JAKARTA, KalderaNews.com – IFC, a member of the World Bank Group, today announced a $40 million senior loan facility to PT Radana Bhaskara Finance Tbk (Radana). The IFC-led financing package aims to develop the country’s micro, small and medium enterprises (MSMEs), and increase financing for women-owned MSMEs.
Financing MSMEs in emerging markets like Indonesia is crucial because they serve as an engine for growth and job creation. According to “Women-owned SMEs in Indonesia: A Golden Opportunity for Local Financial Institutions,” a study commissioned by IFC in 2016, the MSME financing gap in Indonesia is $11 billion annually. The report highlights the challenges that MSMEs—particularly women-owned—face when accessing bank loans. Women in Indonesia contribute to job creation as well as nine percent of GDP growth, but when it comes to bank loans, they tend to be treated differently than men.
The funding commitment is part of IFC’s broader efforts to foster private sector participation, increase access to finance for the underserved and help drive investments in Indonesia’s MSME sector. This financing package will enable Radana, a local multifinance company, to increase its lending for MSMEs, women entrepreneurs, students, and home renovation loans.
“IFC is committed to promoting the growth of MSMEs, creating markets, and spurring innovation in Indonesia,” said Azam Khan, IFC Country Manager for Indonesia, Malaysia and Timor-Leste to KalderaNews. “This financing package is well-aligned with our strategy to maximize Indonesia’s private sector-led development, and support one of the country’s key development goals of creating jobs.”
The five-year financing package comprises $20 million from IFC’s own account and another $20 million IFC helped mobilize from three other lenders, including two international impact funds namely, responsAbility SICAV (Lux), and IIV Mikrofinanzfonds and one international fund manager, Symbiotics SA, through its MSME Bond platform.
“Radana is dedicated to supporting small scale entrepreneurs in Indonesia, and this package aims to bolster financial inclusion across the country” said Evy Indahwaty, President Director of Radana. “Radana wishes to thank IFC for arranging the total financing package of $40 Million, and looks forward to working together to develop a more comprehensive Risk Management Framework within Radana. We hope this will continue to be a mutually beneficial and sustainable relationship.”
In an effort to fulfill the World Bank Group’s Financial Inclusion objective, which aims to mobilize private sector funding to address Indonesia’s shortage of loans to MSMEs, IFC has been at the forefront of investing and mobilizing financing to support MSMEs. Present in Indonesia since 1968, IFC has financed and mobilized over $7.7 billion for private sector projects over the past 49 years.
Radana is a publicly listed company, established in 1972, providing credit to small scale entrepreneurs and low-income borrowers through 56 branches spread across Java and Sumatera. Radana provides motorcycle, multipurpose, working capital and investment financing, and is 71 percent owned by PT Tiara Marga Trakindo. (FA)
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