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Finding the Right Balance: Financial Self-Help Organizations as Sources of Security and Insecurity in Urban Indonesia*

Published online by Cambridge University Press:  06 October 2010

Hotze Lont
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Financial self-help organizations can be found in many parts of the world, and the cities of Java are among the areas where they are particularly widespread. Since about the 1950s, interest in these institutions among anthropologists and development sociologists has increased considerably. Analyses of financial self-help organizations have most often focused on their economic or their social function; few scholars have pointed to their function as providers of security and identified self-help organizations as typical forms of local social security institutions. The main shortcoming of most of these studies is that they base their conclusions solely on an analysis of the financial arrangements provided by these self-help organizations, neglecting the accommodating practices that people undertake in order to fit the provisions of self-help organizations to their own household needs. This essay explores the observation that financial self-help organizations do not simply provide security through the different kinds of insurance mechanisms they might contain, but that, particularly through the way in which people use them and participate in them, these institutions become meaningful for coping with insecurity. It examines the question of whether participation in financial self-help organizations contributes to the ability of households to cope with adversities and deficiencies in a concrete social context. Research aiming to answer this question was conducted in Bujung, an urban ward on the outskirts of Yogyakarta, on the island of Java.

Type
Research Article
Information
International Review of Social History , Volume 45 , supplement S8: Household strategies for survival 1600–2000: fission, factions and cooperation , December 2000 , pp. 159 - 177
Copyright
Copyright © Internationaal Instituut voor Sociale Geschiedenis 2000

References

1. For a good overview of the literature on financial self-help organizations, see Kerri, J. N., “Studying Voluntary Associations as Adaptive Mechanisms: A Review of Anthropological Perspectives”, Current Anthropology, 17 (1976), pp. 23–47CrossRefGoogle Scholar ; Bouman, F.J.A., “ROSCA: On the Origin of the Species”, Savings and Development, 19 (1995), pp. 117–148Google Scholar ; and Hari Srinivas, “The Virtual Library on Microcredit [Online]”, available at: http://www.soc.titech.ac.jp/icm/icm.html (accessed 17 February 2000).

2. See for example Benda-Beckmann, F. vonetal., “Introduction: Between Kinship and the State”, in Benda-Beckmann, F. vonet al. (eds), Between Kinship and the State: Social Security and Law in Developing Countries (Dordrecht, 1988), pp. 7–20, 16Google Scholar ; Bouman, F.J.A., “ROSCA and ASCRA: Beyond the Financial Landscape”, in Bouman, F.J.A. and Hospes, O. (eds), Financial Landscapes Reconstructed: The Fine Art of Mapping Development (Boulder, CO, 1994), pp. 375–394, 375, 381Google Scholar ; Midgley, J., “Social Security Policy in Developing Countries: Integrating State and Traditional Systems”, Focaal, 22/23 (1994) pp. 219–229, 223Google Scholar ; Woodman, G.R., “The Decline of Folk-Law Social Security in Common-Law Africa”, in Benda-Beckmann, vonetal., Between Kinship and the State, pp. 69–88, 81Google Scholar ; Ginneken, W. van, “Overcoming Social Exclusion”, in Ginneken, W. van (ed.), Social Security for the Excluded Majority: Case Studies of Developing Countries (Geneva, 1999), pp. 1-36, 20–26Google Scholar ; Gerdes, V., “Precursors of Modern Social Security in Indigenous African Institutions”, The Journal of Modem African Studies, 13 (1975), pp. 209–228CrossRefGoogle Scholar . Platteau, J.-P., “Mutual Insurance as an Elusive Concept in Traditional Rural Communities”, The Journal of Development Studies, 33 (1997), pp. 764–796CrossRefGoogle Scholar , has very justifiable reservations as to whether these institutions, and other “traditional” collective arrangements, really embody the concept of mutual insurance as we understand it in developed market economies.

3. Bujung itself has around 6,000 inhabitants, whereas the city of Yogyakarta as a whole contains around 500,000 people. The inhabitants of Bujung range from civil servants to scavengers, from pedicab drivers to traders, from poor to lower middle class basically. The poorer inhabitants of Bujung tend to live together along the rivers, more or less separated from their wealthier neighbours.

4. In the literature on financial self-help organizations these arrangements are usually termed ROSCAs (Rotating Savings and Credit Associations). A formal definition can be found in Ardener, S., “Women Making Money Go Round: ROSCAs Revisited”, in Ardener, S. and Burman, S. (eds), Money-Go-Rounds: The Importance of Rotating Savings and Credit Associations for Women (Oxford, 1995), pp. 1–19, 1Google Scholar.

5. This arrangement is usually termed ASCRA (Accumulating Savings and Credit Associations). A formal definition can be found in , Bouman, “ROSCA and ASCRA”, p. 376Google Scholar.

