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# Credit for Women in Indonesia

Women participate relatively actively in credit programs in Indonesia, particularly to support trading -- where women now dominate. Although 61 percent of women worked in agriculture in 1971, only 54 percent reported agriculture as their primary activity in 1980. More women are shifting into trade and services: 45 percent of new jobs for women in rural Indonesia and 95 percent in rural Java have been in trade and services (compared to 39 percent and 50 percent, respectively, for men). Some 28 percent of all self-employed individuals and employers in rural Indonesia are women (42 percent in the trade and services sector). Two-thirds of women working in trading and services are independent entrepreneurs. Women constitute roughly one-quarter of borrowers under two small-scale credit programs: KIK/KMKP and KUPEDES. Women are a higher percentage of borrowers in nonbank financial institutions such as BKK (60 percent are women) and KURK (57 percent are women). Evaluations of repayment performance are, alas, still unavailable.

KIK/KMKP: With World Bank support, the Bank of Indonesia provides credit to commercial banks for investment loans (KIK, or kredit investasi kecil) and working capital (KMKP, or kredit modal kerja permanen). The loans may not exceed Rp 15 million and charge interest of 12 percent yearly. KIK loans may be granted for up to 10 years (4 years of grace); KMKP loans are for up to 5 years (one year of grace). 75 percent of the value of the loan is insured by government, and collateral equal to 50 percent of the loan is required. About 80 percent of the loans are for working capital. Women account for 23 percent of loans -- 31 percent of them for transport, 31 percent for "other," 22 percent for trade, and 18 percent for manufacturing.

KUPEDES: KUPEDES operates under Indonesia's largest commercial bank through 2,272 village branches, granting loans to all creditworthy small-scale entrepreneurs at market rates of interest -- 21.5 percent annually for fixed investment and 31.7 percent for working capital. The maximum size loan is Rp 2 million; the average loan, Rp 350,000. Ninety-five percent are for working capital, three-fourths for trading. To apply, a borrower must describe plans (loan officers help illiterate borrowers), post collateral (land or other assets) equivalent to the loan value, and find a cosigner.

BKK (Badan Kredit Kecamatan): Semi-independent institutions visit local villages weekly or biweekly and lend small amounts of money to borrowers for up to one year with very loose collateral requirements. Borrowers must obtain the signature of the village headman as a character reference. Interest rates, set to cover the costs of lending to small borrowers, range from 27 to 260 percent annually. Some 60 percent of borrowers are women. Petty trading is the primary activity of over half the borrowers, and farming the secondary activity for over half. About half of the borrowers own land, averaging 0.8 hectares. More than 60 percent of the borrowers have not completed primary school.

KURKS (Kredit Usaha Rakyat Kecil): Institutions in East Java (and similar ones elsewhere) give small, short-term, largely unsecured loans and report arrears lower than in a number of government loan programs.

Source: ICRW Report on Women's Credit for World Bank 1987