches." Refida has helped organize ijon (savings clubs) that offer a way out of this "pit of despair" by providing a way to save and invest in the future, she said. These clubs mark a return to a traditional culture of mutual assistance.

Menur's residents have formed a savings club in which each of the 32 families contributes a set amount of money (it may be 1,000 or 5,000 rupiah, depending on economic conditions) to a pool each week, and one family, selected randomly by a drawing, is given the total amount. In a 32-week period, each family wins the pool once. If a family has a pressing need in a given week, such as wanting money to send their children to school, the community may decide to award the pool to that family.

The winning family carefully considers how to invest the money, according to Niam. The financial windfall can provide critical income when there is a crop failure. It may allow a family to rent additional land for cultivation, or expand a small business. A similar pool is based on a quarterly contribution of 100 kilograms of rice by each family.

Refida is organizing a network of 11 such savings clubs from several kampungs in Lombok and the neighboring island Sumbawah, each of which donates 50,000 rupiah to a savings pool. This network also can be used to share business ideas and make trades, e.g., if one village needs soybeans, another may be able to provide them in trade for some other commodity.

Before they created a new kumpung, Menur's residents had no incentive to work for a better future in their spare time, they often went to bed before 7:30 or 8 p.m., or spent their spare time in idleness, Niam said. Now that they are able to save and invest money, they have a strong incentive to care for, and utilize, water buffalo, and they have learned the value of planting crops and working hard, he said. Niam is the first person in the village to buy insurance for his children, and although this is a new concept for the villagers, he said he hopes others will follow his example.

A more tightly-knit community is forming in Menur, and some of the residents are developing leadership skills. They are learning to pool their efforts to improve their lives, such as finding ways to work together to earn extra income at times when they are unable to do farm work, or to organize a play group for the many young children of the kampung.

By developing only one kampung per village, Refida hopes the "whole community" concept will spread to the other village kampungs. When a new community is developed, Refida's organization trains two residents to be "development consultants," who can then help implement this idea at additional sites. In this way, Refida is building a Development Consultant Association for a region that includes the islands of Lombok, Bali, and Sumbawa. She has also founded a network of communities, called the Association of Housing Cooperatives, to promote the development process.


Ratna Refida

Yayasan Kerja Pemukiman Rakyat

Jl. Swaramahardika No. 23B

Mataram Lombok NTB 83121


Tel. 62 370 35288