SME: Small and Medium Enterprise

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The Resilient Farmers on the Foothills of Mount Merapi

For residents of Srumbung Sub-district in the District of Magelang, Central Java, Mount Merapi is considered a friend. Located just eight kilometers from the center of the volcano, Srumbung lies in the Third Ring of Merapi. In other words, disaster is right in front of the residents, waiting to happen.

The people are well aware that every time something happens with Merapi, they will surely feel the impact. “We have known this since we were little, that a disaster can happen at any given time,” said Kandar Priyowibowo, a local resident. In his lifetime, he has experienced three major volcanic eruptions in Merapi; in 2003, 2006, and 2010—all of which created volcanic mudflows that flooded the surrounding areas..

Nonetheless, life goes on. Kandar continues to work on his 2,000-hectare salak (snake fruit) plantation that he inherited from his family since 1997. Like his fellow villagers who also own salak plantations, Kandar’s livelihoods depend on this crop. In fact, the farmers have developed a super quality salak, called Salak Nglumut.

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Resilience – a trait this community embodies – requires hard work and a lot of creative thinking. This is especially relevant in this community, because the destructive impacts of Mount Merapi can often last years after an eruption. When it erupted in 2010, the community’s salak production came to a halt. One resident’s salak plantation of 2,800 hectares was covered in volcanic ash. Under normal situations, a plantation with that size can produce up to 35,000 tons of export-quality salak annually.

The records of the Department of Agriculture in Magelang indicate that approximately 80% or 1,974 hectares of salak plantation in Srumbung Sub-district were completely covered in volcanic ash from Merapi’s eruption, causing total destruction of the plants. The farmers’ loss was estimated up to Rp 1.15 trillion.

At that time, the farmers did not have any mechanisms to secure their assets. When their plantations were damaged by the volcanic ash, they ran out of savings and capital. Many had to take out large loans, some of them even sold off some assets. “When we lived in the evacuation camps, our expenses were actually quite large,” recalled Kandar. Although their basic needs supplied by the government and aid

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continued to flow from humanitarian organizations, community members still had to provide for their families – without any income.

The economic impacts of the 2010 eruption paralyzed agriculture production for up to two years. “We had to wait until things settled down for good, which almost took three years. In the meantime, we had to do something else. Some of us began to grow chilies, while others worked as sand miners,” said Kandar.

Fortunately, Kandar was a member of the Farmer’s Group of Ngudi Luhur. During the recovery phase, the group submitted a proposal to a farming company and succeeded in securing some rice, farming tools (sickles), and fertilizer for salak trees with a total value of Rp 50 million.

Although not all 657 members received this aid package, it was enough for the community to restart their salak production in modesty.

Kandar and other salak farmers who joined the Ngudi Luhur Farmer’s group, were selected in early 2015 to participate in a pilot project of the “Building a Policy Framework and Model of Resilience for SME/Private sector (Membangun Kerangka Kebijakan dan Model Ketangguhan UMKM/Swasta). This program is spearheaded by Oxfam in Indonesia and its partner, IDEA and seeks to become a model to reduce vulnerabilities of Small and Medium enterprises (SMEs) during disasters.

It is envisioned that the program will help to reduce the number of SMEs that can go bankrupt after a disaster, and increase the number of SMEs to recover soon after. The key framework used in this program is a private sector tool called A-BCM (Area-Business Continuity Management). Kandar’s experience in temporarily substituting his income generating activities will be used as a reference case study in the A-BCM, particularly in creating a strategy to develop a temporary substitute business during the recovery phase.

“So far there has not been any significant challenges in facilitating the salak farmers. They are generally very responsive, and since they are all in the farmer’s group, it is relatively easy to organize them,” commented Bambang Herv, a staff member from IDEA. He has been active in facilitating the Ngudi Luhur group throughout the program. He also works with salak farmers from Salam Sub-district.

Farmers already have a simple Standard Operating Procedure (SOP) for Disaster Risk Reduction (DRR), which is very important for them to have it, considering their geographic vulnerability to disasters. “Right now they are drafting an SOP on rescuing the salak plants during a disaster,” stated Bambang. In the A-BCM context, creating an SOP is considered technical capacity building of the SME.

IDEA’s presence in Srumbung has been like a godsend to the farmers. “IDEA

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showed us how to develop our potentials and seek out opportunities. They also taught us how to create an SOP to minimize the impacts of natural disasters,” explained the Ngudi Luhur secretary, Agustinus Suryono.

Although he thinks that this SME is still far from being considered ‘resilient’, Agus has enjoyed learning with IDEA and Oxfam in understanding the concept of a resilient SME. “We are only simple farmers, so it is not easy to understand what DRR is, since the language is too academic for us. But IDEA has continued to assist us by constantly communicating the terms and aspects that are lacking,” added Agus.

Through IDEA’s assistance, the Ngudi Luhur Farmer’s group has also encouraged the Local Government Units (SKPD) of Magelang to become better aware of DRR to help the farmers to be more effective and efficient. Another outcome that the group and IDEA wishes to achieve includes bolstering the community’s resilience and preparedness when disaster happens.

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Flexibility and Disaster Preparedness

The Salak Nglumut fruit has a shiny yellowish-brown color. This snake-like fruit with the size of a clenched fist is harvested in large clusters, and this type of salak is relatively larger than the normal salak fruits.

The fruit has the combination of sweet and sour for its flavor, as well as refreshing, without the sappy taste that one might get from a common salak fruit. Additionally, it is also high in calcium and protein. With all of these great qualities, then it's no wonder that Salak Nglumut is considered to be the star of agricultural crop of Magelang District.

Salak farmers who are part of the Ngudi Luhur Farmer’s Group in Srumbung Sub-district have long certified their products, and that is a main indicator of a Resilient SME (Micro, Small and Medium Enterprise). Their salak plantations have been certified as organic salak fruits. Because of that, Salak Nglumut from Srumbung has become a top export commodity to China.

Unfortunately, these farmers were hit by several disaster in the last few years. According to the Ngudi Luhur group’s records, Salak Nglumut exports to China were decreased drastically after the 2010 eruption of Mount Merapi. Just before the eruption, the area was exporting 251,339 kilograms of salak. In 2011, this number plummeted to around 105,424 kilograms.

Nevertheless, the farmers managed to bounce back. Slowly but sure, they worked to recover their salak production. Luckily, their hard work has shown some positive outcomes. In 2014, the production increased to 216,800 kilograms.

Although at first they struggled to make ends meet as well as managing to cover production costs, the salak farmers have demonstrated their resilience in preparing for future disasters.

“This village has traditionally been viewed as a ‘disaster village’, which in turn has shaped our way of thinking as well,” said Kandar. “Learning from a bitter experience in 2003, we realized that if we didn’t save up, we would be doomed,” he added.

And then, a simple but effective movement began. On Kliwon Tuesdays (according to the traditional Javanese Pasaran calendar), a staff member of Ngudi Luhur’s Micro Enterprise goes around the village to collect cans that were previously given

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out to the group’s members. The previously empty cans which would then be quite heavy with coins.

This movement, “Gurmangatus”, is a micro-saving mechanism that the salak farmers employed to save more money. Gurmangatus, abbreviated from Gur Limangatus, is Javanese for ‘only five hundred.’ Every day, the salak farmers of Ngudi Luhur put at least Rp 500 coins into the can.

