Whether you are a small-time or big-time investor, the first question that pops up on your mind when considering an investment would most likely be: “what kind of returns will I get?”
In recent years, a new breed of alternative financing has been gaining grounds in Indonesia. Peer-to-peer lending and Crowdfunding are helping to increase access to finance for virtually everyone. They also offer new investment opportunities with promises of attractive returns, a lot more than what you would get if you keep your money in a bank time deposit.
For example, a time deposit in Bank Mandiri pays a simple annual rate of 4.25% or up to 5.75% if you have more than Rp 5 billion in your account. But when you invest your money through Mekar, a peer-to-peer lending and Crowdfunding platform, you will earn an average of 10% a year. And you don’t need to be a billionaire to start investing through Mekar.
There are other platforms that offer higher returns, but when it comes to investment, we should be talking about a lot more than just numbers; we need to talk about values.
A Wider Reach
The goal of peer-to-peer lending and Crowdfunding platforms is to make it easier for people everywhere to get a loan to cover their daily expenses or access capital for their businesses by connecting them with lenders or investors. But can these platforms really reach out to everyone, including people who live in small villages, and not just those in big cities? How far-reaching are they?
Mekar has a way to reach out to farmers, fishermen, crafters and other small business owners in small villages in many regions in Indonesia and offer them access to finance they need to grow their businesses. These are small business players who are in dire need of financial services, more so than their counterparts in big cities, where you can still find bank offices and a significantly larger number of micro finance institutions.
The way Mekar reaches out to them is by partnering with savings and loans cooperatives that have operations in villages and small cities in the country. One of Mekar’s lending partners is Koperasi Mitra Dhuafa, which operates largely in the Java, Aceh and Sulawesi regions. Today, Komida has 185 offices and a loan portfolio of Rp. 621 billion outstanding to some 438,000 borrowers.
Socially Responsible Investing
One of the main appeals of peer-to-peer lending and Crowdfunding is you get to choose who you lend your money to. This makes it easier to align your investments with, for example, your vision for the country’s economy, or your passion for the environment.
In Mekar, you will find that all the borrowers are small business owners. But not just any small businesses. Mekar’s lending partners vet the borrowers so that only those whose business is creating a positive impact can get a loan through Mekar. Hence, Mekar’s borrowers are those who are running a business that provides social good for its surroundings — some businesses produce food, others provide clean water, or improve waste management.
The Ripple Effect
When you invest through Mekar, you are investing in people, in small business owners who share the commitment to advancing positive social impact in many places all over the country. They are the driving force of their local economy. They provide opportunity for people in small villages to work, they empower women and families, and they improve the condition of their natural environment.
Thriving regional economies is something that Indonesia needs today and it is a key factor in stimulating a progressive national economy. At the end of the day, your investment benefits a lot more than the small businesses; by supporting their growth, you are helping to boost the local economy, and that, in turn, will help advance the country’s economy. And a good economy benefits all, including you.