A Closer Look at Mekar’s Lending Partner, Koperasi Karya Usaha Mandiri Syariah

Earlier this month, Mekar added Koperasi Karya Usaha Mandiri Syariah (KUM Syariah) to its growing list of lending partners. The signing of an agreement between the two firms took place on July 9 at KUM Syariah’s head office in Bogor, West Java, marking the start of a partnership designed to connect women-owned micro businesses with investors all over Indonesia.

Today, let’s take a closer look at KUM Syariah, a prominent cooperative that adheres to Islamic law in all aspects of its work and is now officially a lending partner with Mekar.

The Karya Usaha Mandiri (KUM) cooperative was established in June 1989 in a poverty-stricken village in Nanggung District, in Bogor. For many years, KUM single handedly provided locals with access to financial services, something they didn’t have before KUM came to their quaint little village.

In 1992, KUM’s management was placed under the auspices of the Indonesian Banking Development Institut (LPPI). In January 2016, the cooperative made changes to its Article of Association in order to convert from a conventional cooperative to one that adheres to Sharia law.

KUM Syariah lends exclusively to women borrowers. It aims to empower impoverished women across Indonesia and help grow their micro business so that they can increase their income. The cooperative adopts the Grameen Bank concept of group lending, which was developed by Nobel laureate Muhammad Yunus in Bangladesh and has been replicated in 60 countries around the world.

A Sharia-Based Cooperative

KUM Syariah offers Sharia compliant solutions for micro financing. Expanding its services, the cooperatives also offers WASH (water, sanitation, and hygiene) loans to borrowers looking to build a latrine, a septic tank or a water filtering system. KUM Syariah has also established small businesses (a restaurant, a motorcycle repair shop and a drinking water refilling station) run and managed by its members.

As a cooperative that adheres to Sharia law, KUM Syariah provides loans on profit and loss sharing basis. Thus, when a borrower enters into a contract for a micro loan with KUM Syariah, any loss incurred by the borrower’s business is spread out between the borrower and the cooperative. Nevertheless, as a lending partner with Mekar, KUM Syariah agrees to guarantee the repayment of the principal portion of every loan that is funded through Mekar.

Mekar’s Chief Commercial Officer Randy Gunadi (right) shakes hand with KUM Syariah’s Chairman Murtadho after the signing of a partnership agreement that sees the cooperative enlisted as a new lending partner with Mekar.

A Bold Step Forward

On July 9, KUM Syariah took a bold step forward by partnering with Mekar, a leading fintech firm that offers peer to peer lending services. With this partnership, investors (also called “Funders” in Mekar) all over Indonesia are now able to invest in micro loans generated by KUM Syariah through Mekar’s P2P platform. As Mekar’s lending partner, KUM Syariah will collect the loan installments and process the repayments to the Funders in Mekar.

By partnering with Mekar, KUM Syariah now has a reliable alternative source of funds and it will be able to free up its capital and, in turn, cater to a larger network of borrowers.

KUM Syariah’s Vice Director Andriyanto said in a recent interview with Mekar, “With this partnership, we hope to accelerate our business so that we can serve and empower more and more communities.”

Want to take part in the empowerment of women micropreneurs in Indonesia? Start your investment with Mekar today.