Jakarta, CNBC Indonesia – President Director of PT Bank Rakyat Indonesia (Persero) Tbk, Sunarso revealed that women's economic participation in Indonesia is relatively low. Where the female workforce has only been recorded at 53% for more than two decades. This number is much less than men, which reaches 85%.

“What's worse, women in the workforce, for various gender-related reasons, are largely encouraged to be involved in sectors or businesses with low productivity,” said Sunarso, quoted from weforum.orgWednesday (17/1/2024).

Besides that Sunarso continued, only around 60% of Micro, Small and Medium Enterprises (MSMEs) are women which exists in Indonesia. Low access to credit and markets also hinders their growth.

On the other hand, most formal financial institutions ignore this segment due to the perception of increased risk caused by lack of business expertise, revenue volatility, service fees, lack of credit history, mostly cash-based transactions, and lack of collateral.

“Access to financial services is very important for underprivileged and underserved communities. Affordable financing can be a catalyst to increase the scale of their businesses and increase opportunities to climb the economic class ladder that is difficult to achieve,” he added.

For this reason, to encourage the role of women and provide access to financial services, BRI launched the Mekaar (Fostering a Prosperous Family Economy) initiative in 2015.

Sunarso explained, by imitating the model of the Grameen Bank microfinance institution in Bangladesh, Mekaar implemented a unique approach to women's groups by providing loans, savings and empowerment programs.

“Operated under the state-owned microfinance institution PT Permodalan Nasional Madani (PNM), Mekaar is dedicated to female borrowers, who statistically demonstrate higher repayment rates and greater financial responsibility, with a primary focus on family and future needs children,” said Sunarso.

Sunarso explained that group loans are still the most common and most successful method for channeling financing to underprivileged women in rural communities. The characteristics of the group loan model are that it builds social capital and relies on social security from the collective responsibility of members

According to him, the methodology has proven successful in providing loans to underserved communities and alleviating poverty in developing countries.

“The study of Mekaar proves its positive impact on group members in various dimensions. Mekaar increases the ability of its members to generate income and profits, provides better financial stability, reduces vulnerability to external shocks, and hopes for business continuity,” he explained.

It is known that a BRI Research Institute survey in 2023 stated that as many as 60.85% of Mekaar borrowers were able to increase their income and 48.35% of them experienced an increase in assets after receiving financing. They are also able to improve family welfare by meeting basic household needs, including food, education, access to electricity, and asset ownership.

“Mekaar also facilitates access to raw materials, expands distribution channels and introduces digital platforms to members through empowerment initiatives. Apart from that, this program instills in members increased self-confidence and decision-making capacity,” concluded Sunarso.

[Gambas:Video CNBC]

(dpu/dpu)