JAKARTA (Yosefardi) – FMO, the Dutch development bank, and Bank Andara (BA) have in November 22, 2013 signed a letter of intent, that entails an US$10 million senior loan, equivalent Rp115 billion.
The loan will be used to expand BA’s commercial funding of local MFI’s and help the company grow their support by providing efficient systems and technological know-how. The financing will contribute to the creation of jobs and better living conditions of the poor in Indonesia who lack access to finance through the local MFI’s.
Indonesia’s microfinance sector is one of the largest in the world, with a diversity of around 500,000 MFIs serving more than 40 million people. Still, it’s estimated that more than 52% of the people in Indonesia do not have access to banking services and nearly half of the population lives on less than US$2 per day.
Most MFI’s are small NGOs, village-owned institutions and commercial or rural banks that serve few microfinance clients. The majority of these MFIs are characterized by low growth in outreach and inefficient systems, which is caused by lack of access to affordable funding and technological know-how.
Through MFI financing the unbanked poor are reached, who still represent almost 50% of the total population of 238 million (in spite of Indonesia being a middle-income country). Via the MFIs that are financed by BA, this segment of the population will gain access to finance.
Established in 2009, BA is a wholesale bank providing finance and advisory services to Rural/Agri Credit Banks (BPRs) and cooperatives in Indonesia.
The Bank’s current shareholders are: Mercy Corps, International Finance Corporation (IFC), KfW, Stichting Hivos-Triodos Funds (HTF), Developing World Market Fund S.C.A – SICAV SIF (DWM), and I Wayan Gatha.
The Bank has been working with more than 737 Microfinance Institutions (MFIs) and outreached 1.2 million people in Indonesia. Bank Andara plans to reach 1,200 MFIs in the next three years.