Sunday, January 31, 2010

Another Trip to the Field

On Saturday we ventured into the field again to meet with VPOs and learn about their businesses and how we can help them. Joining us were two consultants with Vision Spring, a non-profit dedicated to improving the access of the poor to eye care. We wanted to see what kind of eye care was available in the poor communities and whether Vision Spring's program could be offered through PT Ruma's network of VPOs. In addition to myself, there were two other "Bankers without Borders," Elaine Chang and Sultan Haider. They are doing a project for PT Ruma looking at reporting requirements for running both the social and business sides of the operation. The link below should give you access to photographs taken of the trip.

The first VPO we visited was in an "upper" low class (poor) neighborhood in the peri-urban Tangarang area on the outskirts of Jakarta. Ibu Marni is one of PT Ruma's most experienced VPO. In fact she runs a "hub" of 18 VPOs and makes more from that activity than from her direct sales of 10-12 per day. Her husband earns about $150/month as a construction worker. They have two children, one in junior high and one in senior high school.

After discussing the air time sales business the Vision Spring consultants inquired about the availability and quality of eye care for the community. Ibu Marni reported that the neighborhood is regularly serviced by itinerant sales people offering eye tests and reading glasses for around IR300,000 (US$30). Such sales are always made on a 10 month installment basis. She said she could do this business as well if she could offer the same credit terms. She herself had never had an eye exam so one was conducted for her. It turned out her vision is pretty good--20/20 in one eye and 20/30 in another.

We moved on to another VPO not too far away but in a distinctly less affluent neighborhood. Sirma, a recent high school graduate, runs her her business through her family's "wareung" or roadside stand. Her business also seems to be going quite well. She makes about 10 transaction per day and contributes 10-12% of her household's total income.

Finally, back closer to the city, we visited Ibu Trirahyu, a VPO in Tomang, a very poor neighborhood along the river. This was quite a remarkable visit. Ibu Trirahyu was actually the first VPO "hired" by PT Ruma. She has learned that if she increases her "working capital" (her balance of air time in her account with the wholesaler) she can actually increase her sales without requiring any additional outside financing. She understands that only a portion of her cash flow from sales of air time represents her profit and if she retains some of the profit she can grow her business. This is a lesson we must learn to replicate with other VPOs who see their sales constrained by a lack of inventory (air time balance with the wholesaler) and who request bridge financing to consummate their sales. This often causes delays in the delivery of air time to their customers even though they have already paid the VPO for it.

After our meeting with Ibu Trirahyu, we took a short walk through her neighborhood. In spite of the incredible density and poverty we were impressed by its relative orderliness. Many dwellings had small gardens of potted plants and cages with song birds hanging from the windows. Everyone was very friendly to this strange group of foreigners wandering along the tiny lanes that endlessly twisted through this vast area housing thousands of poor families. I asked about the level of crime in the neighborhood and was told it was actually quite low. Everyone knows everyone here.

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