Dece Nahak, TLM client

OPPORTUNITY INTERNATIONAL AUSTRALIA

TLM Community Group Progress Report

July—December 2009
OPPORTUNITY INTERNATIONAL AUSTRALIA

TLM Community Group Progress Report

Message from the CEO

When a woman receives a small loan, it is not simply

a financial transaction. It’s much more than that. For
each client, the loan will represent something
different: for a young woman, it may be an
opportunity to gain independence. For a mother, it
may be a chance to enrol her child in school. For a
grandmother, it may be a way to plan for her
retirement.

For our clients, many of whom have endured

incredible hardship in their lives, a small loan is a vote
of confidence in their ability to forge their own
future. When a person has established a successful
small business and can do the things we take for
granted – afford nutritious food, pay for an electricity
connection, send their children to school – we see
that microfinance does not just improve cash flow. It
Petrus Sauneno runs a kiosk in the village of Fatulili. He invested his
can also change people’s lives. small loan in repairing his kiosk and buying more stock. “I believe
that applying for a loan through TLM was both easier and faster
Following a rigorous process of internal capacity than a traditional bank… it has turned my shop around. I am very
building and product redesign, our partner in West thankful to TLM,” says Petrus.
Timor, Tanaoba Lais Manekat (TLM), is now in a
promising position for future growth. Your support
helped TLM open two branches and reach out to Report summary
thousands of new clients in 2009. • Active clients have increased, with TLM now
serving over 16,000 people.
Opportunity International Australia’s work is only
• The new group loan product continues to be
made possible through the generosity of our loyal
popular with TLM clients and staff.
supporters. At December 2009, our partners in India,
Indonesia and the Philippines were serving over two • New training curriculums have been launched for
million clients. In 2010, we want to let more people group clients, covering financial management
know about the life-changing impact of and entrepreneurship.
microfinance in the lives of the poor. Your continued • A prolonged dry season in 2009 affected
support and advocacy will help us to create more livelihoods across West Timor, impacting on
awareness, harness more support and reach out to many client’s businesses.
more people in desperate need of a hand up.
This report is an update on TLM Community
Thank you for your support of the inspiring men and Groups from July to December 2009.
women who are our clients.

Kind regards

Robert Dunn
Chief Executive Officer
2 OPPORTUNITY INTERNATIONAL AUSTRALIA - TLM Community Group Progress Report

TLM Community Group update

West Timor is not a typical place for microfinance to
flourish: rural villages operate on largely cashless
economies and livelihoods are often dependant on a
good harvest. However, TLM’s client-focused
approach to providing clients with effective service is
now seeing more people benefit from small loans.

From June to December 2009, TLM’s active borrowers

increased by a third, from 12,270 to 16,321. This
included 6,701 new group clients¹. The average loan
size for these clients was Rp. 1,190,448 (A$142).

In 2009, TLM launched its new group loan across all

19 branches, offering loans with flexible sizes and
repayment schedules.
Alfonsius with one of his chairs made out of discarded tyres.

Alfonsius’ story
Outside his simple concrete house, Alfonsius Taifa is
hammering old tyres into chairs, buckets and pots.
Alfonsius’ innovative business supports his wife and
five children—Ido, Ega, Medi, Icha and Atika, aged
between two and 11. His family relies on him to
generate enough income to meet their daily needs.
After high school, Alfonsius worked for a printing
company for seven years, which went bankrupt in
1999. Fortunately, he received severance pay which
he used to set up his tyre recycling business.
Initially, Alfonsius worked very hard to market his
products door-to-door and gain new customers.
Despite receiving many orders, Alfonsius had
insufficient capital to meet demand. Then he became
ill and could only afford the hospital fees with the
help of a neighbour.
In 2009, Alfonsius heard about TLM. He received a
loan of Rp. 750,000 (A$89) which he used to buy raw
materials and equipment. He buys the tyres from
repair shops at Rp. 2,500-5,000 (A$0.30-0.60) each.
Alfonsius has been able to expand his business and,
with his wife’s help, meet the demand for the
increasing number of orders.
“I run a welding business, and the small
loan repayments have been manageable
for my income levels.”
Klofas Seran, TLM client
Clients still meet weekly in groups to make loan
repayments. However, groups can be as small or as
large as is necessary and clients are no longer
required to co-guarantee each other’s loans. This
flexible approach, with loan officers dealing with each
client on an individual basis, means that villagers feel
more confident in applying for a loan.
In 2009, a long dry season caused failed harvests in
many areas of West Timor. As many clients work as
small-scale farmers, sell crops, or have spouses who
are agricultural labourers, this placed greater pressure
on their family incomes.
¹After repaying their loans, a portion of TLM clients will focus on
small-scale farming for a period before applying for another loan.
These are considered by TLM as ‘resting’ clients.