This savings scheme can save a member up to Rp 13.7 million. The money can then be used for times when a family must evacuate. “Particularly for the children’s pocket money,” said Agustinus Suryono. Not only they have savings, the group members also used the money as a way for their children’s education insurance fund.

Budi Sumantri, the Head of Rehabilitation and Reconstruction at the Magelang District Disaster Management Agency stated that members of the SME targeted by IDEA’s and Oxfam’s programs can be considered resilient. Resilience in this context refers to adaptation, or one’s instinctive flexibility to adapt to their environment. Although it is an instinctive resilience, it is often unstructured, as demonstrated by the lack of preparedness in credit.

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SMEs that are hit by disasters typically have a high level of credit in the bank. “So, when disaster strikes, banks usually foresee a halted credit for several years. But in this case, the Ngudi Luhur SME only took less than a year to restart their credit,” remarked Budi. This demonstrates the farmers’ agility, flexibility, and preparedness towards disasters.

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The Fall and Rise of Slondok

The road to Kenalan village, Borobudur Sub-district, Magelang District, is a narrow and windy one. After travelling for about 25 kilometers from the district, then one would finally arrived at the center of slondok. Slondok is a cassava product made into crispy chips and can be eaten either as a snack or part of a main meal.

Slondok production is the main economic activity of the Kenalan community. “Slondok gethuk—a form of slondok—is made by mashing the cassava,” said Edi Wahyono, a slondok producer. While he prepared his slondok batter, he explained the difference between slondok gethuk and slondok krepus: whereas with gethuk the cassava is mashed, with krepus the cassava is grated.

Edi is the third-generation of slondok maker. “My mother taught me how to make slondok,” he explained. Slondok making in Kenalan has gone through many facets from one generation to the next. The first generation of slondok makers made the batter and cut it into small round balls with only their hands.

The second generation had begun to use a hand-cranked meat grinder. “Now our machines are powered by dynamos,” explained Edi. He hopes that the next generation will use even more advanced technology to make slondok production more practical thus able to increase the production volume.

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Slondok making in Kenalan is a good example on how innovation can be used to add value to agricultural products. Most Kenalan residents are cassava farmers that harvest once a year. They are then able to add value to these crops by processing them into snacks.

The demand for slondok is quite steady, and oftentimes the community is unable to keep up with the current increasing demands. The main reason behind this is that during certain months, the cassava supply runs low, due to farmers from one village harvesting their cassava all at the same time. As a result, slondok production has declined.

In order to maintain production rates, the community has had to procure cassava from neighboring villages and nearby districts. “Our supply is very minimum at the moment, whilst our demand is quite high,” explained Adang Atfam, the Section Head for Transportation Equipment and Telematics Industry of the Department of Industry, Cooperatives and SME (Disperikop UMKM) of Magelang District.

Slondok makers also must deal with another challenge—disasters. Kenalan village has been hit by disasters quite frequently, making it difficult for the artisans to maintain a consistent production flow. Landslides and typhoons are the two types of disasters that they have routinely endured. And of course, there are other more severe disasters, such as earthquakes and eruptions from Mount Merapi.

During the 2010 eruption of Mount Merapi, they had to stop slondok production altogether for almost three months. “Everything was covered in volcanic ash,” said Edi Wahyono.

At that time, vehicles were unable to access in and out of the village, because the earthquake caused a landslide, which cut off the roads to other areas. Kenalan village, which is already rather isolated, became even more isolated when power was cut off for two months. The cassava ended up rotting underground as a result of the volcanic eruption. “It was difficult to make ends meet, let alone think about our slondok production,” he added.

Under normal situations, it takes about three days to prepare slondok for frying. However, slondok makers must struggle with nature’s conditions every season. During the rainy season, typically between November and February, the quality of the cassava is quite poor, due to the high water content, which in turns affects the quality of slondok for frying.

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In addition to weather conditions, slondok production is not very profitable, since sales rely heavily on an intermediary. For every 10 kilograms of slondok delivered, the intermediary gets to keep one kilogram as part of payment for the service.

Regarding to post disaster rehabilitation, Disperikop UMKM of Magelang has stated that they are currently drafting a Disaster Risk Reduction plan for SMEs. This unit deals with the sub-economic part of the local team for disaster management. “The core of our service is to assist SMEs in marketing, facilitation, and cooperatives, as well as support marketing networks and institutions,” explained Adang Atfam.

During the 2010 disaster, his unit was responsible in rehabilitating SMEs using standards and procedures that at the time were still under development. According to Adang, after a disaster strikes, SMEs need to be able to rebuild their business, which can be facilitated by creating some market activity. It is expected that if access to a market is available, slondok makers will become more motivated to increase their production.

In line with this strategy, Oxfam, in collaboration with IDEA, has been working to assist the slondok SME to strengthen their disaster resilience. They taught the SME to understand disaster contexts and how disasters can affect their business. They also supported the group in drafting various strategies to use before, during and after a disaster in order to ensure continuity of their business. These disaster

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assessments and business strategies are documented in the Business Continuity Plan (BCP), which is drafted for the individual level, and the BCP-Regional, which is targeted at the regional and collective levels.

Introducing: the Women of Kenalan

Of the 440 families of Kenalan village, 30% are Slondok makers—most of which are women. Amongst them is one particular woman who appears to be more active than the others—Kalimah.

This 46-year-old woman lives with her husband, while her children have all grown up and moved out. In her clean and tidy house, that afternoon, Kalimah constantly stirring a vat of melted palm sugar. “I have depleted my supply of cassava, so I am not making any slondok at the moment,” she said as she stirred the pot.

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Kalimah has a number of side jobs when she is not making slondok. She provides massage services, grows chilies and ginger, makes palm sugar and munggleng—a type of rice cracker.

In normal weather conditions, she is able to produce up to one quintal of slondok krepus, which she learned how to do through PKK (Family Welfare Movement) trainings. “Back then we had to grate the cassava using a pedal,” she reminisced.

She has become even more enthusiastic to expand her creativity since she began to attend meetings and trainings held by IDEA and Oxfam. Their programs have helped the community to identify disasters and taught them about disaster preparedness in order to become a Resilient SME (Small and Medium Enterprise). “I don’t think a day would be enough time for me to tell you how much IDEA has helped us to develop,” she said. In addition to learning about slondok making, she also learned about production management and finance.

Imam Setiyadi, one of IDEA program staff, said that the management system in Kenalan village is still quite traditional, in that business finance is intermixed with household finance. Additionally, almost none of the artisans have ever applied for credit with the bank. Imam introduced villagers to Oxfam’s signature method of assessing and mapping markets, called Emergency Mapping Market Analysis (EMMA), which serves to complement the Business Continuity Plan (BCP).

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With EMMA—which can be adjusted to existing conditions—artisans are able to map the production chain starting from the raw materials all the way to the consumer, both in normal situations and during a disaster situation. After discussing together, the artisans produced the following deliverables: a map of the slondok production chain that leads up to marketing, an analysis of slondok finances from the raw materials to retail prices, a seasonal calendar, and a map of slondok production starting from the raw materials to processed goods. “The goal of using EMMA is to identify points within the production chain that were cut off in order to determine where and when a program intervention is needed,” explained Imam.

Kalimah uses the EMMA method to organize her production accounting. “Using EMMA, I now know how much capital I am spending and how much profit I am getting,” she said. She added that she always puts her profits in a savings account. “There are so many types of expenses in the village, like giving a donation to our neighbors that are having a big celebration,” she explained.

