Affordable Micro-credit

Milkman in Indonesia
Affordable Micro-credit
To service consumption finance requirements of low income groups and retail customers beyond urban areas
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Corporate and Retail Banking
Business Model Description

Invest in B2C and P2P financing companies offering affordable personal loans (small-size, low interest rates and collateral-free) to serve the needs of the underserved population segments, merely using ID proof and contact number of borrowers as a minimum requirement. (11) Examples of some companies active in this space are:

PT. Finansia Multi Finance (subsidiary of KB Kookmin Card Co., Ltd.) (KreditPlus), founded in 1994, provides finance solutions for automobiles, motorcycles, heavy equipment, personal computers, office tools, furniture, and video equipment. In 2020, it raised USD 50 mn from the International Finance Corporation (IFC) and USD 200 mn from SMBC, HSBC, KEB Hana, ANZ, SCB and DBS. (15)

Akulaku Inc., founded in 2016, operates in emerging markets with underserved consumers. It provides digital banking services, consumer credit, digital investments and insurance. Till 2019, it has raised USD 220 mn, including USD 100 mn in Series D round (at USD 450 mn post-money valuation) from Ant Financial Services Group and Alibaba’s financial services arm (USD 40 mn) (16).

Kredivo (product of FinAccel Pte Ltd.), founded in 2015, is a digital credit platform. It has >3mn customers and offers 2 types of lending products: 0-interest 30-day “‘buy now, pay later” financing for e-commerce and offline purchases, and 3-, 6- and 12-month installment loans with an interest of 2.6% a month (annual rate of 53.36%). It raised USD 200 mn in debt from Victory Park Capital. (17)

PT Julo Teknologi Perdana, founded in 2016, provides affordable unsecured personal loans, using machine learning technology to assign varying interest rates and credit limits to borrowers as per their credit worthiness. It offers digital credit, cashback bonus and lower interest rates. It raised USD 10 mn from Quona Capital and USD 5 mn from East Ventures, Skystar Capital in Series A round. (18)

Expected Impact

Provision of affordable loans to the lower income group and retail customers beyond urban areas to ensure financial inclusion and facilitate sustainable growth in the economy

Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
Akulaku: ROI - 50% higher CPI - 40% lower Cost-per-new-credit - 50% lower (28)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
Assets of Indonesian banks 2002: USD 81 bn 2019: USD 628 bn (19)
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
No Poverty (SDG 1) Reduced Inequalities (SDG 10) Gender Equality (SDG 5)
Sector Sources
  • (1) OJK. 2020. BAGAIMANA UMKM & PERBANKAN DAPAT SUKSES DI ERA DISRUPSI EKONOMI & DIGITAL. (2) SOFIA-Oxford Policy Management Ltd. 2017. Understanding people's use of financial services in Indonesia. (3) OJK. 2021. THE INDONESIAN FINANCIAL SERVICES SECTOR MASTER PLAN 2021-2025. (4) Bamboo Capital Partner. 2020. Amartha – Bridging the financing gap for women entrepreneurs in Indonesia. (5) WOMEN'S WORLD BANKING. 2019. Indonesia. (6) OJK. 2020. Supporting Financial Inclusion for MSMEs through FinTech. for (7) Ayman Falak Medina. 2021. Opportunities in Indonesia’s Financial Technology Sector. (8) J-PAL. 2020. Towards Inclusive Digital Finance in Indonesia (Inclusive Financial Innovation Initiative Whitepaper). (9) PRAKARSA Policy Brief. 2020. The Risk of Over-indebtedness Amid COVID-19 Pandemic. (10) PWC Indonesia. 2019. Indonesia’s Fintech Lending: Driving Economic Growth Through Financial Inclusion. (11) Indonesia Financial Services Authority (OJK). 2020. THE INDONESIAN FINANCIAL SERVICES SECTOR MASTER PLAN 2021-2025 to Recover the National Economy and Enhance the Financial Services Sector Resiliency and Competitiveness. (12) International Finance Corporation. 2016. Women-owned SMEs in Indonesia:A Golden Opportunity for Local Financial Institutions. (13) DBS Indonesia. 2022. 5 emerging opportunities for Indonesia's consumer market. (14) Amartha. 2020. Syarat dan Ketentuan Umum Amartha.
IOA Sources
  • (15) Bisnis Indonesia. 2020. Kredit Plus Peroleh US$50 Juta dari IFC. (16) Crunchbase. 2022. Akulaku. (17) Catherine Shu. 2021. Buy now, pay later startup Kredivo doubles its debt facility from Victory Park Capital to $200M. (18) Crunchbase. 2022. Julo-Funding. (19) Statista. 2022. Total assets of banks in Indonesia from 2002 to 2020. (20) Statista. 2022. FinTech Indonesia. (21) Ken Research. 2021. Indonesia Online Loan and Insurance Industry Outlook to 2024 - Changing Landscape of Financial Products Distribution in Indonesia: Ken Research. (22) Ken Research. 2020. Indonesia Online Loan and Insurance Industry Outlook to 2024 : Compelling Incumbents to pursue growth via Product Development & International Expansion. (23) Indo Tekno. 2021. KoinWorks dukung partisipasi perempuan di industri fintech. (24) The Jakarta Post. 2021. Universitas Indonesia: GoPay drives financial literacy and deeper use of financial services. (25) The Jakarta Post. 2021. P2P lending: Setting new trends to reach MSMEs and women. (26) Statista. 2022. Largest banks in Indonesia as of Q1 2021, by total assets. (27) OJK. 2022. Statistik Fintech Lending Periode Desember 2021. (28) Adjust GmbH. 2022. Akulaku. (29) Kreditplus. 2020. Laporan Berkelanjutan KB FMF 2020. (30) Kristie Neo. 2021. FinAccel’s Kredivo to merge with Victory Park’s second SPAC at $2.5b valuation.,cumulative%20users%20on%20its%20platform. (31) Cindy Silviana. 2021. Indonesian fintech player Akulaku’s revenues more than double to $274m in H1. (32) Cindy Silviana, Kristie Neo, Aastha Maheshwari. 2021. Indonesian BNPL platform Akulaku in talks to raise funds, plans to list by 2022. (33) Fintech Indonesia. 2021. Fintech Corner-Edisi Spesial Kuartal II 2021. (34) Aziz Rahardyan. 2021. KoinWorks Ciptakan Ekosistem Layanan Finansial UKM Buat Penuhi Imbauan OJK. (35) Republic of Indonesia. 2021. Annexes Indonesia’s Voluntary National Review . (36) SEKRETARIAT NASIONAL SDGS. 2019. Indonesia's SDG National Action Plans-RAN SDGs 2021-2024. (37) MicroCapital. 2020. MICROCAPITAL BRIEF: Accion Venture Lab Takes Equity Stake in Pintek of Indonesia, Provider of Online Loans to Students, Schools. (38) FSAP. 2017. FINANCIAL SECTOR ASSESSMENT REPUBLIC OF INDONESIA. (39) Tempo. 2021. OJK: Pembiayaan Fintech ke Sektor Produktif Capai 43,65 Persen dari Penyaluran. (40) Janine Marie Crisanto. 2021. Indonesia e-wallet transaction to reach $18.5 billion in 2021 amid fierce competition. (41) Ministry of Finance. 2020. Rencana Strategis (Renstra) Kementerian Keuangan Tahun 2020-2024. (42) OJK. 2016. POJK No. 77/2016 on Information Technology-Based Lending Services. (43) Bank Indonesia. 2017. Peraturan Bank Indonesia Nomor 19/12/PBI/2017 Tahun 2017. (44) Ministry of Finance. 2020. MoF Regulation No. 193 /PMK.05/2020. (45) Direktorat Jenderal Pajak. 2019. Fintech Peer-to-Peer (P2P) Lending dan Potensi Pemajakannya. (46) OJK. 2020. POJK No. 17/2021 on Second Amendment to POJK No. 11/2020. (47) OJK. 2022. Statistik Perbankan Indonesia - November 2021.