Prior to joining TLM, Alfonsius earned approximately

Rp. 50,000-75,000 (A$6-9) a day. Now, his daily income
has tripled to Rp. 150,000-200,000 ($A18-24). Alfonsius
can now support his family and save for his children’s
education. His greatest dream is to purchase a house,
as he is currently renting.

Alfonsius hopes to further expand the business and

employ people to sell his products. Through his
creativity and hard work, Alfonsius has used TLM’s
support to create a brighter future for his family.
Alfonius with three of his young children.
3 OPPORTUNITY INTERNATIONAL AUSTRALIA - TLM Community Group Progress Report

TLM Community Group update

Living in villages where infrastructure is poor, TLM
clients often work together to improve their
community’s living standards. TLM clients have
recently participated in projects funded by the
Indonesian Government, including repairing roads
and building rubbish bins and rainwater receptacles.
As many communities are isolated, villagers recognise
the vital importance of working together on these
projects.
Group training
TLM’s Training and Transformation Unit is dedicated
to equipping clients with the skills and confidence
they need to run their businesses successfully.
The unit conducted a focus group with 46 clients in
order to identify how clients want training to be
delivered and what should be covered. The results of
the focus group suggested that clients want more
training on financial and business management, and
skill-specific training related to their businesses.
“I can save money and plan for the
future. This gives me and my family
greater security and certainty.”
Dorce Nenobais, TLM Community Group client
Environmental disaster spills over into
West Timor
The Montara oil spill in August 2009 made
headlines around the world. Over ten weeks, 500
million litres of oil spilled into the Timor Sea,
creating an oil slick spanning 10,000-25,000km². By
November, the oil had reportedly spread to the
coastal fishing villages of West Timor, where many
fishermen found their catches, and as a result their
livelihoods, affected.
Environmental researcher David Jones studied the
area and reported that local fishermen “found dead
fish in the area and as they started fishing they
discovered their fish catch was off by 70% or
more… every time they went fishing, they were
unable to produce any economic benefit and, in
fact, they lost money every trip.”
A small proportion of TLM’s clients in Kupang run
small-scale fishing businesses. Fortunately, none
have yet reported that their businesses have been
affected by increased pollution. For these
fisherman, their livelihoods and families are
dependant on their daily catch. TLM will continue
to monitor the situation.
Sources: ABC, AFP, The World Today, The Sydney Morning Herald.

Previously, basic business training was provided in

short sessions during weekly group meetings.
However, this training soon became repetitive for
more experienced clients. TLM’s new approach is to
provide training once a month to groups of about 60
clients who gather in a local church hall. This training
covers financial management, entrepreneurship and
market identification. Eight branches have already
hosted the training, with the other 11 branches
scheduled for 2010.

Individual clients will be provided with training

tailored to their businesses on a quarterly basis.

Introducing Community Groups

Our partners in Indonesia and the Philippines have
recently improved how they serve clients. This has
included a movement away from the traditional co-
guarantee system to more flexible loans. This change
has been driven by client feedback and recognises
TLM client Ambotuo Hasanudin fishes in the waters surrounding
that clients have varied financial requirements. To
Kupang.
reflect this fundamental change in client service,
‘Trust Groups’ have been renamed ‘Community
Groups’. This name reflects how a poor community
can be empowered when a group of clients and their
businesses improve the local economy.
4 OPPORTUNITY INTERNATIONAL AUSTRALIA - TLM Community Group Progress Report

Dece’s story continues

Dece Nahak is still smiling, despite facing several
hardships since the last update.