Despite the many expenses, Kalimah stated that she was able to put away between Rp 200,000 and Rp 300,000 a month. This savings has enabled her to finance her children’s weddings, purchase a motorcycle (in cash), and contribute to her children’s purchase of a car. “I have advised other women to also start a savings account and begin recording their expenses and profits,” she added.

It has become Kalimah’s priority to embody the values of a Resilient SME, having learned from the impacts of the earthquake [in 2006] and frequent Mount Merapi eruptions. “That night, I heard a thunderous sound and the sound of tree branches breaking. We did not know what to do, whether to remain in the house and potentially have the roof fall on us, or go outside,” she recalled. She later found out that the roof in her kitchen fell through, destroying her slondok production area.

Due to uncertain conditions and loss of power for two months, Kalimah’s slondok production came to a complete stop. “The cassava was also ruined from the eruption. They have blue spots,” she explained. Nonetheless, Kalimah’s resilience instinct prevented her from despair. Although at first she and her husband were unsure how to restart their production, they began to process the available cassava into gaplek, sliced dried root of cassava.

After two months, they began to purchase some raw materials and equipment to start producing slondok krepus. “We were lucky that there was someone to help us with

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supplying the ingredients, in that we did not have to pay for the cassava, but would pay them back later after we sold our slondok,” explained Kalimah. Because of this, she is a lot more confident with her business.

For Kalimah, all of these experiences, particularly the one where her business was shut down due to disasters, are valuable and useful in drafting the Business Continuity Plan (BCP). This BCP will ensure that businesses are not negatively impacted when disaster strikes—essentially ensuring the continuity of businesses like Kalimah’s. Through the Building a Policy Framework and Private Sector Resilience Model Program, IDEA and Oxfam have facilitated the drafting process of the BCP for Kalimah and other slondok makers.

Resilience and Continuity: Not so Hard, yet Not that Easy

The Institute for Development and Economic Analysis (IDEA), is Oxfam partner that based in Yogyakarta, an advocacy organization focused on development planning and budgeting, which also includes Disaster Risk Reduction (DRR). “Essentially, DRR is not such a new concept for us,” stated Sunarja, the project manager for the Building Policy Framework and SME/Private Sector Resilience Model program.

Although DRR itself is not a new concept for them, applying DRR concepts for SME is. This program began in early 2015; so, how has it faired so far?

The organization conducted an assessment and coordinated with the Local Disaster Management Agency and the Local Development Planning Agency that looked at disaster prone areas, areas with large numbers of SMEs, and areas with many government programs. As a result of this analysis, the team decided to choose salak farmers and slondok makers as participants in the program. Both SME groups would then become models in reducing vulnerabilities to disasters, in order to help reduce SMEs that go bankrupt in the wake of disasters as well as increase the number of SMEs that can recover immediately after a disaster.

Micro-enterprise owners, such as the slondok makers in Kenalan village, and small to medium enterprise owners, such as the salak farmers in Srumbung Sub-district, all have the obligation to ensure their own resilience and business continuity in a disaster. However, it is also the obligation of the government, public, and private sector to

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assist these communities in ensuring resilience and business continuity. In this effort, Oxfam utilizes a resilience framework called Area-Business Continuity Management (A-BCM) or the Business Continuity Plan (BCP) for individuals and for regions (Regional BCP).

However, introducing the BCP concept to salak farmers and slondok artisans who are only concerned with production and marketing is no easy feat. “During the first few meetings, talking about DRR concepts to a group of people who think that disasters are a given was very difficult. Only after five meetings did there begin to be a change in understanding,” said Imam Setiyadi, a program staff member in charge of facilitating the slondok artisans in Kenalan village.

Imam recalls that during the impact and risk mapping exercise, only two slondok makers were present.

Ideally, implementing the BCP document is like conducting a preparedness simulation where actors rescue their assets during a disaster. Miraculously, IDEA and Oxfam, along with their SMEs were able to draft a Regional BCP document in a relatively short period of time. “I let them tell their stories instead of conducting formal interviews. That way, I was able to get more information,” said Imam, explaining his secret for completing the multi-sectoral BCP in such a short time.

These inter-sectoral meetings, involving the SMEs, the government, and the private sector, opened up a space for the sharing and exchange of information. In addition to the SMEs sharing information about their experiences, they also heard information from the government and private sector, which is important for all parties to know.

By default, the government is the main stakeholder that creates policy on SMEs, both

for normal conditions and disasters. Additionally, the private sector also plays a role in providing logistical help and other types of aid after a disaster strikes. It is envisaged that the government and private sector draft a policy to support SME resilience towards disasters.

“We learned what a resilient SME would look like,” said Kamto, the Head of Development Affairs in Kenalan village. “Before, we could only despair in the face of a disaster,” he added. He recalled having to sell his livestock assets, such as chickens and goats, in order to revive his slondok production and make ends meet after a disaster. “But after IDEA and Oxfam intervened, we are now better prepared for before, during and after a disaster,” he stated confidently. Additionally, the

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Standard Operating Procedures (SOP) for draught, landslides and earthquakes are continually being developed and strengthened in the village.

Salak farmers of Srumbung sub-village are also working to improve their resilience. “Not all farmers understand DRR concepts,” said Agustinus Suryono, the secretary of the Ngudi Luhur Farmer’s Group. He conceded that it took some time to implement the DRR concepts with his fellow farmers. It was especially challenging and confusing during the drafting phase of the Regional BCP, since the language was too academic. “IDEA helped us during this process since most of our meetings involved sharing experiences. They also continued to support us with drafting the Regional BCP, so now we are better informed as to what we really need,” he explained.

Agus added that post disaster, they realized that farmers actually still have an abundance of resources that they can utilize, without having to always rely on external aid.

Before an SME is able to draft a Regional BCP, they must be able to first draft an individual BCP, according to their own production rates. This is done so that groups can map the impacts of a disaster to their businesses as well as efforts needed to recover their business post disaster. Furthermore, it is also an important tool to plan disaster risk reduction measures and steps needed to accelerate recovery. Finally, this plan can also be used in maintaining their financial situation so they can prepare for immediate recovery after a disaster occur.

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The Regional BCP itself reflects several aspects, namely: (1) an analysis of disaster risks and SMEs; (2) a comprehensive strategy for SMEs in all stages of disaster (prevention and mitigation, emergency, and rehabilitation and reconstruction); (3) a multi-stakeholder partnership for business resilience at the regional level.

The Right Kind of New Investments

During the 2010 earthquake and Mount Merapi eruption, salak farmers of Srumbung Sub-district, Magelang District, were affected both directly and indirectly. Their salak trees and plantations were destroyed, as well as their farming and transportation equipment. Furthermore, many farmers stopped working, and those who continued had very little motivation to do so. They also faced pressure from their creditors who required the farmers to pay back their loans that had come due. Finally, due to the interruption in production, the farmers lost trust from their buyers.

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The government channeled up to Rp 134.261 billion in aid to help recover the communities’ economies. Additionally, they also provided aid in the form of seeds, farming equipment, organic fertilizer, NPK, and salak stems to the tune of almost Rp 1.5 billion.

Was this aid effective for the salak farmers? According to Kandar Priyowibowo, a member of the Ngudi Luhur Farmer’s Group, most of this aid was not on target. He referred to the example of the salak leaf mincer that the government donated as aid. Although the tool worked perfectly fine, the farmers were unable to use it to its maximum potential, because it was not adjusted to their needs.

