NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, September 9, 2005

With the year 2005 having been declared by the United Nations as International Year of Microcredit, the University of Indonesia’s Small and Medium Enterprise (SME) Center launched its Global Micro-entrepreneurship Awards (GMAs) earlier this week.

The GMAs — which are also sponsored by Citigroup and the United Nations Development Programme (UNDP) — are expected to encourage small entrepreneurs to actively participate through their businesses in reducing poverty in their communities in line with the UN’s Millennium Development Goals of halving the world’s poor by 2015 through rural economic empowerment.

“The GMAs will provide an opportunity to show how effective microcredit is in alleviating poverty,” Citigroup country manager Peter Eliot said in a press release made available to The Jakarta Post.

The GMAs will kick off with the registration of the participating micro-entrepreneurs — nominated by their creditors — and this will be followed by a survey of the participants’ businesses, based mainly on whether they have created socioeconomic added value to their community, and, finally, the selection of the winners.

The registration period runs until Sept. 23, with nominees divided into three categories — micro-entrepreneurs with assets of under Rp 5 million (US$500), up to Rp 50 million and above Rp 50 million, with two winners to be chosen from each category.

Each winner will receive total prize money of Rp 100 million, while the creditors who nominated them will receive acknowledgements for their roles in channeling microcredits.

The selection process, meanwhile, will involve five judges chosen from Bank Indonesia (BI), academia, the business community and the media, represented by the Post’s chief editor Endy Bayuni.

The microcredit approach is an innovative concept first conceived in Bangladesh in 1976 by rural economics professor Muhammad Yunus to help the poor help themselves out of poverty by providing small loans to farmers and micro-entrepreneurs, who would have been ineligible for credit from banks using traditional means of evaluating creditworthiness.

According to the UN, the microfinance sector has grown at an average rate of between 25 percent and 30 percent over the past five years.

Last year, Titik Winarti, a housewife and handicraft entrepreneur from Surabaya was named Indonesia’s representative to receive a Microcredit Award from the UN.