Analysis of Increasing The Savings of The Poor Through The National Programme for Urban Community Empowerment

Capital becomes one of the requirements in businesses. This is often not owned by groups of poor people so they can not able to run their businesses. One of the effort have been made by the government to overcome poverty is business capital loans of the National Programme for Urban Community Empowerment (PNPM Mandiri Perkotaan). Through the loan, it is expected that their savings will be increase and at the end the poor can improve their welfare. Hedam Village in Heram District, Jayapura City, is one of the place where that programme have been implemented since 2010-2014. In general, the village is dominated by residents with a high school education level and work as small traders and transportation services. This study aim was to find out whether the capital loans can improve welfare through increasing the savings. The Ordinary Least Square (OLS) is used to analyze the primary data from 67 respondents. Based on the results, the capital loans have a positive effect on increase savings. On the other side, 64.6 percent of savings variable can be explained by income and capital loans. There are other variables likely affect the model which have not been taken into this study.