6. This type of arrangement has been termed SAVA (Savings Association). See Smets, P., Informal Housing Finance in Hyderabad, India, Urban Research Working Papers No. 40 (Amsterdam, 1996), p. 55Google Scholar.

7. There are many references that mention or discuss the existence of ROSCAs in Java, referred to locally as arisan. The most important are Geertz, C., “The Rotating Credit Association: A ‘Middle Rung’ in Development”, Economic Development and Cultural Change, 10 (1962), pp. 241–263CrossRefGoogle Scholar ; and Papanek, H. and Schwede, L., “Women are Good with Money: Earning and Managing i n an Indonesian City”, in Bruce, J. and Dwyer, D. (eds), A Home Divided: Women and Income in the Third World (Stanford, CA, 1988), pp. 71–98Google Scholar . ASCRAs, referred to locally as simpan pinjam, have been discussed by inter alia: (in west Java) Scheepens, T.J., “Socio-economic Research about Traditional Savings and Credit Associations in Comparison with Modern Organizations in Desa Bojong, Jawa Barat, Indonesia” (M.A., Wageningen Agricultural University, 1974)Google Scholar ; (in central Java) Williams, G. and Johnston, M., “The Arisan: A Tool for Economic Development?”, Prisma -The Indonesian Indicator, 29 (1983), pp. 66–73Google Scholar ; and (in east Java) Cederroth, S., Survival and Profit in RuralJava: The Case of an East Javanese Village (Richmond, VA, 1995), pp. 181–187Google Scholar . , Selosoe-mardjan, Social Changes in Jogjakarta (Ithaca, NY, 1962), pp. 314–323Google Scholar , mentions a number of ASCRAs started as a private initiative by people in and around Yogyakarta as early as the 1940s. 8. The average number of financial self-help organizations per household in Bujung is 4.81 (total 156). There was not a single household in our sample in which none of the members participated i n financial self-help organizations. Compare this with two surveys - one in Bolivia: Adams, D.W. and Sahonero, M.L. Canavesi de, “Rotating Savings and Credit Associations in Bolivia”, Savings and Development, 13 (1989), pp. 219–236, 224, and one in India:Google ScholarSmets, P., My Stomach Is My Bishi: Savings and Credit Associations in Sangli, India, Urban Research Working Papers No. 30 (Amsterdam, 1992), pp. 11–12Google Scholar . The participation rate in financial self-help organizations was found t o be between 30 per cent and 40 per cent (total 450) in the case of Bolivia and 58 per cent (total 326) in the case of India. The data were gathered in a different manner, but it is clear that the participation rate in Bujung is very high; to a large extent this can be explained by the obligatory character of the arisan RT.

9. During my fieldwork the rate of the Indonesian rupiah fluctuated between Rp. 2,400 and Rp. 15,000 to the US dollar. For comparison, over this period the daily wage of an unskilled construction worker rose from Rp. 5,000 to Rp. 10,000.

10. In the two neighbourhood sections where I concentrated my fieldwork, there were fifty households consisting of two parents and one or more children (55.6 per cent), twelve households consisted of two parents, one or more children, and one or more grandparents (13.3 per cent), and nine households with a single mother and one or more children (10 per cent). The remaining nineteen households fell into other smaller categories.

11. It proved to be very hard to quantify the size of the contributions of women in these households because there is a strong tendency among both women and men to dismiss the income earning activities of the wife as “just helping the husband” (bantu-bantu suami).

12. Examples of authors observing a strong position for women in the household are Jay, R.R., Javanese Villagers: Social Relations in Rural Modjokuto (Cambridge, MA, 1969), pp. 92–93Google Scholar ; Manderson, L., “Introduction”, in Manderson, L. (ed.), Women's Work and Roles: Economics and Everyday Life in Indonesia, Malaysia and Singapore, ANU, Development Studies Center, Monograph No. 32, (Canberra, C.T., 1983), pp. 1–14, 6Google Scholar ; and , Papanek and , Schwede, “Women are Good with Money”, pp. 89–91Google Scholar . Others observed some involvement by men in decisions, especially those on major expenditure: Geertz, H., The Javanese Family; A Study of Kinship and Socialization (New York, 1961), p. 125Google Scholar ; and Keeler, W., “Speaking of Gender in Java”, in Atkinson, J.M. and Errington, S. (eds), Power and Difference: Gender in Island Southeast Asia (Stanford, CA, 1990), pp. 127–152, 129Google Scholar . Wolf, D.L., Factory Daughters: Gender, Household Dynamics, and Rural Industrialization in Java (Berkeley, CA, 1992), p. 65Google Scholar , argues that proper observation shows that men make the decisions in the household. , Keeler, “Speaking of Gender in Java”, p. 128Google Scholar ; Wolf, Factory Daughters, p. 66 ; and Stoler, A., “Class Structure and Female Autonomy in Rural Java”, Signs, 3 (1977), pp. 74–89CrossRefGoogle Scholar , emphasize that any economic role that women may have in the Javanese household does not lead to their having a similar position in other social spheres.