Agustinus, the group’s secretary agrees. “Most of the government’s donations were not what we expected, especially in terms of their qualities,” he said.

Small and Medium Enterprises (SMEs) actually have the knowledge and local wisdom to solve problems during a disaster. For example, salak farmers would cut off the leaves that were damaged by the volcanic ash, allowing the salak buds to continue to grow, instead of growing new ones from seed.

Three years into the government aid, there seems to be a marked difference in salak production between farmers who used government-donated seeds and farmers who relied on local

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wisdom. Farmers who continued to use their old salak trees actually produced more salak than those who used the new seeds.

IDEA and OXFAM are currently facilitating the procurement of five salak leaf mincers for the farmers. “We are working on them right now,” said Bambang Hery, one of IDEA program staff member who is in charge of supporting salak farmers in Srumbung Sub-district.

The Regional Business Continuity Plan (R-BCP) outlines six post-disaster strategies for SMEs. These are ; capacity building, temporary businesses, new investments, transfer of risk through business insurance, risk sharing, and establish new businesses.

Since this plan was drafted in early 2015, many of the above strategies have been pursued to create resilient SMEs, both at the individual level and at the regional level namely in Magelang District. With this R-BCP, new investments that are really needed by SME actors can be appropriately identified.

In contrast to the salak farmers, whose biggest needs are the salak leaf mincer that are needed to create organic fertilizer, slondok artisans in Kenalan village identified that their biggest need was a generator. They learned from their experience in 2010 when it took two months to fully restore power and the communication systems in the area. Electricity was the key factor in their business continuity.

As a result, OXFAM and IDEA delivered a 12,000-watt generator to the village. “This generator is like a first aid kit that we can use for lighting when there is a disaster,” said Kamidi, the Kenalan village head. This generator will be able to illuminate 20 homes, or up to 10 slondok-producing homes.

The generator can even be moved according to the needs. “When used to support slondok production, the generator can be moved closer to those artisans whose homes are used to make slondok to power their grinders,” he added.

It is incredibly important to establish good communication with relevant Local Working Units and the private sector when trying to identify the right type of aid for SMEs in a disaster. Moreover, this will also help accelerate the recovery of production facilities and restore the regional business climate during the emergency response phase. An integrative recovery approach for SME actors is a key in creating resilient SMEs.

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A Flexible and Resilient SME Forum The 2010 eruption of Mount Merapi is considered a cyclical eruption that occurs every 40-60 years. This was a very explosive and destructive eruption, causing a large-scale evacuation that lasted for two months. Data from the Emergency Operating Center of the National Disaster Management Agency shows that the number of residents in Magelang District that had to evacuate reached 93,114 people. Meanwhile, the destruction caused a total loss of Rp 2.866 trillion, with the biggest loss endured by the economic sector, in which Small and Medium Enterprises (SMEs) were included. To be more precise, SMEs in the area suffered a direct loss of Rp 3.42 billion and an indirect loss of Rp 8 billion. Moreover, the closing of markets due to the eruption also caused a loss of Rp 239.33 billion. This experience reinforces the need to think about ways to prevent SMEs from suffering such a great loss during a disaster as well as how to promote quick recovery. The longer SMEs suspend their business, the higher their expenses to make ends meet, as well as the amount of assets they might need to sell. In turn, this could lead to more loans.

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The criteria of a resilient SME have been outlined in the Regional Business Continuity Plan (R-BCP) with the following indicators: understanding of disaster risks, good governance, Disaster Risk Reduction (DRR) investments, and disaster preparedness capacity building. “However, many still do not understand the bigger picture of how the R-BCP in DRR can work for SMEs,” said Sunarja, a staff member of IDEA

One way that this bigger picture could be better realized is by holding a multi-stakeholder forum. Fortunately, IDEA has always had a good relationship with several local agencies, including the Local Disaster Management Agency (BPBD), the post-disaster management department of the Local Working Units (SKPD) of Magelang District and the Department for Industries and Cooperatives (Disperinkop), as well as the participating SMEs and the private sector. These

relationships led to the founding of the Communication Forum for Disaster Resilient SMEs. “I’m the one who thought of the name,” joked Adang Atfam, the head of transportation and telematics industry in Disperinkop of Magelang District. He also explained Disperinkop’s role in the forum, saying, “We promote disaster risk reduction, and when a disaster strikes, we deal directly with the SMEs.”

Within its mandate, Disperinkop covers three areas, namely industries, cooperatives, and SMEs. “That is why when the need arises, we are the ones who do the appraisals. Disperinkop assesses who is entitled to how much aid,” Adang explained, referring to his experiences in 2010. “In other words, BPBD answers to the top, while we go downward, to the SMEs,” he added. Budi Sumantri, the head of Rehabilitation and Reconstruction of Magelang BPBD conceded that not until recently was there a focus for DRR in SMEs, both at the district and provincial levels. “In my department, our only program is a sort of recovery of business owners,” he explained. For example, the National Agency for Disaster Management (BNPB) and the Magelang BPBD provided a stimulus for salak farmers after a disaster. However, only after initiatives from BNPB and Oxfam, in collaboration with the Magelang BPBD and IDEA, did discussions on sustainability of the local salak

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business occur. “This is the first time that a regional business continuity plan, or R-BCP was in place, because there had never been anyone who focused specifically on micro-enterprises until now,” he added. Records show that there are 58 SKPDs from the village to district level that deal with DRR in SMEs, but only few had been involved in discussions of the R-BCP. “Because this is a multi-stakeholder effort, we should not be comparing ranks or departments. Everyone must pitch in,” Budi stated. Furthermore, he stated that in order to be effective, the communication forum for SME resilience should not be a formal one. “This is a very strategic forum, so there is no need to formalize it. Inter-sectoral meetings can be flexible and carried out over coffee. If we formalize it, then there would need to be some sort of monitoring,” he explained. The Local Mid-term Development Plan (RPJMD) already oversees a formal institution in this area, since disaster management is included in the sixth RPJMD. “The Communication Forum for Disaster Resilient SMEs will be in charge of making sure that SME is included in the disaster management portion of the plan,” Budi added. Conceptually, the forum serves to diversify the program, in that it complements both the beneficiaries and aid provider. A flexible communication forum is important given the rigid and structured nature of government administration planning processes. Adang agrees with Budi Sumantri, saying that members of the communication forum do not necessarily have to represent their agencies. “That way we don’t have to worry about personnel changes when the government does a job rotation,” he said. What is more important is that each of the members has a concern for disaster risk reduction, especially for SMEs. “This forum makes them aware that SMEs have resources that they can utilize, including networks that larger industries also need,” he added. Budi Sumantri hopes that the Communication Forum for Disaster Resilient SMEs can be effective in providing support that is appropriate and right for SMEs, given its concern for its fellow citizens. “Essentially, we need to be able to plan what is

needed for them, far in advance of the donors,” he explained. If needed, forum members should be able to help each other as well—not just be a recipient of aid. “The more meetings we have, the better understanding we will have of what the SME actors will need,” Budi concluded.

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Sthrengthen

Community’s Resilience

in Agam District

Oxfam - Jemari Sakato

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RESISTING EARTHQUAKE AMENSIA

The earth began to shake, buildings collapsed and trees fell over. People were running in all directions. Immediately afterwards, huge waves that towered over homes along the coast began to sweep everything in their path, both moving and inanimate objects. It was almost impossible for anyone to have avoided the waves.

