Local Societies and Rural Development
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Local Societies and Rural Development

Self-organization and Participatory Development in Asia

Edited by Shinichi Shigetomi and Ikuko Okamoto

The importance of community-based and participatory approaches to rural development in developing countries has long been emphasized. Rural people, who are economically and politically weak as individuals, can only participate in development projects when they are collectively organized. However, this is no easy task. This book aims to identify the mechanisms in each local society through which rural people can best organize themselves to meet their development requirements. It stresses the need to find local mechanisms that motivate and control the members of a new organization in order to achieve organizational goals.
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Chapter 5: Organizational responses of local societies in regional diversity: case study of a microfinance project in rural Indonesia

Motoko Shimagami


Indonesia is the world’s largest archipelagic country, comprising more than 17 000 islands and 237 million people. Across the archipelago, Indonesia consists of hundreds of ethnic and linguistic groups. This distinct cultural diversity is illustrated explicitly by a rich variety of folk terms used to express “village”: desa in Java, Madura, and Bali; nagari in Minangkabau; dusun in South Sumatra; gampong in Aceh; marga or merga in Batak; wanua in Minahasa; matowa in the Bugis region; and nagory or dati in Maluku (Kartohadikoesoemo 1984, pp. 15–16). A rural development project, even if implemented according to the same framework, takes different forms, demonstrating Indonesia’s diversity of local societies. Performance of the IDT (Inpres Desa Tertinggal) project presents one such case. IDT is a microfinance project for poverty alleviation that was implemented throughout the nation by the Indonesian government for three years from 1994. The government grant was provided directly to groups of people in the form of a revolving fund. According to Mubyarto (1996), project performance differs from place to place, even though the framework is the same. For example, the repayment rate differs distinctly by region: 99 percent in Java and Bali, 27 percent in Sumatra, and only 11 percent in Kalimantan. Additionally, the average loan size differs; loans for residents of Java and Bali are small and equally circulated to the members on an equitable basis, while larger loans for residents of other regions are granted to only a few individuals.

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