By Shinta Hutagalung
Bank Andara is one of an increasing number of commercial banks serving the microfinance sector in Indonesia, but with one notable difference - its vision is to act as a wholesale partner to MFIs offering a range of flexible financing mechanisms, to help MFIs expand and improve their activities and market presence.
Early in 2009, BPR Arthaguna Sejahtera (AS), one of Bank Andara’s first BPR clients (a community bank), received a working capital loan that enabled the BPR to provide its low income clients with flexible and needs driven loans.
Ibu Murni, an AS client, and her three sons live under an electricity tower in south Jakarta, where they survive on an income earned from collecting junk and recycle-able materials and re-selling them. In 2004, after several losses in the early years of her business, Ibu Murni discovered and led an AS run group lending program (“Kelompok Sejahtera”) for housewives.
She tells us, “It was so hard before we knew about BPR. We used our own life savings to finance our business, and whenever the market prices fell, we could not survive. We would have to close the business and go back to zero.”
The group lending program provided Ibu Murni with funds to support her business through price fluctuations without losing all of her life savings. As the leader of the lending group, Ibu Murni administered the loans of 10 housewives, who used their money to finance small home businesses such as small grocery shops, “warung” food stalls and tailoring services.
However, lending stopped for Ibu Murni’s group in 2008 when most of the members quit as they could not make their repayments. “By then I decided to stand on my own to survive and I dared to apply for an individual loan. I had to move forward for my family,” Ibu Murni explained with a smile.
Ibu Murni started with a loan of IDR 4 million (US$ 526) and built to a loan facility of IDR 20 million (US$ 2,104), always repaying on time. The individual loans she received from AS, enabled her not only to rebuild her junk business without the risk of losing all her life savings when market prices fluctuated, but also to finance payment to suppliers until she received better repayment prices from the wholesalers.
Through reaching and supporting increasing numbers of secure MFIs and subsequently, their economically active entrepreneurial poor rural and urban clients, Bank Andara is beginning to realize both its business objectives and social mission - to catalyze large-scale outreach to millions of the un-banked and under-banked in Indonesia, by providing innovative financial products and services at scale, to and through MFIs.
“Now a door is open for my family and me,” said Ibu Murni “We can borrow money to help our business continue to grow and I have started to do bookkeeping. I am hoping that I can donate infaq to the mosque this year. Things are getting better and I hope it will last.”