Indonesian P2P lender Amartha turns eight
By Yunnie Marzuki May 28, 2018
- Has distributed US$28.6 million to more than 104,357 micro businesses
- Contributes in the improvement of borrowers’ social welfare
INDONESIAN peer-to-peer (P2P) fintech lending platform PT Amartha Mikro Fintek (Amartha) has turned eight.
Amartha was founded in 2010 and is based on the group lending or collective borrowing concept where each group consists of 15 to 20 people.
In eight years, Amartha has distributed investment funds amounting 402.8 billion rupiah (US$28.6 million) to more than 104,357 micro enterprises in 532 villages across Indonesia.
Amartha chief executive officer and founder Andi Taufan Garuda Putra shares that the funds are mostly used as working capital for micro ventures run by rural women entrepreneurs and the implementation of strategic assistance programmes by the company.
“After eight years, Amartha is proud to say that it managed to create a synergy between funders in urban areas and rural women who wanted to improve their livelihoods.”
He adds that these women entrepreneurs have been able to increase their annual income up to 45%, while 50% of the programme beneficiaries have enjoyed better and more sustainable livelihoods.
Amartha also achieved 98% on its Social Return on Investment (SROI) annually, which illustrates a significant social impact of the funding initiative. This rate far exceeds the average global SROI of 72.5%.
A 98% SROI rate means that every average loan of three million rupiah (US$213) provided by Amartha will directly result in social impact equivalent to 5.94 mil rupiah (US$421), which will create improved welfare with certain indicators including growing asset ownership, better education quality for children and beneficiaries, better health quality, improved leadership in the family environment, and better quality of individual relationships.
“After receiving a profit from their businesses, we are able to see an improvement in their social welfare indicators. As an example, they have the ability to renovate their houses, put in better sanitation, and obtain clean water resources.”
To improve the credibility and reputation of its management services, Amartha developed an investment management and distribution programme as well as carries out assistance and counselling programmes for pre-prosperous communities in their struggle to escape from poverty.
Amartha offers different interest rate for its lenders, ranging from 10% to 20% yearly depending on the credit score of the micro enterprises. It also says that it has a timely payment rate of above 99.84%.
“We are able to maintain this figure because of the grouping concept where they will help each other to return the money on time.”
Amartha received Series A funding of an undisclosed amount led by the Corporate Venture Capital (CVC) arm of Mandiri Group, Mandiri Capital Indonesia (MCI) in March 2017.
Andi says his company will now will focus on reaching more micro enterprises and adding partners such as banks and multi-finance companies.
“We aim to collaborate with more partners that include social projects that will empower the sustainability of our borrowers.”
Amartha now works with Permata Bank and Mandiri Tunas Finance as lenders, and loan collateral provider, Jamkrindo. For boosting its social impact, Amartha also works with Pulse Lab Jakarta, Oxford Microfinance Initiative, and Melbourne Microfinance initiative.
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