The 2004 earthquake and tsunami that struck Aceh seem to have made everyone more acutely aware of the dangers that lurk inside of the earth, and that disaster cannot be controlled by human beings. What can be done, however, is to anticipate disaster in order to suppress the potential loss of the impacts.

There are many areas in Indonesia that are prone to disasters, including those that have been affected by earthquakes, flooding, coastal abrasion, typhoons, and landslides. Despite these risks, many communities still insist on living in these types of areas—most of which are considered as ‘home’.

Communities living in these disaster-prone areas have learned to adjust and adapt to the best of their abilities. However, a more structured and planned preparedness is essential, especially in preparing for more immense disasters, such as the Mentawai Megathrust. Scientists predict that a disaster of this scale could trigger a massive tsunami on the western coast of Sumatra—a ticking bomb waiting to explode.

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Agam District, located on the western coast of Sumatra, is located not far from the epicenter of the 2009 earthquake that devastated Padang city and surrounding areas. On the eastern part of the district lie Mount Marapi and Mount Singgalang, two volcanoes that have yet to reveal their true strength. “West Sumatra is like the mini market of disasters, and Agam is the most complex area in this province,” said Bambang Warsito, the operating chief of the Local Disaster Management Agency in Agam District.

The number of people living in this vulnerable area is quite high; out of a total population of 459,155 people, approximately 148,000 people are considered vulnerable. Some amongst this group live in Tiku Selatan nagari, or village. Fortunately, Oxfam and its partner organization, Jemari Sakato (Jaringan Kerja Pengembangan Partisipasi Indonesia Sakato/ Network for Participation Approach Support West Sumatera), are working with communities in the village through the Deepening Resilience project. “Oxfam’s DRR program is more comprehensive [than others], which creates a good challenge for us,” said Sarimundanas, a project

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manager at Jemari Sakato. One of its goals in this program is to create resilient Small and Medium Enterprises (SMEs) in Agam District.

Secondary data from the Department of Cooperatives, Industry and Trade in 2013 indicates that Tiku Selatan nagari had 133 SMEs in the industry sector and 390 MSMEs in the trade and service sectors. Based on typical SME characteristics, many of these enterprises are categorized as micro and small enterprises, which is characterized by a total profit of less that Rp 50 million annually and less than 10 employees.

SMEs in this area are typically located approximately one to two kilometers from the coastline. Therefore, the results of a risk assessment of SMEs done by Oxfam and Jemari Sakato estimate that if an earthquake and tsunami were to hit the area, approximately 523 SMEs would be affected and their productions would be suspended. The estimated loss of assets could reach up to Rp 4 billion.

Prior to the implementation of this program, many local SME actors did not have any business insurance, a back-up plan for the business in case of an emergency or disaster, nor a post-disaster capital recovery plan. The paradigm of resilient SMEs has yet to become an important concern for local communities, which is compounded by the lack of understanding in disaster risk reduction (DRR) concepts. “This is where the Deepening Resilience can play an important role for the SMEs to develop DRR awareness amongst the SMEs,” remarked Imran.

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NOT PREEMPTING GOD

Changing a community’s paradigm is easier said than done. Socio-cultural factors play an important role in determining success in changing a community’s world view, including beliefs on disasters.

“There seems to be some kind of notion that disaster risk reduction is like pre-empting God,” said Zawirman, referring to his community’s reaction to the government’s socialization of disaster management. Zawirman is the Wali Jorong, or village head of Pasir Tiku of Tiku Selatan, Agam District in West Sumatra.

As more non-governmental organizations (NGOs) like Oxfam and its partner, Jemari Sakato continue to promote and work with communities to raise their awareness on DRR, these strongly held beliefs have gradually eroded. “I think that our community in Pasir Tiku has changed 180 degrees, in that we no longer think that DRR is an attempt to preempt God,” Zawirman added.

Community members now understand the importance of capacity building in DRR so that they know what they need to do during a disaster and afterwards, which in the end helps to minimize risks.

Experiences from major earthquakes in 2006, 2007 and 2009 made them realize that they needed better capacity in disaster situations. Moreover, they also realized that

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earthquakes have both direct and indirect impacts on the local economy.

Most members of the community lost their livelihoods, taking years to recover. For example, rice fields were covered by landslides and many cottage industries had to close because their facilities and equipment were destroyed. “It was only ten days after the earthquake that the fisher folk dared to go back to sea,” said

Zawirman, who had previously worked as a captain on a fishing vessel for 11 years.

Together with the local government, Oxfam and Jemari Sakato continue to educate the community, promoting the understanding that disasters are unexpected events. “And because of that, we need to minimize the risks. We should not be vulnerable all the time,” Zawirman added.

Nonetheless, a paradigm change is only the first step for Oxfam and Jemari Sakato. “It is good that communities can save themselves in a disaster. But what then?” asked Imran Sarimudanas of Jemari Sakato.

A strategic step in strengthening disaster preparedness for Small and Medium Enterprises (SMEs) is creating a joint preparedness plan. Furthermore, there needs to be a synergy of disaster preparedness plans amongst the government, SMEs, and the private sector, which will inform the best recovery plan for the SMEs. This is where the Business Continuity Plan (BCP) will be key. “The BCP is a dynamic document that includes assessments on hazards, vulnerabilities, capacity and risks to business continuity in disaster prone areas,” added Imran.

Niko Rinaldi, a Jemari Sakato staff member in charge of the Resilient SMEs project also hopes that disaster management plans (including activities before, during, and after a disaster) will be synergized with working plans of related Local Working Units (SKPD), such as the Department for Cooperatives, Industry and Trade. “Take for example the case of an SME in Tiku Selatan. Many of its planned activities, such as disaster risk reduction training and the identification of alternative raw materials and marketing methods in a disaster should all be initiatives that an SKPD like the Department for Cooperatives, Industry and Trade should take into consideration,” explained Niko. Without proper synergy, the BCP is useless during a disaster.

In fact, it is imperative that these various post-disaster action plans be integrated into the district-level earthquake and tsunami contingency planning. “It would be very

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interesting if there were a sectoral contingency plan that includes recovery for SMEs,” added Niko.

Recently, Jemari Sakato and the Agam District Local Agency for Disaster Management (BPBD) discussed the district contingency plan. Joined by Oxfam, Jemari Sakato promoted the idea of incorporating the SME BCP into inter-agency planning pertaining to disaster management in Agam. “One of our partner SMEs was invited to join the district contingency planning team,” said Niko proudly.

Recently, Jemari Sakato and the Agam District Local Agency for Disaster Management (BPBD) discussed the district contingency plan. Joined by Oxfam, Jemari Sakato promoted the idea of incorporating the SME BCP into inter-agency planning pertaining to disaster management in Agam. “One of our partner SMEs was invited to join the district contingency planning team,” said Niko proudly.

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WOMEN ARE BECOMING MORE RESILIENT

One of the first steps in creating a Business Continuity Plan (BCP) is realizing one’s role as a business actor.

Take for example Yuli, a woman from Malang, East Java, who moved to West Sumatra with her husband 17 years ago. “I didn’t know what an SME was,” she explained. A friend of hers was involved in the village’s Disaster Preparedness Group, part of a program that Oxfam and Jemari Sakato started in 2012. This friend later invited her to become part of the Deepening Resilience Program, aimed at creating resilient SMEs.

