Loaning a lifeline
By Lim Li Min
A network of social workers in Klong Toey are replacing loan sharks with their hands-on help.Klong Toey, Thailand’s biggest urban slum, is comprised largely of rickety lean-tos. Some of these look onto fetid sewers; others have open doorways leading onto the area’s complicated tangle of sois. As children play in these densely populated streets, many a mother or a grandmother etches out a living through jobs such as selling noodles or mending clothes.
Malika Lertlumwan, a co-ordinator with the Women’s Group Credit Union (WGCU), an arm of the Human Development Foundation’s (HDF) Mercy Centre, knows every nook and cranny of these sois. She and other social workers have walked down these tiny lanes every day for the last few years. On her trips, Malika collects daily contributions from women who are paying back WGCU loans. Sometimes, she collects small sums that will go toward a family’s nest egg.
The social workers are not an unwelcome sight in the sois, as residents say the WGCU has provided a welcome alternative to the loan sharks that prey on their community. Since it was founded 12 years ago, the women’s group has helped fend off problems associated with the loan sharks, such as racketeering, intimidation, destruction of property and violence.
“People always know who they can go to if they need [quick] money,” says Malika. The Mercy Centre’s social workers estimate that more than 50 percent of Klong Toey’s families are in debt to loan sharks. Malika says some families have even fled the community to escape loan sharks, who may be living just a street or two away. Families who cannot pay their debts have had their valuables and property seized. Some are viciously attacked by large groups of gangsters.
This problem with loan sharks is not unique to Klong Toey. In many areas there are certain people who are known to lend money. But the problem is especially pernicious in poor communities where few people have the collateral to take out a bank loan. Often, it is most impoverished, the most poorly educated and the most marginalized members of society who are forced to turn to loan sharks.
Established in 1974, the Human Development Foundation also runs AIDS hospices, orphanages and various street outreach missions. Funding for the HDF comes from a combination of private sponsors and the government. The HDF also runs micro-credit projects to assist people with HIV/AIDS and the handicapped poor. These loans help people set up small businesses such as food vending stalls.
In Klong Toey, an area notorious for the level of AIDS infections, social ills and drugs, many people work in the adjacent port as laborers, earning about 200 baht a day. Gambling, a widespread problem in such poor neighborhoods, may eat into these meagre wages. But social workers estimate that 50 percent of Klong Toey’s households do not even have a male breadwinner, as many families’ menfolk simply leave home when there is marital strife. Others take on or take up with second wives.
In addition to divorces, single mothers and teenage pregnancies are rife, often meaning grandmothers have to look after the children while mothers go to work.
“Women are often the strength in these slums. They have to manage the money and control the purse strings,” says John Padorr, advisor to the Mercy Centre.
The WGCU, which operates in 43 neighborhoods in Klong Toey, has been a boon to women such as 62-year-old Tangon Komkleow. Tangon, who has to look after a household of six, says she joined the WGCU nine years ago after her husband’s death. “If you can’t pay back the loan sharks, your debt to them will just mount, and maybe your home will be confiscated. Paying the WGCU back is just cheaper,” she says.
With the WGCU’s help, Tangon has supported her family of six since her husband died.
Klong Toey’s loan sharks typically charge an interest rate of 20 percent a month. If a borrower cannot pay the sum borrowed within the stipulated time, the interest rate is increased. In contrast, the WGCU charges just one percent interest and it only costs 50 baht to become a member. A borrower may take out a loan three times the amount accumulated in their savings passbook. Most women’s loans are to pay for their children’s school fees, says Padorr.
Because it takes three signatories (a woman will usually engage her friends or relatives) before a member can be granted a loan, almost all of the WGCU’s loans are paid back. In their daily collection runs, Malika and her co-horts typically take five to 10 baht from each woman they visit.
The women are given two passbooks, a red one for savings and a blue one for savings and withdrawals. The interest offered on straight savings accounts is higher than that of commercial banks. Last year’s rate was five percent. Nowadays, the WGCU manages more than two million baht and has about 325 members.
In addition, the WGCU functions as an informal support group, dispensing advice and helping with official paperwork; sometimes even stepping in to arbitrate on community disputes. It organizes aerobics classes in seven locations and provides educational outreach information on bird flu, infectious diseases and fire hazards. It also provides help with birth registrations, school admissions, access to health care and legal advice.
One member who has benefitted from the WGCU’s services is Prapan Eamkal, 68, a mother of ten. Today, Prapan, who has no teeth because she has never been fitted with dentures, is dressed in a bright yellow shirt. Although it is Her Majesty the Queen’s birthday when Thais traditionally wear blue, Prapan cannot afford to buy a blue shirt so she has opted to wear the yellow shirt she bought to honor His Majesty the King on the 60th anniversary of his accession to the throne.
Since her husband’s death over 20 years ago, Prapan has set up a home laundry business with a loan from the WGCU. With 9,000 baht, she bought a washing machine that she uses to wash her customer’s clothes. She has single handedly put her 10 children through school with the earnings from her laundry business. Several years back, she also borrowed money from the WGCU to pay for an operation for her daughter.
“It is a very good system to collect money because the interest is low. You can die without any repercussions, debt free,” she says.
The WGCU’s Malika sums up the organizations work: “The WGCU empowers women and teaches them how to deal with problems such as loan sharks and domestic abuse. Through it, women can network and find ways of helping each other out.”