Why has Ultra Microfinance bee a Policy Success in Indonesia

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By Beginning of 2016, The Government of Indonesia through PT Permodalan Nasional Madani (PNM) has initiated the establishment of Mekaar, a state-owned financing product targeting the pre-prosperous micro business sector. Among all the local organizations that provide ultra microcredit service for the poor, Mekaar is considered as the nearest to the poor, since the program is targeted poor productive women with a credit amount of only IDR2 million or IDR3 million (US$150-220) per person for 54 weeks. With its unique peer-lending model, Mekaar has successfully reach more than 800,000 customer in year and targeted to become 2 million in end of 2017, who come from various regions across Indonesia. The peer-lending model was originated from grameen bank; however, PT PNM has been successful in adjusting the peer-lending model with Indonesian culture and market including indoctrination program in favor of the Government goal such as pluralism, anti racism, loving nation, etc. In this article, we examine Mekaar's success story in penetrating Indonesian pre-prosperous market with ultra microfinancing. The information presented in this article is collected primarily from field observation to several Mekaar's branches and interview with the key person in those branches. First, we presented an overview of microfinance market in Indonesia to give a contextual background. Then, we evaluate Mekaar's target market, product and peer-lending model. We also evaluate the role of Account Officer who doing indoctrination program and as a facilitator between the lender and the borrowers in Mekaar's case and the way Mekaar's build their brand as a trusted lender among poor productive women in Indonesia. Finally, we discuss the performance of Mekaar using several criterias such as breadth of outreach, depth of outreach, and portfolio quality.
Original languageEnglish
Publication statusPublished - 2017
Event2017 IAFICO Global Forum for Financial Consumers Financial Consumer, Society and Global Development - CN, Sanghai, China
Duration: 1 Jan 2017 → …


Conference2017 IAFICO Global Forum for Financial Consumers Financial Consumer, Society and Global Development
Period1/01/17 → …


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