HARA and BTPN-S collaborate to improve financial inclusion in rural Indonesia
Tags: Agriculture, Indonesia, Blockchain, Financial Inclusion, Partnerships

At the end of November 2018, HARA helped the Indonesian bank BTPN-S provide micro-finance to over 700 farmers from 10 villages in Bojonegoro, East Java.

BTPN-S was able to extend their services to the farmers because of the assistance HARA had provided in streamlining the application process by gathering important data.

In total, BTPN-S approved of Rp 1.162.500.000 ($80.000) in micro-finance. The micro-finance ranged from a minimum of Rp 500.000 ($35) to a maximum of Rp 50.000.000 ($350) per farmer, with the average coming down to around Rp 1.650.000 ($115) per farmer.

“HARA provides new insights for BTPN Syariah, because this is the first time we have made an acquisition that did not use field officers from BTPN Syariah, but instead used the data and information provided by HARA. “We hope that this project can be expanded on a larger scale, so that the effect on the community and the effect for farmers is far greater.” — Arief Mediadianto, Business Development Specialist at BTPN-S

An estimated 55% of people in the remote areas of Indonesia regularly borrow money. Unfortunately, access to financial institutions is limited in these areas. And this is not only because there are only a few bank branches found in these more rural environments.

Often times, locals simply don’t possess the documents required to open a bank account or apply for a loan where banks are present. Sometimes this data is simply missing. This could be as simple as not having credit history, or a registered deed to a farmer’s plot of land.

“At the bank, the requirements are little bit complicated. You have to use a power of attorney, the head of the village, and a guarantee is required. When compared to other cooperatives or banks, I think it’s better with HARA. Besides that, it’s better because it’s in the village itself, so we don’t have to go to the city. You just need to bring a Kartu Keluarga (family card) and an ID Card, that’s it.” — Lisawati, farmer from Ngampal Village.

The result of this is that people in these rural areas have to resort to lending from middlemen that charge extortionate interest rates of up to 300 percent! The high interest rates charged by these loan sharks make daily life increasingly difficult for the farmers, especially if they have a family to provide for.

“HARA is tremendously helpful for smallholder farmers. This kind of activity greatly helps farmers to fulfil their needs HARA’s presence here […] helps us to come together to think about the people’s welfare in the years to come, and how we can bring it to perfection. That’s what I’ve been looking for.” — Mochamad Rodhi, Village Head of Kayulemah

HARA makes it possible for banks to extend financial services to rural areas by making the invisible visible. By collecting and verifying the data needed by financial institutions in an efficient way that benefits the farmer, all parties stand to gain.

Farmers get access to financial products while retaining the rights to their data, while banks are able to extend their services to a new demographic without the extra burden of collecting the data themselves.