In the midst of recent economic storm, Indonesia stands out tall with stable growth revolving around 5.2% in the last decade. Exposed by global recognition towards this achievement, Indonesia is now facing great challenge in familiarizing prosperity to all.
Indonesia, the world’s 4th largest country, is used to colliding with crisis. Five decades after its heroic independence, Asian financial crisis hit hard in . Inflation once reached 82% and economy collapsed. This causes social unrest and multidimensional crisis. Desperate about the depressing situation, the idea of national reformation eventually came out.
Another blow struck ten years after the crisis. Indonesia has learned much from previous crisis and reformation has benefited the country this time. Slightly disturbed by the turbulence, the economy was performing well even during the crisis. The effect of crisis didn’t much afflict most Indonesians. Moreover, Indonesia has been performing better in the following years.
McKinsey Global Institute puts Indonesia as the world’s 7th largest economy in 2030. Through its publication in 2012, it was predicted that there would be possibility for Indonesia becoming a larger economy than the Germany and the UK. Reflecting it to today’s reality, it seems quite like an attainable yet ambitious goal.
Poverty Is Still a Nightmare
Despite the economic glory, GDP growth has not been distributed evenly among all citizens, leaving the nation in miserable inequality. According to the World Bank, poverty headcount ratio at national poverty line is accounted for 12%. With 240 million people living in Indonesia, the figure means almost 30 million people are considered to be poor. Although the trend shows that the ratio has been declining in the last decade, there is another alarming signal to be concerned about.
It is common to hear cynical comments saying that riches grow richer when poor get poorer. Sadly, it holds partly true in reality as data supports. Inequality has been growing widely, proven by rapid movement of the Gini Index which measures inequality. Despite fast economic growth in consumer-class level which also contributes big to economy, the poor still unfortunately favours little portion of the nation’s prosperity.
Government had plans for this challenge that were partly implemented. However, poverty has not been cured significantly. It is partly due to a fundamental problem that still remains but cannot be eradicated through what government has been doing. The difficulties poor people face in accessing financial services are the fundamental problems government needs to answer.
Reconsidering Growth
Paying attention to the condition, Bank Indonesia as central bank commenced a National Strategy Financial Inclusion in 2010 to ease access to financial services for people, especially the poor. This is a way to alleviate poverty as well as to gain sustainable and equitable development for all. The strategy is supported with 23 policies embracing five aspects from strengthening monetary stability, encouraging banking intermediation functions, to strengthening banking supervisory functions. To put it all together, financial inclusion is seen as a solution for Indonesia’s challenge in promoting sustainable development and growth.
Indonesia may not be the first to implement the strategy. India has realized the idea earlier with satisfactory results in lifting the poor to better life. G20 also recognized financial inclusion as one of main pillars of global development agenda not so long before the initiative was announced in Indonesia. With customized style, financial inclusion is run in developing countries dreaming to include the poor to national growth.
Aim Higher, Aim Wider
With tagline “Ayo ke Bank” or “Let’s Go to Bank”, Indonesia has successfully let more unbanked people reach financial services. Since its initiation in 2010, 4.7 million unbanked people have become the banked people, eightfold the achievement in 2010. With this reach, Bank Indonesia starts to consider the building of branchless bank to let more people get connected with financial services. The program is now being brainstormed to strike balance between banks’ and people’s interests. This is also due to financial industry’s rigidity and complexity. Besides, there are issues regarding financial education and literacy that may be obstacles to the success of the program.
Financial inclusion is more than just changing the status of unbanked people. The intention to invite and involve the poor to financial system is a sincere strategy to alleviate poverty, reduce inequality and eventually empower the poor to achieve better live. Despite obstacles and challenges along the way, this program helps the poor become part of economic growth and prosperity of the big-nation-to-be.
By Naya Hutajulu
Photo: Badan Otonom Economica
