Jakarta, 12 May 2022 – Digital transformation offers a solution for increasing access to finance for women, youths and MSMEs towards realising inclusive growth and driving the post-pandemic economic recovery. The World Bank recorded 1.7 million people worldwide facing difficulties in terms of access to basic financial services. This is due to minimal literacy, limited infrastructure, the perception that financing is unnecessary, asymmetric information, legal document constraints and cyber security. That was the key takeaway of the hybrid international seminar entitled “Digital Transformation for Financial Inclusion of Women, Youths and MSMEs to Promote Inclusive Growth” hosted by the Ministry of Finance in synergy with Bank Indonesia on Wednesday (11/5) in Bali, preceding the 2nd Plenary Meeting of the Global Partnership for Financial Inclusion (GPFI) today and tomorrow, 12-13th May 2022, as part of the series of events under Indonesia’s G20 Presidency in 2022.
In his opening remarks, Bank Indonesia Governor, Perry Warjiyo, emphasised that digitalisation represents a game changer in terms of increasing access to inclusive finance. Governor Perry outlined three critical steps to overcome the challenges constraining MSMEs in terms of limited economic ability, financial literacy and access to digital infrastructure. First, economic empowerment, including women as micro-entrepreneurs. Second, capacity building to improve productivity, literacy and financial management through education supported by innovation and digitalisation of the business processes to strengthen more competitive MSMEs. Third, policy harmonisation, through BI support for the Job Creation Act, which has streamlined the licensing process, while supporting an ecosystem for MSMEs and e-commerce platforms that unlocks access to domestic and global markets.
RI Minister of Finance, Sri Mulyani Indrawati, took the opportunity to reiterate the collateral constraints faced by women, adding that financial institutions seem reluctant to lend to younger people and MSMEs struggle with access to finance. Such inauspicious conditions demand immediate attention and policy response. Financial inclusion and digitalisation, as a priority agenda of Indonesia’s G20 Presidency in 2022, could significantly help to overcome such issues.
Echoing those sentiments, the Minister of Women Empowerment and Child Protection, I Gusti Ayu Bintang Darmawati, explained that with the dominant contribution and population of MSMEs, women are the backbone of economic growth and stability. Indonesia has implemented various programs to increase gender equality, entrepreneurship and financial inclusion through training for women together with woman-and-child friendly villages as well as a regulatory framework that includes a national strategy for the financial inclusion of women, coupled with regulations that support female entrepreneurs, while increasing access to credit for MSMEs.
In her closing remarks, GPFI Co-chair from the Bank of Italy, Magda Bianco, described how digitalisation has transformed our lives in general and the financial system specifically. Digitalisation has been a godsend during the pandemic, unlocking broad opportunities for MSMEs to innovative quality financial products and services, thereby increasing access, reducing transaction costs and facilitating creditworthiness checks to ultimately create broader inclusion. Today’s seminar was organised in preparation for the 2nd GPFI meeting on 12-13th May 2022, which will discuss the progress of deliverables as a target of Indonesia’s G20 presidency in 2022 concerning digital financial inclusion and SME finance.