In her spare time, this 40-year-old woman and mother of three, likes to knit and bake pastries to support the family economy. “I learned how to knit from my family,” Yuli explained.

However, it is difficult to find inexpensive wool in her village, Jorong Pasa, Agam ditrict. As a result, she must travel to the capital city, Padang, and also Bukittinggi, to purchase affordable wool for her micro-enterprise.

“At first, I knitted some clothes for my daughter’s dolls. Then, my neighbor saw my work and liked it,” she said recalling the start of her knitting business. Now, she makes a variety of different knitted goods, such as TV and audio set covers and engagement dowry covers.

As it turned out, Yuli was not the only woman in Nagari Tiku Selatan who did not realize that they were SME actors who played important roles in supporting the local community, particularly in workforce absorption. This sub-village, or jorong, is home to many emerging SMEs. Secondary data from the Department of Cooperatives, Industry and Trade in 2013 shows that there are 359 workers in this sector, covering seven different types of production, including fish processing SMEs, traditional cosmetic cottage industries, fish chips (rakik maco) cottage industries, and embroidery artisans producing head dresses and worship (salat) equipment.

During an afternoon in mid-June 2015, a group of SME women gathered at Jemari Sakato’s field office. This was one of many meetings they had previously had, typically characterized by laughter and a cacophony of

diverse conversations. This time, they were gathered to discuss product packaging.

“I want to learn more about packaging, but I don’t know the name of the machine for packaging,” said Evimala, who also goes by the name Bibik. Bibik makes a kind of

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cold powder that acts as a sunscreen, an important product for coastal communities. This rice-based product is locally known as “Badak Bareh”.

Bibik tried hard to remember the name of the packaging machine that she needed. Mulia, an embroidery artisan from Jorong Banda Gagang, then advised, “draft a plan, then give it to Jemari.”

A few months ago, these women did not know each other, much less have the initiative to draft a Business Continuity Plan (BCP). Following the program intervention of Oxfam and Jemari Sakato, they began to learn more about SMEs resilience. They are now trained in drafting a BSP, are able to independently identify risks to their business’ continuity, and also have the availability of support from relevant stakeholders in drafting the BCP document itself.

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Each of the women live in sub-villages, or jorongs, that have different levels of vulnerabilities. Those who live in Dare hamlet, for example, are particularly vulnerable to tidal flooding, whilst those in Banda Gadang are exposed to salinity intrusion and coastal abrasion.

Moreover, earthquakes and tsunamis are also potential disasters that could affect these coastal sub-villages. “And if that were to ever happen, all of these communities would be wiped out,” said Nico of Jemari Sakato. Nico works closely with the group of women, especially in supporting the creation of individual BCPs, an output of the Deepening Resilience program.

The women, in turn, are very grateful for the support they received so far. “We now know who to contact in a disaster,” said Yuli, as the other women agreed. “Without guidance from Jemari Sakato and Oxfam, we would be a mess. We would only be expecting aid from the government, without realizing that there are things that we

can do on our own before asking for aid,” she added. Many of the women agree that the regular meetings and exchange of information have motivated them to better themselves.

Yuli regrets that she has not yet succeeded in promoting her newly acquired knowledge in resilient SMEs to her fellow neighbors. “This is very important knowledge, but when I talk to them about it, they think that I am pre-empting God,” she explained. She added that she found it

difficult in writing the BCP in the beginning, because it had been a long time since she had done so much writing that she almost forgot how to write.

Mulia, who now employs four employees in her embroidery business, agrees with Yuli. “Help does not always have to be in the form of money. What Jemari Sakato and Oxfam gave us was knowledge—much more valuable for us,” she stated. Increased motivation is also an added bonus. Mulia is excited about sharing her sewing and embroidery skills to other women in her sub-village. “The important thing now is to share knowledge and skills,” she said.

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PRODUCTION AMIDST EVACUATION

The Small and Medium Enterprises (SMEs) supported by Jemari Sakato and Oxfam have gradually been making progress in drafting their Business Continuity Plans (BCPs) according to their respective industries. A big part of this process was a number of trainings that were conducted in mid-April at the assembly hall of the Nagari Tiku Selatan office.

Despite initial difficulties with technical jargon, members of the local SMEs were able to complete their individual and regional BCPs. These plans incorporated disaster risk reduction (DRR) concepts, SME financial preparedness management plans for disaster prone areas, and how to build Resilient SMEs.

However, there are still some challenges in drafting the Regional BCP (R-BCP) due to the lack of time of business owners to discuss the plan. It is very difficult for them to find time to do this amidst running and managing their businesses. “For example, the fish processing group rarely comes together to discuss their problems,” said Imran Sarimudanas of Jemari Sakato.

In contrast, SME members have no problems in completing their individual BCPs and fully enjoy doing it. They were able to identify several disaster risks that could potentially threaten their business’ continuity. They were also able to analyze the availability of support from several related stakeholders in drafting their BCP. One of the SME members even stated that their BCP is ready to be taken to the next level.

If a disaster were to happen, Mulia, an embroidery artisan, would have to leave her heavy embroidery machine behind. Nila, who makes rakik maco (fish chips), would have to wait patiently for a supply of fresh fish before she could resume her business post-disaster. On the other hand, Evimala, also often called Bibik, refuses to despair. This woman, who sells up to 10,000 packets of “Badak Bareh” per month, has a brilliant plan to protect her assets, before, during and after a disaster.

During the 2009 earthquake, Bibik, whose home was on the coast, sought refuge at her relative’s home that was located on the hill, far from the beach. With its spacious yard and fertile ground, the house on the hill was transformed into an evacuation site. After having learned about BCP, Bibik sees that empty lot as an opportunity. She convinced the land owner, her relative, to set aside a small plot to grow her raw materials for her business.

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In support of this idea, Jemari Sakato and Oxfam provided the capital for Bibik. “We supported her with Rp 600,000 to purchase the partitioning nets and seeds,” said Niko Rinaldi of Jemari Sakato. This activity is one of many action plans of SMEs in the traditional cosmetics production. The raw materials for Bibik’s business included rice and traditional medicinal herbs.

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Currently, Bibik obtains her raw materials from the garden in her front yard, which is located on the beach. Because of that, a major part of this SME’s preparedness plan is to have a backup storage place for the raw materials, particularly the medicinal herbs, near the evacuation site on higher ground. “This is our preparedness plan for business continuity in case of a disaster,” said Bibik.

In her BCP document, Bibik outlines that she currently requires 40 liters of raw materials per month, has a total of Rp 3 million in assets, and a gross income of over Rp 8 million per year. Bibik believes that even if she has to stay at an evacuation site during a disaster, she must be able to continue producing her cosmetics, which can be done by moving her raw materials to the evacuation location. Bibik is in position to become a Resilient SME.

In terms of the R-BCP, the SMEs in the fish processing production, which collectively owns 40 anchovy storage units in Jorong Pasir Tiku, are very much prone to earthquakes and tsunamis. As a result, they must understand the potential impacts that those types of disasters might have on the community and the local economy. “Furthermore, the Department of Marine and Fishery Affairs, together with the Department for Cooperatives,

Industry and Trade, should take this into account when considering the recovery options,” said Niko, the point person in charge of Resilient SMEs at Jemari Sakato. Moreover, he believes that frequent discussions on this issue will help to build awareness amongst related SKPDs.

