UNDP and OJK Collaborate to Push Financial Services for Poorest CommunitiesAug 30, 2016
Tangerang, Banten, August 30th, 2016 – United Nations Development Programme (UNDP) Indonesia and Indonesia’s Financial Services Authority (OJK) signed a Memorandum of Understanding (MoU) today to jointly promote financial literacy and financial inclusion in support of the Sustainable Development Goals.
OJK’s Chairman of the Board Muliaman D. Hadad and UNDP Indonesia Country Director Christophe Bahuet signed this MOU during Indonesia FinTech Conference at ICE BSD in Tangerang. The ceremony was witnessed by Her Majesty Queen Máxima of the Netherlands, who is on a visit to Indonesia in her role as the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA).
Financial inclusion aims to provide affordable financial services to low-income communities. The working poor regularly rely on low-paid work or irregular income and often have to take informal credits and pay high interest rates. The fact that many also lack financial literacy makes it more difficult for them to get out of poverty.
“Promoting financial literacy and expanding access to financial services especially for the unbanked population and small enterprises means unlocking development opportunities for the poor, reducing their vulnerability to external shock and enabling them to invest for their future,” said UNDP Indonesia Country Director Christophe Bahuet before the signing ceremony. Improving financial inclusion and financial literacy will positively impact several Sustainable Development Goals, including poverty reduction, increasing food security and reducing inequalities.
Under the MoU, UNDP Indonesia and OJK as regulator will use innovative ways including the use of technology to encourage and work with provincial development banks to provide tailored financial services in poorest regions and promote financial literacy training. Both parties will also collaborate to encourage regional and local financial institutions to increasingly contribute to sustainable development in local communities from environmental, economic and social aspects.
Since 2014, UNDP Indonesia has been in partnership with Bank Nusa Tenggara Timur (Bank NTT) through a development project named SPARC. The UNDP-Bank NTT partnership has provided financial literacy training and business development training resulting in increased inclusion of citizens in the banking system. As many as 1,300 micro and small enterprises now have credit with the total amount of USD5 million.
With a financial contribution from Bank NTT’s Corporate Social Responsibility programme, the SPARC project has been extended to provide access to electricity and water to poorest communities prone to the impact of climate change in NTT , which will increase local villagers’ economic productivity and diversify their income. With the signing of the MoU, UNDP Indonesia and OJK aim to replicate the successful partnership with regional banks all over Indonesia.
In 2012, the Indonesian Government launched National Strategy for Financial Inclusion which aims to increase the percentage of adults having access to formal financial services to 50% by the end of 2019. According to the World Bank (2014), only 36% of people aged 15 and above in Indonesia have a bank account and 27% have formal savings.