IFC extends $40m loan to Indonesia’s Radana to boost MSMEs lending

Komodo Bonds
Indonesian currency Rupiah on hold by a cashier. Photo: Reuters

The International Finance Corporation (IFC), the private investment arm of the World Bank, has invested $40 million in the form of a senior loan facility in Indonesia’s PT Radana Bhaskara Finance Tbk.

The funding will allow Radana, a local multifinance company, to increase lending to SMEs, women entrepreneurs, students, and home renovation loans, IFC said in an announcement.

The five-year financing package comprises $20 million from IFC’s own account plus another $20 million that IFC helped mobilize from three other organizations including ResponAbility SICAV (Lux), IIV Mikrofinanzfonds, and international fund manager Symbiotics SA.

In a study commissioned by the IFC in 2016, the MSMEs financing gap in Indonesia was mentioned at $11 billion per year. The report highlighted the challenges facing MSMEs, especially for women SME players when accessing bank loans. Women in Indonesia contribute to job creation as well as nine percent of GDP growth, but when it comes to bank loans, they tend to be treated less favorably, compared to the treatment that men of business actors receive, it said in the statement.

“IFC is committed to driving MSMEs growth, creating markets and spurring innovation in Indonesia,” said Azam Khan, IFC Country Manager for Indonesia. “This funding package is aligned with our strategy to maximize the role of the private sector in leading development, as well as to support the government.”

Present in Indonesia since 1968, IFC has financed and mobilized more than $7.7 billion for private sector projects.

Established in 1972, Radana Finance provides credit to small entrepreneurs and low-income borrowers through 56 branches spread across Java and Sumatra. It provides motor, multipurpose financing, working capital and investment. The company’s 71 per cent shares are owned by PT Tiara Marga Trakindo.

Also Read:

IFC to extend $35m debt to Indonesia’s Indosurya Inti Finance

Indonesia: IFC to inject $20m into Radana Finance as shariah debt