Validus will use the proceeds to support the financial inclusion of micro, small and medium enterprises (MSMEs) in Indonesia, addressing the challenges they face in accessing financial resources.
With 64.2 million MSMEs contributing 61% of Indonesia’s GDP, according to Indonesia’s Ministry for Economic Affairs, the potential for growth is immense. These MSMEs employ about 119.6 million people, which is 97% of the total workforce in the country. However, only about 17.5 million MSME players are tapping into the online ecosystem and e-commerce. Indonesian MSMEs face significant challenges in accessing financing, mainly due to commercial banks’ stringent operational, reporting, and collateral requirements, as per a 2017 report by the World Bank. Despite government initiatives, only around 20 percent of bank loans go to MSMEs, the World Bank report said.