In our last report, we shared how a loan of Rp.

1,000,000 (A$119) from TLM had enabled Dece to
move from selling vegetables by the side of the road
to building a small kiosk with a greater range of stock.
Dece is a mother to five children and her husband
Fredrik works as a driver.

The biggest trial Dece has faced is the condition of

her daughter, Sandy, 13. Since a childhood illness,
Sandy has suffered from severe learning difficulties.
Recently her health has worsened and she dropped
out of school. Sandy’s condition will require costly
medical treatment.

In addition, a bigger kiosk opened in Dece’s village,
Nefonaek, which negatively impacted her business.
Her daily income decreased from Rp. 90,000 (A$10.70)
to Rp. 60,000 (A$7.15). Dece decided to move her
kiosk to Fontein, a village about 3km from Nefonaek.
She is still establishing her presence in this area, but
expects her income will begin to increase. Dece’s
new kiosk is in a main thoroughfare, so she has been
able to attract many customers. She plans to start
selling cooked food and mobile phone recharge
cards as well.
Dece’s husband Fredrik is a great support to her.
However, his job as a driver means that during busy
periods, he can be away for up to a month. Dece lives
with her five children and three relatives, so there are
always extra helping hands to help the children get
ready for school.
Dece with her youngest child, Gisela, at her new kiosk in
Fontein.
On a positive note, since joining TLM Dece has saved
Rp. 2,500,000 (A$298). She plans to use this money to
invest in her business and her children’s education.
Schooling is expensive but Dece regards it as her
highest priority.
Although Dece has faced many setbacks recently, she
is confident that with the continued support of TLM
her business will prosper again and she will be able to
afford care for Sandy.
Just 18 months ago, Dece was selling vegetables
from a roadside table, barely covering her operating
costs with a daily income of Rp. 30,000-40,000
(A$3.60-4.75). Both Dece and her business have come
a long way since then. She regards her investment in
her business as an investment in the future of her
family.

Dece with her husband Fredrik and daughter Cornelia in her

old kiosk in Nefonaek.

Dece, with bowls of cooked food to sell, in her new kiosk.

5 OPPORTUNITY INTERNATIONAL AUSTRALIA - TLM Community Group Progress Report

Reaching remote communities

Sabu island, circled, is approximately 175km from Kupang,

where TLM’s head office is located. Source: Multimap
The Sabu branch team.

In May 2009, TLM opened a branch on remote Sabu
island, situated approximately 175km from Kupang,
the region’s capital.
The Sabu branch was established in order to reach
poor communities who largely rely on subsistence
agriculture to survive. The island’s remoteness and
dry climate means that seasonal hunger is
widespread. There is great potential on the island for
economic growth through small enterprises.
Sabu island has a very low population density.
Electricity is only available at night to approximately
60% of the population. Only 40% of the population
has access to running water. There is one hospital on
the island and several small health clinics.
In the day to day operation of the branch, TLM staff
face various difficulties. Firstly, many people on Sabu
island only speak a local language, so staff must
have a translator. Low population density and poor
infrastructure also means that reaching clients can
be time consuming.
TLM staff are also working hard to gain trust in the
local communities. There are many money lenders
operating on the island and it will take time to build
TLM’s reputation as a fair and equitable
microfinance institution.
The new Sabu branch is the latest TLM initiative to
bring microfinance and support services to remote
West Timorese communities.

TLM faced many challenges in establishing the Sabu

branch. As the local population are not well
educated, TLM ran a recruitment drive throughout
West Timor to find suitable staff. Adverse weather
delayed shipping to Sabu island for a period,
affecting the office set up and staff placement.

