by James Gough
Yayasan Bina Upaya or YBU, which was founded under the Trustees Act in October 2009 began its operations in March 2010 with the goal of improving the living standards of low-income households through its Microcredit Financing Programme. Ipoh Echo which originally carried a report on YBU’s activities in 2010 (December 16, 2010) recently met with its Chief Financial Officer Hairul Anwar Mohamed Noor to get an update.
Interest Free Loans Coupled with Stringent Vetting Paying Off
According to Hairul, since its inception, YBU has so far provided assistance to 989 recipients with RM13.5 million of loans disbursed. Interestingly it is currently compiling a booklet of 100 of its successful recipients who have managed to improve their livelihood.
By any standard a success rate of just over 10 per cent in just over two years is already a good measure. According to Hairul, an added bonus is that over 50 per cent of its borrowers service their loans on time each month, 10 per cent service their loans months in advance in anticipation of rainy days while another 10 per cent settle their loans outright way ahead of the repayment schedule. Considering that the customers are the underprivileged, this healthy cash flow is a revelation.
Fatimah Fadzil, 53, is a single mother selling fried curry puffs. In 1999, when her husband died due to a traffic accident she was forced to fend for her three children on her own. She tried several jobs but the pay was small and it was difficult to make ends meet. She approached a welfare body earlier but was told that as she was still young and could still work to support herself.
Fatimah later joined a single mother’s association, Nur Kasih, and was encouraged to venture into the curry-puff business. She manually produced 150 curry puffs per day, which catered to food outlets. Fatimah operates out of her Ashby Road flat.
Two years ago she was approached by YBU to participate in their single mother programme called Ladies Uptown. Subsequently, to increase her production capacity, she obtained a loan from YBU and purchased two machines, a flour mixer and a pastry kneading machine which have the capacity to make up to 1000 curry puffs a day. Currently she makes 300 curry puffs per day which she supplies to individuals, food outlets and government departments.
Fatimah took her microcredit loan from YBU in 2010. Her repayment period is 60 months but anticipates on settling her loan much earlier. Two of Fatimah’s children are still studying. Their needs have been taken care of. Generally she is comfortable, her livelihood has improved and her only concern is that she has to work every day to fulfil her customers’ orders.
Gawri and Indian Rice
Gawri a/p Manisagaran, 27, operates an Indian rice food stall at the Candy Bar coffee shop in Simpang Pulai which offers 10 varieties of dishes daily. Previously she operated daily along the Simpang Pulai to Pengkalan main road for almost two years in her own stall before shifting into the nearby coffee shop. With her YBU microcredit loan, Gawri purchased more items for her shift to the shop and realised a doubling of her turnover almost overnight.
Gawri is married and has two children. Her husband works in KL and comes home once a month. She recently purchased a Perodua Viva and anticipates she will be able to settle her YBU loan before its full period.
YBU’s Microcredit Financing Programme
What sets YBU apart from other credit facilities is its microcredit system. Loans, based on Islamic principles, are interest free and do not require collateral or a guarantor. The programme is multiracial and is open to all communities and anyone can apply. For the two ladies mentioned above, there was no way a bank would give them a loan without a secure collateral in hand which they couldn’t provide. However, with YBU’s microcredit financing programme, Gawri and Fatimah were given an opportunity to improve their livelihoods and they have seen the results almost immediately.
The programme enables community members to apply for loans for working capital in economic activities such as opening a food stall, or increasing output of existing small businesses.
Loan values range from RM1000 to RM20,000. Eligible applicants must be between the ages of 18 and 60. According to Hairul the loan repayment period is for a maximum of 60 months and the repayment value is mutually agreed on between YBU and the recipient.
Stringent Vetting Prevents Delinquent Loans
The goal is to provide loans to the very needy and ensure the loans fulfil their objective of empowering the recipient. Hence the vetting of each application is very stringent to ensure the loan does not become delinquent. All applications will also be cross checked against the government’s welfare database such as e-Kasih to identify if previous loans had been provided.
Applicants fill an application form available at its office or on its website after which YBU will send its team for an on-site visit to vet the applicants.
Successful applicants, before receiving their loans, are called to the office and are given a motivational talk on the need to grow their existing source of income and improve their overall livelihood for the future. Subsequently too, the officer overseeing the loan will monitor the applicant for three months after disbursement, after which another department monitoring debt collection will take over.
“All this monitoring is necessary to ensure the recipient will successfully improve their livelihood and meet the objective of the programme. By being successful their self confidence improves. For a poor person the responsibility to repay the loan is very important and more so for a Muslim,” explained Hairul.
YBU would like the successful recipients to be more productive and does offer them a second loan should they want to expand their businesses. However, many have turned down the offer saying they are now able to take care of their families “which indicates that their livelihood has improved”.
The data of successful applicants will subsequently be updated to the government’s e-Kasih database.
Over the last two years YBU has compiled its own database of underprivileged citizens. This is done by its squad of volunteers or sukarelawan numbering over 3000 throughout the state currently. Generally the poor are ashamed to share their problems hence the job of the volunteer is to vet and identify suitable candidates.
Poverty Eradication Programmes
Besides its microcredit financing programme, YBU had initiated other activities to distribute its economic benefits. These include:
Housing Aid programme which refers to their housing assistance to construct new homes as well as upgrade and repair homes including those damaged by natural causes. The purpose of this programme is to enable a comfortable and quality living environment for the poor. Since its inception there have been 596 beneficiaries.
Adoption Programme. This programme applies to primary students in Year 5 and 6 to be entitled for financial assistance including tuition fees. To date a total of 113 students have been put under this programme of which 56 students obtained between 2 to 7As in the recent UPSR examination.
Higher Education Programme. This year YBU participated in an MOU with two institutions of higher learning, Quest International University of Perak (QIUP) and ITP (Perak’s Institute of Technology) to provide potential underprivileged student places at their institutions.
Federal Government Interest
YBU’s multi-pronged activities towards addressing and improving the livelihood of the underprivileged in the state have “captured the interest of the Federal Government who are contemplating implementing it nationwide,” said Dato’ Seri DiRaja Dr. Zambry Abdul Kadir during YBU’s second Symposium on Capacity Building held during the middle of this year.
Based on testimony from the recipients and interviews with YBU officials, the multi-pronged strategies being implemented do address the issues of poverty by empowering the recipient to improve his livelihood. Hence it works. As a YBU executive expressed “when the plan works, the recipient’s face beams with self confidence”.
Further testimony of this can be noted from the recipients making their repayments on time.
Poverty is everywhere and is a never ending story. Fortunately for the underprivileged in Perak we don’t just give them fish to eat for a day we teach them how to fish.