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PERTNERING WITH A STRONG PLAYER

Many of the products sold by local SMEs that are typically made using traditional methods have quite a big market locally. Interestingly, almost all of the SMEs that are facilitated by Oxfam and Jemari Sakato in Nagari Tiku Selatan use their own capital and have yet to establish partnerships with other institutions. For example, using only Rp 200,000 as her capital, Yuli was able to generate a total income of Rp 6 million per year, producing on average 10 knitted pieces per month. In another example, Neti is able to produce up to 30 kilograms of rakik maco (fish chips) per month with only Rp 25,000 in seed money. Evimala, who only started out with Rp 1 million, was able to sell 15 kilograms of her “Badak Bareh” each week by distributing her products in three different markets. However, in order to progress and develop, SMEs need more support from various other institutions, like the government, NGOs and the private sector. “If my powder is well packaged, I am sure that I could sell a lot more,” said Evimala, also known as Bibik. This is where the private sector needs to step in. PT Grafika Jaya Sumbar is on hand to rise to the challenge. “Our company has a unit for packaging and business consultation for SMEs,” said Dasril, the CEO of this West Sumatra regency owned enterprise. Fortunately, he is quite familiar with the world of SMEs. Dasril, who has led this company for four years now, stated that although this program that specifically targets working with SMEs has existed in the company for quite a while, it has not received the attention that it deserves. “I see it as an opportunity,” he added. Further, he explained that one of the duties of his company is to help nurture the community by supporting their economy.

Dasril believes that SMEs are essentially deeply rooted in the community. “The task at hand now is to build their confidence and convince them that their enterprises are their main sources of income,” he added. Dasril, who actively attends many social events, also believes that these SMEs need to realize that their businesses require care and maintenance and are just as

important as their lives. This local strength, built upon local potential, could then develop into local independence. “Once this mindset has formed, we, the private sector, can help complement their other needs by facilitating some of the real needs, such as packaging,” he explained.

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As a result, PT. Grafika Jaya Sumbar signed a Memorandum of Understanding (MoU) with Jemari Sakato in an effort to involve the local government, the private sector, business associations, SMEs and banks. The MoU was signed during a Public Private People partnership workshop, which also produced a number of other agreements to support SME resilience. The MoU outlines that PT. Grafika Jaya Sumbar commits to support the SMEs supported by Oxfam and Jemari Sakato in terms of business consulting, packaging, creating partnership networks amongst SMEs, and product marketing through the Indonesian auction markets. “This MoU is exactly what was needed,” Dasril stated.

The next step is figuring out how the local government can also become a partner, particularly in terms of formalities. “For example, products that will be consumed by the larger public must have an industry registration mark,” said Dasril, illustrating one way that local government agencies can get involved. “They might even be able to subsidize this process and make the arrangements free of charge for the SMEs,” he added. Furthermore, getting the halal seal on the food packaging is relatively inexpensive in West Sumatra. “We invite the Indonesian Ulema Council (MUI) to our SME forums,” said Dasril. Through direct dialogues, he added, we are able to assure the council that the food products of the cottage industries are indeed halal. It is particularly convenient as well that Islam is deeply rooted in the culture and daily lives of the population in West Sumatra. “But we need to remember that the issuing authority of this label does not lie within the community. Our hope is that this issuing authority does not make it difficult for the SMEs to obtain something that we can actually help them with,” he added.

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Dasril, whose father was a fisherman, also emphasized the importance of accurately mapping the current needs prior to channeling any kind of support. “Each area has its own set of characteristics and potentials for SME resilience,” he explained. He cited the example of the rakik maco (fish chips) production, which he visited during a field visit with Jemari Sakato. “They don’t need help in their packaging, but rather in marketing, because they use fresh fish in their products, which do not last for very long,” he stated. Therefore, packaging assistance would not be appropriate or efficient for rakik maco products. In contrast, products like “Badak Bareh” could benefit greatly from superb packaging that could potentially attract new customers, and even target customers beyond Nagari Tiku Selatan. “Not all SMEs should be receiving the same type of

support,” Dasril commented.

Bambang Warsito, the head of the Local Agency for Disaster Management (BPBD) of Agam District, agrees that the government should listen to what the community needs before giving support. “And even then, it should not be just dump and go,” he added, highlighting the importance of monitoring the community’s development after receiving governmental aid. “We need to change this practice,” he said. Bambang has worked closely with Jemari Sakato and Oxfam to fully understand the community’s needs. He added that he has learned a great deal from the continuous monitoring performed by the two NGOs, who have worked with the agency for quite some time. Bambang admits that monitoring has been a rather weak point of many local government institutions. “Because the government has

to cover so many things in so many areas, after they drop off the aid they typically leave soon afterwards,” he explained. This is quite different from Jemari Sakato and Oxfam, who are much more focused and are able to monitor the progress after giving support. Reflecting on previous disasters, the BPBD in Agam is fully cognizant of how the disempowerment of small communities could paralyze the local economy. “If the local economy is strong, the government would not encounter so many complications in managing post-disaster efforts,” said Bambang. Therefore, the economy must be strengthened from the middle level to the lower level. “Because the size of this group is so large, without proper support in disaster

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preparedness, the government will face difficulties,” said Bambang, underlining the importance of creating Resilient SMEs.

PREPAREDNESS WITH A DISASTER “PIGGY BANK”

Two mopeds were on display in the middle of the lobby of Bank Perkreditan Rakyat Mutiara Pesisir, or BPR Mutiara Pasir (Coastal Pearl People’s Credit Bank), located not far from Nagari Tiku Selatan, Agam District. These two mopeds were the grand prizes of the 2015 Prize Extravaganza promoting the preparedness savings account, also known as Kacio Siaga (preparedness savings).

This savings account—born out of a partnership between the bank, Jemari Sakato and Oxfam—provides the customers with a value added in the form of compensation in case of a

disaster. The bank launched this innovative product that stemmed from the Coastal Community Economic Empowerment Program in 2006.

Kacio is the local term for piggy bank. “Now my piggy bank is actually in the bank,” said Syafril, the Director of BPR Mutiara Pasir. In fact, this new product had recently been linked with Asuransi Central Asia (ACA), which is the only insurance company that caters to

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micro enterprises. “The nature of these types of insurance is compensation, with very simple terms, making it accessible for small communities facing disasters,” he explained. All of the Kacio Siaga customers are automatically enrolled in an insurance policy for earthquakes and tsunamis, two of the major disaster risks in Agam District, particularly in Nagari Tiku Selatan.

This preparedness savings account is one of the indicators of a resilient SME, as stated in the Business Continuity Plan (BCP). More specifically, these indicators include: SMEs have alternative plans in procuring raw materials and accessing markets; SMEs have a temporary backup business during recovery; SMEs build a backup network of local suppliers; SMEs have business insurance to save their assets and capital money; and they have a disaster preparedness savings account, like the Kacio Siaga.

In the Memorandum of Understanding (MoU) between the BPR Mutiara Pesisir and Jemari Sakato, it is outlined that the bank is ready to assist the community in providing capital to increase their business, provided that the bank deems it worthy. Furthermore, the bank will also educate the community about financial management and provide free consultations on finance and business management skills, in addition to its main duty, which is to provide banking services to the community.

Syafril believes that the programs run by

Jemari Sakato and Oxfam to target SMEs

in disaster-prone areas is crucial in

bolstering the local economy in the wake

of a disaster. “The local economy of

vulnerable communities in disaster-prone

areas is typically not that robust, even un-

bankable,” he added. Therefore, the first

step must be to strengthen the local

economy so the community can become

more stable and independent, and

subsequently develop. “Eventually, the will

be able to save money and have insurance,” explained Syafril.

