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BPR Bank Magelang Launches Low Interest Sanitation Credit

BPR Bank Magelang Launches Low Interest Sanitation Credit

The local government of Magelang city continues its efforts to reach 100% free from open defecation practices in 2019. Building communal wastewater treatment plants is one of the local government’s programs to achieve the target.

In 2018, the Housing and Settlement office (Dinas Perkim) of Magelang city spent Rp4.6 billion to build 88 communal wastewater treatment plants to serve 620 households in nine urban villages. Four of them have capacity of more than 50 house connections, and the remaining 84 are able to serve less than 10 houses.

However, the open defecation rate in Magelang city remains high. Data of the STBM in Magelang city in 2018 indicated that among the total 38,631 households in Magelang city, 72% of them have healthy and permanent latrines (JSP), 13% have healthy and semi-permanent latrines (JSSP), 12% use shared toilets, and 3% defecate in open spaces.

This situation occurs because some community members are unable to finance the construction cost of the house connections to the communal wastewater treatment plants. Moreover, the government does not have sufficient budget to help these people build the house connections.

Dinas Perkim of Magelang city recorded that only 50% of the 620 beneficiaries of the communal wastewater treatment plants in 2018 built the house connections at their own cost while the remaining 50% lack finances to build the house connections, which cost from Rp500,000 to Rp750,000.

To address this challenge, Dinas Perkim of Magelang city, with assistance from USAID IUWASH PLUS, established a cooperation with BPR Bank Magelang to develop a microfinance scheme for sanitation facilities improvement. The micro-finance scheme will help the community members to finance the house connection construction cost.

The micro-finance scheme gives the community members who apply for the credit facility low effective interest rate at the amount of 0.58% per month and easy requirements, such as ID card and family card.

In December 2018, BPR Bank Magelang and Dinas Perkim of Magelang city signed a cooperation agreement in a ceremony attended by the Deputy Mayor of Magelang City, Windarti Agustina. She expected that the heads of sub-districts and urban villages will socialize the sanitation credit to low-income community so that the city could be 100% free from open defecation practices in 2019.

Taking on the sanitation credit seriously, BPR Bank Magelang launched the sanitation credit in a ceremony attended by the Mayor and Deputy Mayor held on February 21, 2019 in Magelang city.

“One of our targets is poverty reduction, which could be indicated by [improvement] in community’s water and sanitation access. This sanitation credit will provide the community members with affordable and easy credit scheme for the community to improve their sanitation facilities,” said Magelang City Mayor, Sigit Widyonindito.

-Edy Triyanto/Abdul Muhtar (contributors)-

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