In Indonesia, millions of people are self-employed through small businesses. But only a small percentage of them have had access to the formal financial services that help people move permanently out of poverty. It’s not that the country lacks the microfinance institutions designed to serve smaller business clients – on the contrary, it has one of the world’s largest concentrations of such institutions. But their products and services were not readily available to the poor.
That’s why, in 2008, Mercy Corps founded Bank Andara, which is now a fully separate commercial entity. Bank Andara is a licensed wholesale bank designed to exclusively serve the microfinance sector by providing smaller lenders with affordable access to capital and useful financial products, services and technology. Bank Andara helps microfinance institutions reach out to Indonesia’s unbanked and underbanked population, bringing poor people into the world of modern financial services – remittances, insurance, transfers – so they can stabilize and improve their lives.
Bank Andara is one of Mercy Corps’ most stunning achievements in social innovation, one that is already helping more than 1 million Indonesians access modern financial services to move out of poverty. And, we are expanding the concept to the Philippines, where we’re beginning to provide mobile banking and other financial services to the poor.
Tofik Hidayah is one of those 1 million Indonesians who are getting help thanks to Bank Andara. Tofik used to earn his living collecting and selling recycled waste. Then prices dropped dramatically, and Tofik sought a more reliable trade. He saw some neighbors harvesting honey and decided to become a beekeeper.
“I realized that could be a sustainable business for me, too,” he said. He borrowed $555 from a rural microfinance institution supported by Bank Andara, purchased three bee boxes and set up his business. Tofik learned how to collect honey, which he sold door-to-door. Within six months he owned 18 bee boxes and had three employees bringing in $27 a day selling his top-quality honey. Since little honey is collected during rainy months, the seasonal loan he obtained – with its flexible repayment schedule – was essential to his success.
Now Tofik and his employees are building a financial stability that will keep them from slipping back into poverty and bring greater prosperity to their communities. And the beekeeper is looking ahead. “I hope that my business will continue to go well,” he said, “so I can employ more workers and increase profits.”