A recent editorial in The Jakarta Post, a newspaper in Indonesia, examines the issue of access to financial services in Indonesia and highlights financial literacy as an important element in increasing financial inclusion [1].
The editorial notes that approximately 25 percent of the adult Indonesian population has no access to formal financial services which is “a true reflection of the skewed distribution of finance, which is hindering growth and the development of poor households and small businesses.” According to the authors, the government should play a regulatory and facilitating role while the private sector should “see the huge untapped market for financial services as a great opportunity for market expansion.” An example of the need for a framework from the government is in the use of mobile phones for financial services.
The authors point out that simply providing access to financial services to as many people as possible could be counterproductive if financial literacy remains low, especially because financial services and products are becoming increasingly complex. Financial literacy will enable consumers to be “knowledgeable about finance in a way that is relevant to their lives, and enables them to use this knowledge to evaluate financial products and make informed decisions.” The authors cite the recently introduced Tabunganku (my savings) national campaign by the Indonesian central bank as an example of easy-to-use, low-cost services that could become an entry point for engaging small-scale savers and educating them about financial services and products.
By Nisha Koul, Research Associate
Sources and Additional Resources:
[1] The Jakarta Post, Editorial, July 2011, “Access to Financial Services,” http://www.thejakartapost.com/news/2011/07/01/editorial-access-financial-services.html
MicroCapital.org story, June 30, 2011, “MICROCAPITAL BRIEF: Mobile Finance Platform Fundamo, Bank Andara Aim to Extend Access to Financial Services to 40m in Indonesia,” https://www.microcapital.org/microcapital-brief-mobile-finance-platform-fundamo-bank-andara-aim-to-extend-access-to-financial-services-to-40m-in-indonesia/
MicroCapital.org story, June 7, 2011, “MICROCAPITAL BRIEF: The Wall Street Journal Reports on Expansion of Indonesian Banks into Microfinance Sector, $30b in Microloans Are Distributed in 5 Years,” https://www.microcapital.org/microcapital-brief-the-wall-street-journal-reports-on-expansion-of-indonesian-banks-into-microfinance-sector-30b-in-microloans-are-distributed-in-5-years/
MicroCapital.org story, May 31, 2011, “MICROCAPITAL BRIEF: India’s MicroSave Publishes “No Thrills: Dormancy in NFA Accounts,” by Ann-Byrd Platt, Akhilesh Singh, Sachin Bansal, Anurodh Giri, Akhand J Tiwari re “No Frill” Microfinance Accounts,” https://www.microcapital.org/microcapital-brief-india%E2%80%99s-microsave-publishes-%E2%80%9Cno-thrills-dormancy-in-nfa-accounts%E2%80%9D-by-ann-byrd-platt-akhilesh-singh-sachin-bansal-anurodh-giri-akhand-j-tiwari-re-no/
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