AFPI Holds Fintech Lending Days, Educating MSMEs on Utilizing Fintech Lending and Avoiding Illegal Loans
Jakarta, May 8th 2024 – The Indonesian Fintech Lending Association (AFPI), supported by the Financial Services Authority (OJK) and various financial technology companies, has successfully concluded the Fintech Lending Days event in Medan, North Sumatra. This event follows previous editions held in cities such as Bali, Malang, Makassar, and Yogyakarta since 2021. AFPI remains committed to regularly hosting this initiative with a focus on fostering funding services for Fintech Peer-to-Peer Lending companies and supporting Micro, Small, and Medium Enterprises (MSMEs). Based on the OJK statistic, as of February 2024, the fintech landscape recorded approximately 1.4 million lender transaction users and around 123 million borrowers accessing credit. Over Rp806.49 trillion in loans have been distributed to users and 101 companies that have been licensed by the OJK and are divided into three financing sectors, such as productive, multipurpose, and sharia. By the end of 2023, the fintech lending industry had disbursed IDR241 trillion, equivalent to 45%, with an increase every year. The legal fintech lending industry continues to be committed to driving innovation and inclusivity in the development of related sectors, especially for MSMEs in terms of funding their business ventures. Entjik S. Djafar, General Chair of AFPI stated, “This year, Fintech Lending Days took place in Medan, inviting 17 MSME communities under the auspices of North Sumatra regional organizations to take part in the MSME Exhibition & Talk Show session. This demonstrates their interest in alternative financing for their businesses through fintech lending platforms. This event is expected to serve as a bridge between micro-business players or entrepreneurs and fintech lending providers to collaborate in developing businesses together. We also aim to continue educating MSME players to utilize fintech lending platforms as a legal funding alternative, thus avoiding illegal borrowing.” The event commenced with an MSME Visit, where representatives from all fintech lending platforms visited selected MSMEs in the craft, plantation, and ulos textile industries in the Berastagi area. Additionally, a Media Visit and Radio Talk Show were conducted on the previous day (6/5). These activities aimed to understand the needs and aspirations of MSMEs, provide updates on the fintech lending industry and gain insights into the financial behaviors of North Sumatra residents. AFPI recorded that as of February 2024, there was a specific distribution of fintech lending to North Sumatra with accumulated loans reaching Rp19.5 Trillion which shows strong adoption from the people in utilizing fintech lending services. Furthermore, there were 77,651 lenders and 3,178,464 borrowers, reflecting the rapid development of the fintech lending industry in North Sumatra, which is expected to have a positive impact in advancing the regional economy and increasing financial access for the community. “Looking at data on the contribution of MSMEs in North Sumatra, micro and small businesses account for 98.9 percent of all businesses, while medium and large businesses make up only 1.1 percent. Despite the large number of micro and small business actors, their contribution to the economy of North Sumatra is significant, at 46.51 percent. Moreover, MSMEs are able to absorb 80 percent of the workforce. Based on research results, one of the biggest obstacles for MSMEs currently is funding problems; business owners often have difficulty accessing financing to start or grow their business. Limited financial resources can be a major obstacle to business growth and innovation. With the existence of a fintech lending platform, MSMEs can more easily apply for loans and obtain the funds needed to develop their business. This presents a new opportunity for business owners to plan long-term growth and increase their competitiveness in the market,” said Naslindo Sirait, Head of Cooperatives and SMEs, North Sumatra Province. Jasmi, Deputy Commissioner of Supervision of Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Services Institutions at the OJK, added, “The structure of the Indonesian economy has strong characteristics, partly because of the very large role of MSMEs in supporting its growth. This large role necessitates joint attention from all stakeholders, including the regional government. The growth and development of Indonesia’s economy are certainly influenced by the growth and development of its MSMEs. In 2023, the Indonesian economy grew by 5.05% (yoy). As an alternative source of funding for MSMEs, OJK provides support in developing innovation in the financial services industry, especially related to fintech lending and its ecosystem. We express our appreciation and thanks to AFPI, the regional government, and all parties who continue to support this effort.” Aside from the lack of knowledge about fintech lending, most MSMEs in North Sumatra also struggle to access business credit due to the lack of information about the application process and requirements imposed by fintech lending. Therefore, it is hoped that all MSME profiles can be reached to become an additional option for productive and proactive MSMEs who want to obtain financing to expand their business lines. Productive digital MSMEs are the key drivers in accelerating the national economic recovery. According to data from the Indonesian Chamber of Commerce and Industry (Kadin Indonesia), in 2023, approximately 66 million MSMEs contributed around 61% of the Gross Domestic Product (GDP), equivalent to IDR9,580 trillion. This event was also attended by 33 fintech lending companies which are a combination of members and supporting ecosystems of AFPI, such as PT Ekosistem Digital Nusantara, Easycash, Privy, Kredit Pintar, and OVO Finansial, as well as 250+ participants from MSMEs (Micro, Small, and Medium Enterprises) in Medan. Other than Medan, Fintech Lending Days will continue to be held in other cities with healthy MSME growth rates. AFPI identifies significant opportunities within the fintech industry based on data from the OJK, the World Bank, and Ernst & Young in 2023. The data indicates a fintech credit distribution encompassing 186 million productive individual users aged over 15, 46.6 million unbanked MSMEs, 132 million Indonesians lacking credit access, and a Credit Gap amounting to IDR 1,650 trillion, surpassing the IDR 1,000 trillion conventional IJK support. Furthermore, AFPI-EY research projects an Estimated Credit Gap for MSMEs reaching IDR 4,300 trillion by 2026, with a supply capacity of IDR