Social finance will unlock support needed to achieve SDGs

Mar 24, 2017


New frontiers in financing SDGs provide new hope for eradicating poverty in Indonesia. United Nations Development Programme (UNDP) and Indonesia’s financial services authority OJK launched two bodies of research on the powerful potential of social finance.

Between $3 - 4.5 trillion is needed in the developing world to deliver the SDGs. Social finance plays a key role in funding gaps in healthcare, education, sanitation and energy sectors. Social finance covers various forms of private funding such as impact investors, angel investors, crowdfunding or venture capital which focus on investments delivering social benefits in addition to financial returns. Similarly, social enterprises (SEs) are organizations designed to create positive social impacts with the use of commercial strategies.

In Indonesia, the social finance sector has been slow to develop and is comprised mainly of locally-based microfinance institutions. There are many engaged stakeholders but the ecosystem supporting Social Enterprise development is still limited and fragmented. 

By channeling private funding towards profitable ventures delivering social and environmental impacts, social finance can become an important tool for accomplishing the 2030 Agenda.

At the event held at Mandarin Hotel, 23 March 2017, Dr Muliaman Hadad Chairman of OJK opened the event by emphasizing the importance of diversity in the support provided to achieve the SDGs.

Mr Christophe Bahuet, Country Director of UNDP reinforced the need to leverage finance for development in Indonesia: “There is a funding gap to reach the SDGs, which social finance can help bridge by channeling private funding towards profitable ventures delivering social and environmental impacts” he said. “ The two UNDP reports that we launched today show that there is a strong potential for social finance in Indonesia but that there is a disconnect between the enterprises and the investors that needs to be bridged” he added.

The ambitious 2030 Agenda requires significant financing in order to achieve the Sustainable Development Goals (SDGs). As public sector financing is not sufficient, it is necessary to explore ways to leverage private sector financing, including social finance and the use of social enterprises. 

Key messages: 

  • It is estimated that globally, between $3 - 4.5 trillion would be needed in the developing world to deliver the Sustainable Development Goals. Current investment in healthcare, education, sanitation, access to energy and all the sectors covered under the SDGs is around $1.4 trillion, creating an average investment gap of about $2.5 trillion.
  • Social investment in enterprises directly contributes to the SDGs by tackling social and gender inequality and poverty.
  • In 2016, around 25 foreign-based impact investors were looking to enter Indonesia.
  • In 2016, an estimated USD 43 million went into social enterprises, a nearly two-fold increase from USD 23 million invested in 2014.  But this pales in comparison to USD 861 million invested by more than 60 technology venture capitalists in Indonesia in 2015, most of which went to e-commerce and internet companies.
  • Challenges for social enterprises remain. Most social enterprises cannot fully finance their operations or growth through market base revenue or external investment. They are not profitable enough to access the traditional financial markets.

Two UNDP Indonesia reports can be found here: ‘Social Finance in Indonesia’ prepared with Allied Crowds, a London-based consulting company leading in data and analytics on alternative finance in the developing world. This report defines social finance as investments targeted at initiatives which bring about social and environmental impacts.

Social Finance: A New frontier for Development’, is prepared with the Indonesian Angel Investors Network, Angin, and describes the composition of the social finance and social enterprise sector in Indonesia.  


Isabel Dunstan
Communications Officer

UNDP Around the world

You are at UNDP Indonesia 
Go to UNDP Global