Sahil Sondhi, an associate consultant at Strategic Asia, a Jakarta based consultancy, wrote an article that appeared recently on the Jakarta Globe website calling for a new strategy in the Indonesian microfinance sector.
Citing a study by the Asian Development Bank [2], a regional development bank headquartered in Manila, Philippines, the author points out that 60 percent of the people surveyed, which included people from across the economic spectrum, have no access to institutional credit. Mr Sondhi laments that “even as the commercialization of microfinance has taken place in Indonesia, competitive pressure and efficiency in the market remain low.” [1] He recommends that Indonesia set up a task force to outline an overall strategy for developing the microfinance industry, as did the Indian Task Force on Supportive Policy and Regulatory Framework for Microfinance. Mr. Sondhi also urges more collaboration between the public and private sectors to bring financial services to the poor.
As of 2009, 16 Indonesian microfinance institutions (MFIs) report data to Microfinance Information Exchange, the microfinance clearing house, with an aggregate loan portfolio of USD 3.9 billion, and 4.7 million active borrowers [3].
About the Asian Development Bank [4]:
Headquartered in Manila, Philippines, the Asian Development Bank (ADB) is a regional development bank that consists of sixty-seven members. Established in 1966, the ADB has three strategic agendas: to foster inclusive growth, to facilitate regional integration and to ensure environmentally sustainable growth. To accomplish these objectives, the ADB uses loans, technical assistance programs, grants and direct assistance in the form of equity investments, guarantees and credit to private companies in member countries.
By Trevor Kwong, Research Assistant
Additional Resources and Sources:
[1] Source Article: Jakarta Globe: Indonesia Needs to Re-examine Untapped Microfinance Potential:
http://www.thejakartaglobe.com/opinion/indonesia-needs-to-re-examine-untapped-microfinance-potential/386827
[2] Asian Development Bank: Low- Income Households? Access to Financial Services:
http://www.adb.org/Documents/Books/Low-Income-Households/low-income-household.pdf
[3] Microfinance Information Exchange: Indonesia:
http://www.mixmarket.org/mfi/country/Indonesia/profile/flatstore_mfi_mfdb_data.mix_diamonds__c,balance_sheet_usd.gross_loan_portfolio,products_and_clients.total_borrowers/2009/
[4] MicroCapital Universe: Asian Development Bank:
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Asian+Development+Bank
[5] National Bank for Agriculture and Rural Development:
http://www.nabard.org/departments/publications.asp
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/tiki-index.php
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