The communities facilitated by Jemari Sakato and Oxfam generally lack access to banks.

Fortunately, the capital money from the post-disaster fund channeled to the community

helped them to get back on their feet. “Before, many of these SMEs had difficulties in

starting their business. How could banks provide them credit in that kind of situation?” asked

Syafril. “Now that they have received some capital, they are able to start their business. We

educate them and encourage them to create a savings to facilitate access to banks,” he

added.

Furthermore, Syafril also advises the SMEs to use the capital to grow their businesses so that they can qualify for banking requirements. “We will support them for future developments,” he stated.

Mulia, an embroidery artisan, whose head dresses can sell for up to Rp 60,000 a piece, stated that she had never thought of opening a savings account for disaster preparedness—the Kacio Siaga. Fortunately, she is now a customer of the BPR Mutiara Pesisir bank. “Jemari Sakato and Oxfam advised us to put away a little bit of our income into a savings account and that we shouldn’t spend it all in one place. We have to save some in case of an emergency, or to further our business,” she said.

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In the eyes of BPR Mutiara Pesisir bank, Mulia represents the real picture of communities in Agam District who are realizing the importance of a savings account following the 2009 earthquake and have started to save as a result. “In a way, the earthquake was like a blessing in disguise. Before the earthquake, it was difficult to encourage communities to open a savings account because of the perception that saving at a bank is too complicated,” recalled Syafril.

In fact, following the earthquake, instead of more credit requests, the bank has seen an increase of new customers for savings accounts. Community members no longer rely on storing their money or jewelry at home, because they feel that their money is safer in the bank. Additionally, they also worry that they would not be able to carry their valuable possessions in case of an evacuation. “With the abundance of recovery funds after the earthquake, there was an increase in spending for goods and services for rehabilitation of houses and businesses,” recalled Syafril. He added that his bank was also closed for three days after the earthquake, but it was able to resume all normal operations and services after it re-opened.

The Kacio Siaga account is more attractive compared to other types of savings accounts, because in addition to the regular services, such as an account book and interest, customers are also eligible for disaster insurance in the form of compensation. “For a premium of Rp 20,000 per year, the customer is covered for earthquake and tsunami insurance,” explained Syafril. “So if an earthquake or tsunami were to happen and cause severe damage, customers enrolled in this plan would receive Rp 2.5 million per policy unit,” he added.

To access this fund, the BPR bank would only need an official announcement made by the Local Agency for Disaster Management (BPBD) explaining that the disaster(s) caused some damage. No other documentation would be required to receive the fund, since it is essentially aid. “We store the names of our customers online, so we don’t need to look at any papers,” he explained. Further, he also added that the liquidation process for insurance funds made by the Financial Services Authority (OJK) would only take less than a week.

The Kasiga account could potentially attract many more customers to this bank that already serves over 16,000 clients and has Rp 12 billion. “We have been able to raise awareness of disaster preparedness through savings, and the response has been pretty good so far,” Syafril stated. “On the other hand, this type of savings account would probably not be as attractive in areas that are not prone to disasters, because they would see no need for it,” he concluded.

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CLOSENESS AND SYNERGY ARE THE KEYS

During the initial phases of the Deepening Resilience program, many members of the SMEs (small and medium-sized enterprises) that were facilitated by Jemari Sakato and Oxfam had to endure teasing and mocking from their neighbors. “So how much did you get?” Mulia said, recalling a question one of her neighbors asked when they found out she was participating in the Resilient SME program. They mocked her because she chose to participate in a program that did not provide her with direct cash.

“This is typical of areas that are accustomed to receiving aid, making them vulnerable,” said Dasril, a representative of PT Grafika Jaya Sumbar who worked with Jemari Sakato and Oxfam in facilitating the participating SMEs. “This is going to be a challenge for Jemari, because they have to gain entrée differently than other programs,” he added, referring to the fact that assistance from most aid programs in disaster prone areas is typically in the form of money.

Moreover, many local government programs often lack clear end goals. “This has made the communities very pessimistic of government programs, which in turn creates a negative perception,” said Bambang Warsito, the head of the Local Agency for Disaster Management (BPBD) in Agam District, agreeing with Dasril.

He cited an empowerment program for micro enterprises that the Department of Cooperatives, Industry, and Trade had been running for a long time. “They would provide some sewing machines and capital for the artisans,” he explained. Bambang added, “If the government wants to help by providing raw materials, they should also be willing to help with

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the marketing of the products.” If the methods in which aid is channeled can be adjusted, economic rehabilitation as expected by SMEs could be achieved.

Due to the poor track record of government aid, BPBD stated that oftentimes they are dismissed by the communities. “They don’t listen to the information that we are giving them. I guess this is the kind of condition that we have to deal with,” Bambang said. Nonetheless, he promises to continue to give the best to the community so they can prepare for disasters, even though he does not wish for disasters to happen.

Yuli, a knitting artisan, states that she no longer panics when an earthquake happens, having learned the types of earthquakes that can cause a tsunami. At first, she found it hard to get involved in the Resilient SME activities that Jemari Sakato and Oxfam convened. “My husband was not happy with my participating in trainings,” she said.

However, she insisted that she was not just wasting her time, when in fact she was attending a training session on how to draft a business continuity plan (BCP). To convince her husband, she asked the head of the BPBD to call her husband. “That way he really believes that I am in a training,” she said.

Her trick worked. Her husband no longer has any objections to her bettering herself through trainings and workshops, making her business a true resilient SME.

Bambang Warsito laughed, recalling the episode. “When we get together with the SME participants, you can no longer tell who is from the government, and who is the from the community,” he said, referring to the closeness of the Agam BPBD with community members of Nagari Tiku Selatan. BPBD staff members frequent the village, creating a close relationship between the community and the agency. “We visit Tiku at least once a month, monitoring the tsunami

early warning sirens, as well as monitoring the SMEs facilitated by Jemari and Oxfam," he added.

It is important to Bambang that his staff is able to assimilate with the community. “It is difficult for us to reach the most marginal communities if we continue to display our positions of authority,” he explained. He stressed the importance of his staff members listening to what the community wants.

“This allows us to have direct contact with the government, so that if a disaster happens we can contact them,” she said happily; “this is great!”

Bambang Warsito agrees. “We always try to communicate with the community, because sharing information is crucial,” he said. He has even allowed for BPBD facilities, like pick-up trucks, to be used by community members together with Jemari Sakato during disaster socialization sessions—a form of multi-stakeholder synergy.

“We all have a stake in this,” he remarked. “The government is interested in bettering the people’s welfare, whilst Oxfam and Jemari Sakato are interested in running a successful program that benefits the community,” he concluded.

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This project is implemented by Oxfam’s partners in Indonesia:

Supported by Australian Government through DFAT – Department of Foreign Affairs and Trade

Oxfam is an international confederation of 17 organizations networked together in more than 94 countries, as part of global movement for change, to build a future free from the injustice of poverty.

Published by: Oxfam in Indonesia Jl. Taman Margasatwa No. 26 Ragunan Jakarta 12550 | Tel. 021 7811 827 Fax. 021 7812 321 FB. Oxfam in Indonesia | Twitter: @OxfamIndonesia Email: jakarta@oxfam.org.uk

© 2015