Amartha improves access to finance for women in rural Indonesia
Introduction
Development Finance Institutions Swedfund, Finnfund, and the Belgian Investment Company for Developing Countries (BIO), have jointly provided a loan of USD 55 million to Amartha, an Indonesian microfinance fintech company, to drive financial inclusion for women entrepreneurs. The loan is part of a broader syndicated facility of up to USD 199 million, led by the International Finance Corporation (IFC), a member of the World Bank Group.
The initiative will support Amartha's mission to connect underserved micro-enterprises with affordable capital, leveraging technology for greater impact.
Indonesia's MSME sector employs 97% of the workforce but has an estimated financing gap of USD 21 billion. Of the 44 million micro-enterprises in Indonesia, women entrepreneurs, particularly those operating outside of Java, face the largest financing gaps. These businesses often lack access to formal financial services and instead rely on informal lenders with excessive interest rates.
Amartha addresses challenges faced by women-led micro-enterprises in rural areas by providing loans with sustainable terms, including affordable capital without collateral, and enabling access to capital for individuals with limited credit history.
— Swedfund's investment will enable Amartha to reach women entrepreneurs in rural areas with financial resources through responsible lending, boosting local economic stability and growth. By empowering these women, Amartha helps reduce rural-urban disparities, increase employment opportunities, and supports digital innovation and capacity building, said Jane Niedra, Investment Director for Financial Inclusion at Swedfund.
Amartha is a leading microfinance technology platform that provides a digital financial infrastructure for the economy at the grassroots level through a cooperative group lending model. By connecting women to capital markets, Amartha is helping to reduce the gender gap in labour force participation and stimulate local economies.
— Finnfund finds it important that Amartha encourages its group loan customers to accrue savings in addition to providing micro loans. It has recently developed a new app, AmarthaFin, whereby Amartha’s
customers can become micro-lenders to other group loan borrowers.
With AmarthaFin, borrowers can generate more income, said Ulla-Maija Rantapuska, Senior Investment Manager at Finnfund.
Amartha's ongoing digital transformation, in partnership with the Indonesian government, includes digital literacy training for rural villagers. This initiative is important for integrating micro-entrepreneurs into the digital economy, increasing their competitiveness and resilience.
— Digital payments and e-wallets are powerful tools for financial inclusion, especially in rural communities where traditional banking infrastructure is limited. Through our investment in Amartha, we aim to accelerate the adoption of secure and accessible digital financial services, empowering women entrepreneurs to participate fully in the digital economy and manage their finances with greater autonomy and transparency, said BIO’s CEO, Mr Joris Totté
Proceeds from the investment will be fully directed to supporting women borrowers, particularly rural microentrepreneurs in areas where financing gaps are widest and most difficult to fill. Of the USD55 million committed, Swedfund is committing USD 25 million, Finnfund USD 15 million, and BIO USD 15 million.