NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, December 8, 2016

Indonesian farmers can expect to find a micro-credit program specifically designed to fulfill their financing needs next year.

On Tuesday, President Joko “Jokowi” Widodo called on his Cabinet to design a micro-credit program specifically designed for the agriculture sector to increase the amount of financing farmers could receive. He acknowledged that the current micro-credit program was too broad.

According to the President, the Rp 100 trillion (US$7.5 billion) allocation in this year’s micro-credit program has barely been enjoyed by farmers. Instead, the wholesale and retail trade sectors has reaped most of the financing program.

“By July 31, 2016, up to 65 percent of micro-credit was distributed to the wholesale and retail trade sectors, while only 15 percent was distributed to the agriculture and forestry sectors,” he said during the opening of the closed-door meeting.

The Cooperatives and Small and Medium Enterprises Ministry also noted that the government had disbursed 71 percent of its Rp 100 trillion lending target to 2.95 million debtors. Alongside 28 existing banks and multi-finance firms, the government has also appointed several cooperatives to act as lenders for the program.