13. Zelizer, V., “The Special Meaning of Money: ‘Special Monies’”, American Journal of Sociology, 95 (1989). pp. 342–377. Zelizer describes the special status of household money for housewives in the United States. She argues that “culture and social structure mark the quality of money by institutionalizing controls, restrictions, and distinctions in the source, uses, modes of allocation, and even the quantity of money”, p. 342.CrossRefGoogle Scholar

14. The qualifications “good” and “tough” (baik and keras in Indonesian) were used by female informants.

15. The quantitative data on Bujung in this article are based on a questionnaire among 156 households in July 1998.

16. For example, wives of civil servants regularly complained that they worried about making ends meet at the end of the month, and a woman who went around houses selling breakfast snacks each morning told me that her turnover was significantly less at the end of the month.

17. For the 39.1 per cent of households that d o not own the house in which they live, the annual rent is a problematic expenditure as well.

18. Bouman, F.J.A., “Informal Rural Finance: An Aladdin's Lamp of Information”, in , Bouman and , Hospes, Financial Landscapes Reconstructed, pp. 105–122, 117-118Google Scholar . The same mechanism also explains why some people prefer to borrow money (from their boss, a moneylender, or simpan pinjam) even when they still have stocked savings somewhere. They will often have acquired their savings as the result of a windfall or strong self-constraint and therefore consider it a waste to spend that money too easily. An elderly tailor for instance said: “My gold ring is worth Rp. 250,000. It is a sort of savings, but I never want to sell it. I am too afraid that I will never be able to buy a new one.” A loan is preferred because that way they will be forced to repay it regularly, whereas savings are not so easily renewed.

19. For extensive descriptions of the complexities of saving and credit practices, and comparisons between the various sources of finance, see also Hospes, O., People That Count: Changing Savings and Credit Practices in Ambon, Indonesia (Amsterdam, 1996), pp. 41–131Google Scholar ; and Lont, H.B., “When We are Broke […]: Managing Unbalanced Cycles of Money in Urban Households, Yogyakarta, Indonesia”, in Smets, P. (ed.), Money and Culture, Urban Research Working Papers No. 44 (Amsterdam, 1999), pp. 7–26, 13-17Google Scholar.

20. Literally the expression means “dig a hole, fill a hole”.

21. UKK stands for Usaha Kesejahteraan Keluarga, or Family Welfare Enterprise, a self-help organization set up by local leaders of the ward. Dasa Wisma, or Dawis, is a subgroup for women in each Rukun Tetangga. Absari is an organization for women who follow birth control. RW stands for Rukun Warga and is a coordinated collection of five or six Rukun Tetangga. UP2K stands for Usaha Peningkatan Pendapatan Keluarga (Enterprise for the Enhancement of Household Income). P2WKSS stands for Peningkatan Peranan Wanita menuju Keluarga Sehat Sejahtera (Enhancement of Women's Role in Support of the Health and Welfare of the Family). The last two organizations are voluntary activities of PKK, the national women's organization.

22. Hansip stands for Pertahanan Sipil, the local voluntary civil guard platoon. In his position as head of the security section in his RT, Irwanto attends the meeting for leaders of the RT.

23. , Ardener, “Women Making Money Go Round”, p. 15.Google Scholar

24. Swaan, A. de, “Onderlinge Fondsen: Toen en hier nu en daar”, in Linden, M. van der and Sluijs, J. (eds), Onderlinge Hulpfimdsen (Amsterdam, 1996), pp. 9–22, 12Google Scholar . The argument is further developed in Bijnaar, A., “Wat je zaait zal je oogsten!: Dwang en Zelfdwang in Creools-Surinaamse Onderlinges”, Amsterdam Sociologisch Tijdschrift, 25 (1998), pp. 329–370Google Scholar.

25. In discussing this issue, informants did not distinguish particularly between the use of arisan and simpan pinjam, even though the latter provides loans and the former does not.

26. It is very difficult to establish which pan of the lump sums from financial self-help organizations is used for repaying debts. The practice is generally regarded as irresponsible behaviour, which leads to people being very secretive about it. Of die 109 respondents to our questionnaire who said they had ever borrowed money from a simpan pinjam, only 2.8 per cent said they had used it last time t o repay debts. Based on my daily observations, interviews, and informal conversations I can safely say that this is a considerable underestimate.