My Letter To My Paper 16 Oct (Micro audit can aid jobless poor)
THE most recent recession has shown that many jobless, low-skilled Singaporeans lacking in capital have few alternatives when it comes to making ends meet.
There is little chance that they could get unsecured loans from banks if they are broke or unemployed. Banks look at prospective borrowers’ employment status before they extend credit to them.
For someone wanting to start a food stall, for example, he would need at least $10,000 in capital. He would also have to place a deposit of at least three months’ rent should he want to rent a stall in a neighbourhood coffee shop.
Assuming that the average rent of a small food stall is $1,500 a month, that is a $4,500 deposit which is largely non-refundable, should an operator decide to shut down the business after one month.
The food-stall operator would also need to buy equipment, which would cost around $2,000–$3,000. Before the food stall can even generate any business, the operator would need about $6,000–$7,000 to tide him over the initial dry period – money he would not have as he was jobless.
For low-income Singaporeans, it is tough to cough up such money in start-up costs should they want to embark on a business venture.
They would have no choice but to continue looking for low-paying jobs, with no chance of breaking out of the poverty cycle.
They would also continue to face challenges as they age and come up against competition from younger and cheaper foreign workers. Finance houses or even the Government could grant lowinterest loans to budding entrepreneurs who wish to rise above a low-income bracket.
Such loans can be paid back monthly at low interest rates. Should borrowers default regularly, interest rates could be jacked up so that they would be motivated to pay off their loans promptly.
With many Singaporeans facing massive challenges in the near future in an economy that looks to be volatile, many would benefit from micro-credit programmes. Such schemes could provide hope and a lifeline to those who have the skills but little capital to strike out on their own.
Mr Gilbert Goh Keow Wah
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