USAID Support for Financial Inclusion in Indonesia

• Loan Guarantees• Islamic Financing• Branchless Banking

USAID Loan Guarantee Program

USAID jointly works with banks to identify underserved sectors and share risk Micro and SME, Women- managed businesses, agri-businessesTechnical assistance is provided to borrowers and lendersAim is to demonstrate profitability of neglected sectors

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Impact of Loan Guarantees in Indonesia

We currently have six guarantees in place valued at USD 100 million• Bank Danamon: $16 M, SMEs in Aceh, 9,605 loans• Bank Danamon 2: $35 M, new lending to Ag sector• Bank Andara: $13 M, 104 loans to MFIs• Bank Andara 2: $3 M, just started lending to Ag sector• MBK: received loans from 3 banks valued over $8 M• Standard Chartered: $20 M, 126 loans made to SMEs

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Support for Islamic Financing

USAID signs agreement with Bank Muamalat

• The first USAID loan

guarantee to support Islamic Financing in the world

• Guarantee USD 2.7 million to Mitra Bisnis Keluarga

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USAID Research on Zakat

• USAID commissioned a study on Zakat to:– Assess potential size and

growth– Understand how OPZs

function• Findings and

recommendations:– Poor organization– Low public awareness– Limited standards and

oversight – Regulatory improvements for

transparency and poverty alleviation

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Support for Mobile Financial Services (MFS)

• Regulatory and Government coordination support– Analysis of current policies/regulations– Assist in mapping and coordinating

Ministries’ role in supporting MFS– Help learn from Int’l best practices– Develop plans for pilot programs

• Grant fund to catalyze Private Sector investment– Training to agents and bank lenders– Financial literacy– Monitoring and learning from pilot

programs

Mobile Money Continues to Expand Globally

Source: GSMA Mobile Money Deployment Trackerhttp://www.wirelessintelligence.com/mobile-money/unbanked

Mobile Financial Services to Reach the Poor

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2005 2006 2007 2008 2009 2010 20110.0

50.0

100.0

150.0

200.0

250.0

Bank/BPR/Coop Mobile Subscribers

Financial services op-portunities

Mobile Telephone versus Bank Penetration in Indonesia

Source: GSMA, Telkomsel, Indosal, PT XL, Axis, BI

Reduced costs Convenient and understood

channel for unbanked and under banked populations

Provides reach into rural areas Time savings, security, and

transparency More than just banking services

Potential for Financial Inclusion Using Mobile

USAID’s Potential Areas for Support in Indonesia

Catalyst Category Intervention ActivitiesMarket Research, System and Product Development

Develop Public Private Partnerships to design and test new products and services

Market research to develop demand-driven financial services Remove information asymmetry and encourage institutions to

use mobile technology to expand to underserved markets

Enabling Environment Reinforce regulatory capacity building efforts

Ecosystem Development

Support assessment/studies of optimal agent network development and expansion

Public Awareness/Outreach

Support financial literacy campaigns

Stimulate Pilots Persuade government entities to pilot conditional cash transfer disbursements to mobile wallets

Persuade commercial entities to pilot salary payments

Moving Mobile Money/Banking Forward

Ground-breaking mobile money programs have enabled people from Kenya to the Philippines to access financial services for the first time.

"The concept works. Now it's time to take it out of the lab and into the mainstream. There is tremendous potential for innovative delivery channels to reach the 2.7 billion people who have no access to affordable financial services.”

Tilman Ehrbeck, CGAP's Chief Executive Officer

Contact Information

Brian Duszabdusza@usaid.gov+62811 910 8216

Websites: www.Indonesia.usaid.gov

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