There are two ways to travel from Kupang to Sabu

island: aeroplane and ferry. The aeroplane is
prohibitively expensive, so TLM staff travel on the
ferry, which only does the 26-hour round trip twice a
week and costs Rp. 85,000 (A$10). The Sabu branch’s
nine employees travel back to the mainland to see The ferry from Kupang docks at Seba Harbour on Sabu
their families four times a year. This considerable island.
personal sacrifice is testament to the dedication of
TLM staff.
6 OPPORTUNITY INTERNATIONAL AUSTRALIA - TLM Community Group Progress Report
Investing in people
Australian Youth Ambassador Mark Peacock (second from left)
celebrating Australia Day with TLM staff in the Kupang office.
Staff profile: Shanty Kock
Due to the remoteness of the communities where
TLM works, and the many languages and dialects
spoken in West Timor, providing reports on TLM’s
programs and clients is a challenging task. TLM staff
member Shanty Kock manages the process so that
donors can witness the impact of their support.
Shanty, 33, lives with her husband David, five-year-old
daughter Audy and mother-in-law. She loves to
spend time with her family on weekends, as during
the week her daughter is at school and her husband
also works.
Shanty travels throughout West Timor to collect
information on clients, interviewing them about their
businesses and taking photos. She will usually travel a
couple of hours to reach a client, interview them for
half an hour, then return to the office to write their
profile. It usually takes a full day for Shanty to produce
a client profile written in English.
Shanty enjoys getting to know clients and learning
about their local cultures. TLM employees, like Shanty,
play a vital role in sharing the good news of TLM’s
clients with the wider community.
Shanty with Zakarias, a TLM client in the cattle fattening
program.
Postcard from the field
“Hello Friends. Instalment number two from
Kupang during my year ‘in the field’ with TLM.
From memory last time I checked in, I was making
more language bloopers than George Bush on a
good day, my sweat glands were in overdrive and
I was planning to help TLM with improving their
audit function as well as review and improve their
process manuals.
It is now (February) the middle of the rainy season.
And when it rains in Kupang, it pours. For days on
end. Good for the farmers. Not so good for a city
boy who loves the sun. At least the sweat glands
get a reprieve. By the time you read this, the wet
season should be behind me.
On the work front. I’ve been busy here but have
been working to a… ‘fluid’ workplan. Flexibility is
the key here. Most recently I have been working
with the management team to develop TLM’s
three year business plan. It has been both an
exciting and difficult process. Exciting because
looking ahead allows the team here to dream big,
and imagine what kind of impact we might have if
the number of families we impact in the region
increased to 25,000 then 35,000 then… dream
big, 50,000 over the coming years. The potential is
huge.
Yet it has been a difficult process too. Difficult
because, as with any organisation, particularly not-
for-profits, there are limitations. Limitations due to
funding. Limitations due to an uncertain
regulatory environment. Limitations due to a lack
of skilled labour in parts of this poor province. But
no one said this was meant to be easy. And I am
particularly heartened that Opportunity Australia
is committed to keeping supporters informed of
both the successes and the struggles. And when
all is said and done, TLM is making a huge
difference in this region of Indonesia.
The team here at TLM are terrific also. Friendly.
Warm. Helpful. Full of laughs and smiles. Makes
this experience all the more enjoyable. Bring on
the next six months.”
Mark Peacock
Australian Youth Ambassador
7 OPPORTUNITY INTERNATIONAL AUSTRALIA - TLM Community Group Progress Report

TLM’s performance
Performance indicators Jun 2009 Dec 2009
Active clients¹ 12,270 16,321
Branches 19 19
Average loan size² A$ 306 264³
Portfolio (funds with clients) A$ 3,000,783 3,389,363
Portfolio at risk (PAR) > 30 days 11.62% 4.34%⁴
Percentage of loans to women⁵ 46% 53%
Operational sustainability 114% 100%⁶
Financial sustainability 85% 77%

¹Active clients include all TLM Group and Individual clients.

