Amartha in Efforts to Foster the Welfare of Entrepreneurial Mothers

Sri Wahyuni's eyes lit up when he told the story of how he carried out the craft of weaving and scout rope at his home. Likewise, Pariyah who produces unique snacks from breadfruit with her neighbors.

We also saw a similar expression when we looked at the hand-drawn batik business owned by Titik Supartina. At the age of almost half a century--or even more--both Sri, Pariyah, and Titik are both reaping sweet results from home-scale businesses with loans.

Sri, for example, after ups and downs running a woven craft business that was previously run by her husband, has now pocketed a turnover of IDR 6 million per month from an initial capital of IDR 2 million obtained from Amartha since 2014.

Meanwhile, Pariyah has earned a turnover of Rp 9 million-Rp 17 million from the sale of breadfruit chips and sticks. Even the production has reached the land of Sakura. This achievement was supported by Amartha's loan of Rp. 3 million in 2014.

"We sell these breadfruit sticks for Rp. 35 thousand. In Japan, we sell them separately. The price can soar up there to Rp. 250 thousand per bag," said Pariyah.

We got this story when we were invited to visit their business in Yogyakarta. We saw firsthand how the three of them contributed to the advancement of micro-enterprises and the empowerment of women in Yogyakarta.

We also witnessed the mentoring activities of the written batik business council chaired by Titik. This assistance is nothing but to foster financial literacy and encourage the spirit of mutual cooperation in each member. The progress of their business will be highlighted weekly by Amartha's official field officer.

At this place of business, each member is offered to be a Titik partner with a fee of Rp. 200 thousand per batik cloth. The initial loan of IDR 1 million he obtained from Amartha was used to purchase batik cloth and equipment.

A little refresher, Amartha uses joint responsibility method in disbursing loans to mothers. The joint responsibility system is made in groups (assemblies) consisting of 15-20 people. The goal is to reduce the possibility of default from one of the members.

For Amartha, the joint responsibility method has been successful in reducing the potential for default. Amartha's non-performing loan (NPL) ratio is still below 1 percent.

In fact, according to company data, this method has also increased incomes and reduced poverty rates of other Amartha partners--such as Sri, Pariyah, and Titik--by 60 percent and 22 percent, respectively.

Met while visiting partners Amartha In Yogyakarta, Chief Commercial Officer Amartha Hadi Wenas said that his party already has its own mechanism to resolve problems, such as defaults, within the assembly.

"Usually bad credit happens because of family problems or the business fails. But we have Code of conduct itself, that is, problem solving is carried out within the scope of the assembly. If you still fail to pay repeatedly, Amartha will just step in," said Hadi.

Prosperity is not limited to increasing income

Entering the second half of 2019, the company is still reluctant to reveal its business plans for next year. However, there is multiple strategies which Amartha is currently preparing to strengthen the market which he says has been controlled for the last nine years.

Hadi revealed that the definition of prosperity is not limited to the ability to increase income. The success of educating children through a business is one of the achievements to get to that level.

He described how Amartha's partners will not only be smart in managing loans to run a business, but also manage finances for their families. The picture just now is an example use case which will be Amartha's next development plan.

"We are preparing an application for borrowers. But we can't tell yet. We already have a community base from our partners. Hopefully [through this app], we can close poverty gap they. Prosperity through income alone is not enough," he said.

Amartha is also doing piloting for online registration and the addition of new features for borrowers in the next few months. For now, all loans are disbursed in cash to partners.

"There are indeed many competitors, but our segmentation is unique because it targets micro-enterprises from mothers. We even have one value added with assembly building. It is also efficient in business because agents and investors have their own applications. And our investors are different, no cash based"Hadi explained.

"Meanwhile, Amartha's Chief Risk and Sustainability Officer Aria Widyanto added that Amartha is ready to expand its market outside Java. He said expansion to South Sulawesi will begin next month.

"We see the [micro-enterprise] market there is very potential. We have prepared our own team to expand to South Sulawesi," said Aria who was met on the same occasion.

As of July 2019, Amartha, which was originally built as a cooperative, has distributed loan funds of IDR 1,2 trillion to 270 thousand women entrepreneurs in 4.100 villages throughout Indonesia.

Thanks to the high enthusiasm of the market, Amartha estimates that by the end of the year the loan disbursement can reach Rp. 1,5 trillion to 300 thousand women entrepreneurs. Amartha targets its business growth to double to three times next year.