Beyond Fishing? The Impact of Microcredit on Alternative Livelihoods in South Sulawesi, Indonesia

Indonesia has the most biologically diverse coral reefs worldwide. However, many marine areas of Indonesia, including the Spermonde Archipelago of South Sulawesi, have become increasingly degraded due to global environmental change and local pressures including coastal runoff and destructive fishing practices. As ocean health declines, small island villages of the Spermonde Archipelago experience food insecurity and growing levels of poverty. These small island communities face challenges in developing alternative livelihoods to fishing due to limited access to economic markets and resources. As conservation strategies evolve to better incorporate the importance of natural resources to people, microcredit has emerged as a possible tool in addressing both conservation and development objectives in the region. Created in 1998, the Coral Reef Rehabilitation and Management Program (COREMAP) is a national conservation initiative that melds bottom-up and top-down policy approaches to protect coral reefs and empower the coastal and island communities that depend upon marine resources. One way in which COREMAP seeks to reduce pressure on marine resources is through the provision of small loans for the development of alternative livelihoods to fishing. Through 74 semi-structured interviews with loan recipients and village staff in eight small island villages, this study examines the impact of the COREMAP microcredit system on the generation of alternative incomes in the Spermonde Archipelago. Results show that COREMAP small loans fostered the development of additional income sources to fishing. Although the COREMAP microcredit program achieved the development goal of income diversification, it has thus far fallen short of the conservation objective to reduce fishing pressure. The creation of alternative livelihoods is incredibly complex. Small island villages in Spermonde face small, variable incomes and limited livelihood opportunities. Microcredit may be unable to achieve conservation goals in the region without demonstrating its ability to support businesses that provide higher incomes than fishing. In light of these findings, this study recommends policy strategies that could address existing challenges to business success and program sustainability, including increased loan amounts, partnerships with private industry, funded positions for village COREMAP staff, regular loan repayment meetings, greater flexibility in loan repayment schemes, and a combined savings-credit approach