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IFC collaborates with Indonesia’s Amartha to empower women-led micro-enterprises

An innovative funding solution has been created by the International Finance Corporation (IFC) and Amartha, an Indonesian microfinance fintech platform, to increase access to finance for women-owned microenterprises, according to a statement.

The agreement, which was announced on Wednesday, uses capital market techniques to create a platform that will allow Amartha to access financing, including from offshore impact investors, that could be scaled up to $206 million, according to The IFC.

IFC, the World Bank’s private sector arm, has committed funds from its own account as a cornerstone investor to build the platform and plans to raise the remaining funds from reputable foreign investors.

IFC and Amartha will support companies that collectively employ tens of millions of people and significantly contribute to Indonesia’s economy by increasing access to finance for microenterprises, a subset of Indonesia’s micro, small, and medium-sized (MSME) sector. The agreement is also thought to have the potential to expand Indonesia’s capital markets by acting as a catalyst for future investments by serving as a model.

According to the statement, Amartha is a leader in developing financial infrastructure and promoting financial inclusion for grassroots communities. With more than 70% of its loans underwritten outside of Java, Amartha also helps to balance the economic development of non-Java regions and rural communities. Given Amartha’s primary focus on women microenterprises in rural areas outside of Java where financing gaps are the widest, the initiative announced on Wednesday is anticipated to address the financing gaps for ultra-microenterprises in some of the most underserved segments and geographies of the country.

“We are grateful to have a strategic collaboration with the IFC,” said Andi Taufan Garuda Putra, Founder and CEO of Amartha. “Amartha’s technology and our digital financial infrastructure were built to close the MSME financing gap. The digital economy market share in Indonesia is approximately 40 percent of total digital economy transactions in ASEAN. This is where Amartha’s business model aligns with the government’s goal of achieving digital financial inclusion. With this partnership, we can go the extra mile to reach remote villages and women-led MSMEs”.

Women make up a sizeable portion of Indonesia’s MSME sector, which employs 97 percent of the country’s workforce but has a financing gap that is estimated to be $21.2 billion. There are thought to be 44 million ultra-microenterprises operating in Indonesia, and their financial needs are even more acute. These businesses typically rely on funding from unofficial sources like money lenders, friends, and family because they do not have access to financing from commercial banks. The largest financing gaps within this sector are among female microentrepreneurs, particularly those operating outside Java.

The IFC and Amartha partnership is anticipated to have a significant impact on the nation’s digital financing. The anticipated results are consistent with the IFC’s emphasis on Indonesia and the strategic priorities of the Indonesian government, which include advancing the digital economy. IFC will assist Amartha in developing its environmental and social (E&S) management framework in order to reduce E&S risks and gain knowledge that will help to improve responsible finance practices and expand social financing.




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