Enhancing the livelihoods of poor and near poor households is critical to Indonesia’s poverty reduction efforts. In rural Indonesia, most of the poor and near poor are self-employed in either agriculture or micro and small enterprises (MSEs), or both. Therefore, improving the productivity of MSEs is critical to improving the livelihoods of the poor – a core area of KOMPAK’s work to support local economic development.
Since 2017, KOMPAK has been partnering with local governments, start-ups and local producers – in this case, MSEs – to pilot an approach to enhance their ability to market and sell their products and services. This ‘Market Linkages’ approach assists MSEs to assess market opportunities and then design viable business options to respond.
KOMPAK is also working with Bappenas to integrate the lessons learned from these pilots to strengthen the local economic development components of the next national medium-term development plan (RPJMN 2020-2024).
An increased number of micro, small and medium enterprises, especially those involving the poor and vulnerable, have increased their productivity and market access.
Bappenas with the support of KOMPAK through DEFINIT in early 2020 has conducted a study to see the gap in terms of demand (demand) and supply (supply) of financing, especially for Micro and Small Enterprises (UMK). Financing for MSEs is not only seen from the side of the financing product, but also needs to be considered the various obstacles faced by MSEs. For example, from financial management capabilities, information and literacy, administrative requirements, and geographical access. In addition, this study also provides a perspective from the banking sector in channeling credit funding for MSEs.