²Exchange rate used is A$1: Rp. 8,400
³In 2009, TLM focused on serving Group rather than
Individual clients, resulting in a decreasing average loan size
across all products.
⁴TLM has implemented a series of controls to address
portfolio at risk, including a more comprehensive loan
application and a systematic process to deal with late
repayments. As a result, portfolio at risk has decreased.
⁵Loans to women in West Timor are often signed by the
husband, hence the statistic for loans to women is lower than
the actual.
⁶New regulations in Indonesia mean the Government will tax
Foundations (like TLM) if they exceed 100% operational
sustainability. To address this, TLM is reinvesting additional
income in community projects.
Glossary
Portfolio at risk (PAR) is a stringent measure of a
microfinance institution’s loan portfolio quality. It
calculates the total value of outstanding loan balances
for loans with at least one payment being overdue by
more than 30 days. PAR is used to highlight potential
future repayment problems.
Operational sustainability is the ability of an
organisation to cover the costs of its lending
program with the revenue earned from its lending
program.
Financial sustainability is the ability of an
organisation to cover the costs of its lending
program with the revenue earned from its lending
program including the cost of its capital, in
particular inflation.
Disclaimer
This report provides information about Opportunity International
Australia’s program activity. Information is provided to us by our
implementing partners and we believe it is a true and accurate
reflection of program activity at the time of writing. Programs may
change in scope or be discontinued where our core operations are
no longer fulfilling the intended outcomes. In this case, Opportunity
International Australia may redirect funding to a suitable alternative
program.
Fairlie Butterfield with children of microfinance clients at a TLM
cattle fattening station.
Postcard from the field
“Looking at the terrain caught me by surprise
while preparing to land at Kupang Airport.
Expecting to see lush countryside, I was taken aback
when, in reality, it was rugged, dry and rather
inhospitable terrain that the West Timorese called
home. From that moment, I better understood
conditions under which the West Timorese lived and
had to make a living.
Each day we were driven to stalls, kiosks, markets
and small businesses in Kupang or in the
neighbouring countryside, to get a true picture of
how small loans have been beneficial to the loan
recipients and their families. The diversity of
businesses was endless.
It was an amazing experience to see just how
resilient, resourceful and happy these people were.
Knowing that with the help of small loans, children
were being given an education and a better chance
in life, food was on the table, and other villagers
were being employed as small businesses grew.
It was so encouraging to see how donations were
being used again and again, with some recipients
onto their second or third loans.
For David and me, it was a truly humbling
experience to visit West Timor. The people were so
hospitable and generous and we were welcomed
with open arms.
Our resolve to continue to be involved with
Opportunity Australia’s support to West Timor has
been confirmed through this trip, and we would
love to return there in the future.”
Fairlie Butterfield
Opportunity Australia supporter
 How do you want to Share the journey
change lives?
1. Invest in the future of microfinance
Become an Opportunity Investor and walk
alongside Opportunity Australia as we implement
and improve services to the working poor in India,
Indonesia and the Philippines.

Invest in Innovation—Support Opportunity

Australia’s Social Performance Management program.
$25,000 delivers expert consultants and practical
tools to provide more people with better
Your support can provide the poor with enough capital to kick
opportunities. start their businesses and work their way out of poverty.

2. Sponsor clients in their journey out
of poverty.
You can sponsor 25-50 microfinance clients for
$10,000. These clients will start or expand their own
small businesses and in doing so, bring hope to their
communities. You can choose to support clients in
India, Indonesia or the Philippines with life-
changing loans.
3. Support the people who make
microfinance work
Walking with TLM - Our partner TLM is building its
capacity to provide flexible, innovative financial
services and training to poor people in West Timor.
Double your impact—Philippines Renewal
Program - Three microfinance institutions and long-
term partners of Opportunity Australia, ASKI, TSKI and
TSPI, are transforming into dynamic organisations
equipped to achieve greater social impact now and
in the future. AusAID will match each dollar you
donate, doubling your impact.
Thank you for your generous support.
Opportunity Australia needs your help to expand
our community of supporters and continue
changing lives in India, Indonesia and the
Philippines. We would like to connect with more
people like you.
Sharing your report with family, friends and
colleagues is an easy way to increase the impact of
your commitment. You can inspire others to join us
on the journey as we give a hand up to those living
in poverty.
To discuss how you might share your journey with
others, contact your local Donor Relations Manager
or contact us on opinfo@opportunity.org.au or
1800 812 164.
More exciting opportunities to
support clients and their families are
coming soon.

“Be the change you want to see

in the world.”
Mahatma Gandhi
ID3TB ED0310

Microfinance can help parents give their children a chance at

a brighter future.