Microfinance for Post-Disaster Support in the Earthquake Affected Areas of Yogyakarta (D.I.Y.) and Central Java

This paper presents the impact of earthquake on People's Credit Banks and microfinance program undertaken by GTZ-ProFI in affected areas in Indonesia. This is a report of an earthquake that struck the Indonesian Island of Java on the 27 May 2006. The report presents the earthquake consequences. It:

• Describes the losses and damages suffered;
  • The quake took the life of 5,778 people and completely destroyed 139,859 houses. A further 468,149 were heavily damaged, and an estimated 2,111,872 people were made homeless.
• Details the impact it had on People's Credit Banks {Bank Perkreditan Rakyat(BPRs)} in Yogyakarta and Central Java.
  • Some of the BPRs had to relocate their operating office;
  • There was excessive loan restructuring after earthquake;
  • Bank Indonesia exemption directives for affected BPRs;
  • Most BPRs undertook actions to prevent potential losses.
• Elaborates on the policy responses:
  • The Government of Indonesia reacted quickly after the quake and the army aided the immediate disaster relief.

The paper further discusses a proposed GTZ-ProFI (Promotion of Small Financial Institution) program. It aims at increasing the number and volume of microfinancial services accessible to the self-employed and lower income segments of the population affected by the earthquake. The document describes the following aspects of the program:

• Rationale and design considerations;
• Proposed project activities;
  • Loan fund of EUR 500,000 would be used for on-lending;
  • Technical assistance and capacity development measures would be provided for involved financial institutions;
  • A Quick Impact Capacity Development & Knowledge Transfer Center (QUICK) for microfinance in Yogyakarta would be established.