A palm tree saved Rosalina’s life. She thought her fate had been sealed when the flood waters carried her away on the morning of December 26, 2004. Somehow, though, she found herself in the top of the palm tree, a hundred meters from her house in the district Aceh Utara. She clung to it for two hours, while animals, people, whole houses were swept away beneath her.

Today, the 30-year-old is again working as a teacher, helping other women rebuild their lives and livelihoods as seamstresses. Allianz and the German Society for Technical Cooperation (GTZ) are financing the project – one of the many they support.

Together with the GTZ, Allianz is involved in three microfinance projects in Aceh to revive small businesses affected by the tsunami. Allianz is providing more than 360,000 euros in donations to be used as start-up capital for five small banks, two saving and credit cooperatives and 20 women’s self-help groups. For its part GTZ ensures effective use of the money and also offers the recipients training and finance workshops.

Solidarity funds of this kind have a tradition in Aceh: villagers pay regular contributions to the local savings and credit/self-help group and receive credit for their business if they need it. The tsunami literally washed away many of these savings associations. Many of their members were killed, outstanding credit was lost. Others survived, but their small stores, shrimp farms and snack bars were destroyed.

"What people urgently need now is working capital," says GTZ advisor Iman Budi Utama. Most of the time only small amounts are needed to get a business going again, explains Iman, who studied economics in Germany. Women with small businesses are an important source of income for their families, but they have particular difficulty in raising money. So Allianz has provided start-up capital for women’s self-help groups like Rosalina’s. Several hundred families will benefit from the scheme.

If Rosalina and her 14 seamstresses had had to rely on regular bank loans, she would never have been able to get her hands on the sewing materials she needed so quickly. After the murderous flood, in which 150 of the 800 inhabitants of her village Jambo Timor died, and which Rosalina survived in the top of the palm tree, the women and their families were initially accommodated in the transition camp in Lhokseumawe. As soon as their houses are rebuilt, they intend to return to Jambo Timor, five kilometers away.

In the meantime they have started a successful sewing business. Teacher Rosalina, who financed her studies with sewing work, has taught the women the right techniques; the sewing machines came from Germany. They now sell their beautifully embroidered blouses as far away as Jakarta. Part of their earnings of 60 to 70 euros a month is put into a savings account. The money is used to pay for repairs and materials.

The economic viability of such projects is especially important. "We can’t give people credit when it’s obvious that they can’t pay it back. The entire program would fail if we did that," says Svenja Paulino who coordinates various GTZ projects from Banda Aceh. She is convinced that an economic process can only come about if a market-oriented approach is taken that can survive when the international aid organizations finish their work in three years’ time. This is why potential borrowers must also demonstrate they are able to run a business. And they must also show that they can pay back the money.

If loans are paid back on time, the borrower usually qualifies for a re-loan. The principle of these re-loans gradually increases in order to reward the borrower for his or her good track record, but also to meet increasing credit needs for the growing business. With each new loan cycle, business progress is re-assessed and the borrower is coached anew.

The combination of reliable borrowers who pay back their debts, very low loan administration costs and gains made from fair interest rates ensures that micro-insurance projects like Allianz's can continue to help individuals and families in regions like Aceh. Usually these individuals have no access to commercial banks, or are otherwise dependent on credit sharks who demand sky-high interest rates.

A system that works, as carpenter Mohammad Ali’s example demonstrates. When the 47-year-old retires, he will be able to hand over a healthy business to his two sons, although he doesn’t look as though he’s going to retire just yet. "I’ll work for as long as it takes," says Mohammad, whose success story began in 1992 with his first loan from the Bank Perkreditan Rakyat (BPR) in Lambaro, a suburb of Banda Aceh.

He borrowed 300,000 rupees (30 euros) as start-up capital to buy wood. Five years later he borrowed two million rupees to buy himself a plane. Currently he has a loan of five million rupees. His son Julizan, who has been working with his father for the past seven years, entered the business with a stake of ten million rupees (1,000 euros) and has bought the land on which the workshop is situated. "It’s a big responsibility," says the 25-year-old. To date, father and son have never fallen behind with their repayments.

Two years after the Tsunami, Allianz has disbursed close to 900,000 euros in employee and corporate donations to Tsunami victims throughout Indonesia. A total of 15 projects were started in the sectors of microfinance, education, and water and sanitation, of which ten projects have already come to a successful close.

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer, provided on the right.