Credit in Magelang for Economic Transformation
The new study from Basagita.com in Magelang found something interesting about how people there perceive credit in Magelang. In the first hypothesis, people tried to avoid credit and expected social assistance from bigger institutions to solve their issues. However, the hypothesis is proven inaccurate and an erroneous assumption, given the study led by Ardiyanto Pramono, the head of this project.
“The people of Magelang are not afraid of taking credits. They accept that applying for credits is part of life, and they concede that this is part of having a limited salary and income that is barely more or barely reaching the minimum wage,” said Ardiyanto Pramono, explaining the Magelangnese’s perception of credits.
The result is quite concerning since credits/debts is perceived as a way to survive, and people hustle from day to day just to survive. Meanwhile, the government tends to believe that micro-credit will be a good foundation for small, medium, and even micro enterprises to grow.
Credit in Magelang does not affect significantly for overcoming poverty issues
“There is evidence that credit has done its part to develop micro-businesses. Nonetheless, the number is not quite significant in reducing the unemployment rate or even improving the quality of life of the people in Magelang.”
The issue is clear: funding is not the sole issue for micro-businesses; the issue is even more complex. People who have started businesses lack the marketing, distribution, or even production skills required for their businesses’ development. Experience will improve their capability. Yet, everybody learns at a different pace, or even realises their mistakes or finds solutions for their businesses.
“Let’s be honest, credit would not change the fate of most people if we hope people will use it to build their own businesses. People see credit as a way to extend their lifeline, and actually this situation is extremely serious and needs to be addressed since people only try to survive in the daily context; they cannot even prepare for the future. The study pertaining to retirement plans is going to give us more shocking results. The productive age group does not even have retirement savings. Once they stop working, they are part of the people who struggle in poverty. Without heavy involvement of the government, we will see extreme poverty in 10 to 15 years grow exponentially.” Add Ardi.
Though further study is considerably substantial in order to find a financial scheme to improve people’s lives, Ardi is convinced that the local government needs immediate industrialisation.
“Having a strong industry that can recruit 1,000 workers with a salary that, on average, is more than 20% above the minimum wage is something that I would recommend. Expecting micro businesses to change people’s lives is like a bet that we cannot win anyway. By providing jobs that make it easier for them to plan for their future. We have prepared them to face future unemployment and rapid growth of poverty that can lead to a multidimensional crisis.”
