Five year plan to increase microlending market penetration in Indonesia.

1. Five-Year
Master Plan
Amartha GAE OPO? Gae Indonesia maju!
(What is Amartha working on? Indonesia’s better future!)
The Loan Wolf
University of Melbourne
Aditya Darma Saputra
Elvira Hakim
Katherene Reji
Maggie Singorahardjo

2. Industry Context
The industry aims to alleviate high levels of poverty among the Indonesian population.
MICROFINANCE INDUSTRY
50 million borrowers (est. 2013)
60,000
Microfinance
Institutions (MFIs)
(est. 2013)
Local
commercial
banks
The number of banks in the industry are set to increase with Bank
Indonesia proposing a rule stating at least 20% of loans to
be micro loans by 2018
Assuming compounding annual growth rate (CAGR) of 4.46% per year
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

3. Firm Context (Amartha)
Amartha’s vision is to allow more accessible financial services to a low income
demographic in Indonesia’s rural areas.
Amarthans are socially driven with main focus revolves around meeting the needs of
people.
Amartha sees the importance in empowering women with affordable financial services as
it will positively impact on the welfare of the household.
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

4. What do we want to achieve?
Indonesian workers rank highest in the
world in terms of willingness to give up
higher pay for a greater work/life balance.
In reality, people in the rural area do not
have the choice to have a greater work/life
balance. They have to generate income
for their families and often they need to
migrate to other city/country.
Their mindset is that the only opportunity
to work in their hometown (rural area) is to
work in paddy field. While in reality, being
a farmer is not the only thing that they can
do.
We aim to give them opportunity to
generate income without having to leave
their home and family by disbursing a
target of approximately 62,000 loans and
extending our product offerings through
our flagship program, GAE OPO.
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

5. How do we achieve our goal?
Consultation
Extending on education prior to loans
being issued, we also seek to implement
the provision of consultation for
startups and new entrepreneurs in terms
of marketing, business and financial
advice, also provided through volunteers
With consultation, startups and small
businesses are exposed to new sources
of skills and knowledge which they can
use to leverage their businesses.
Thereby increasing income, decreasing
the probability of default rates and
increasing level of confidence to borrow
Implementation
In order to achieve the desired benefits of the
proposed solutions, we put forth two main
programs that we abbreviate into:
GAE OPO
GAE OPO is a Javanese dialect language
which roughly translates into “What are you
working on?” in english.
GAE OPO is an abbreviation, consisting of the
first letter of every word from the name of the
initiative that we are proposing:
“Poor people are bonsai people. There is nothing wrong with their seeds. Only society never gave them
a base to grow on.” - Mohammad Yunus
Open
Partnership
Opportunity
Guilt Marketing
Attractive Promotion
Effective Socialisation
Education and Socialisation
Study in Indonesia found that those who
were not financially literate were less
likely to use financial services.
Our recommendation aims to alleviate
this problem by instilling financial literacy
education to mature individuals through
liaising with the government and other
education institutions.
Also, we will aim to partner up with
institutions and organisations such as
Melbourne Microfinance Initiative to
assist current employee with the field
works. With having volunteers at our
disposal, we will be able to expand the
range of rural people that we can touch
without having to incur significant cost.
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

6. Guilt Marketing Attractive Promotions Effective Socialisation
Attractive Promotions
Tying staples to the seminars -
providing staples to low income
families provided they attend
the seminars.
The aim of this promotion is to
increase awareness of the
program that is available to the
rural people of Indonesia.
Effective Socialisation
Indonesian, especially those in
rural area, put their trust into
public figures such as the
Mayor of the area.
Inviting village head/mayor of
the province to talk and
participate in the program
enables them to gain a sense
of security and increases
credibility of the program.
Educate people on the benefit
of productive loan, and the
opportunity to earn income
without having to leave their
home
Guilt Marketing
Consumptive behaviour is very
apparent during the Lebaran
period. And more often than not,
the feeling of guilt comes right
after the act of spending money
itself.
During this period, we will use
“guilt” as our primary marketing
tool. Guilt will be an effective
emotion to use to get into
people’s head and to make them
realise that they need to work
again/earn some money.
By creating a subtle but effective
marketing campaign, we want to
instil the feeling of guilt to people,
and at the same time we will
promote the benefits of having a
m i c r o f i n a n c e l o a n , w i t h
generating more income as one
of them.
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

7. GAE’s Strategy Rationale
During the festive period of Lebaran in
which most people return to their
homes and families, we want to focus
our efforts on marketing, socialising
and giving promotion to people during
this period.
Overseas labour workers/Migrant
workers would be presented with the
opportunity to start a business in their
hometown. This could be attractive to
them provided that they have the
capability to access loans offered by
Microfinance institutions such as
Amartha.
GAE Marketing Framework
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

8. Partnership
W e a i m t o a c h i e v e a
sustainable partnership within
the community of Amartha.
Following our first point, Open,
we want to open the door to
women who want to work with
other people. Encouraging
women to start their own
businesses with people who
they trust will have a positive
impact on the sustainability of
their business, income, and
happiness.
Open Partnership Opportunity
Opportunity
By having an open partnership
structure in our community,
opportunity will arise through
an effective discussion and
community that fosters growth.
We provide consultation
services as a platform to cater
to and support the growing
number of business ventures.
Open
W e l c o m e m e n i n t o t h e
A m a r t h a ’ s c o m m u n i t y ,
provided that women remains
the sole focus, i.e. the
proportion of women as
members of Amartha is greater
than the men.
The Indonesian culture
continues to place a greater
i m p o r t a n c e o n m a l e
dominance as men are often
perceived as the community
leaders, decision makers and
mediators while women are
seen as backbone of the home
and family values.
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

9. OPO’s Strategy Rationale
Partnerships would give women confidence to
engage in entrepreneurial activity to a point where
they are sensitised with the practice. This will also
motivate other women to join, thereby increasing
the number of borrowers for Amartha
Partnerships would be accounted as one entity,
which will help reduce the number of defaults as
the partner/s would be able to share responsibility
of the whole syndicate. As the graph shows,
partnerships enterprise enjoy higher survival rate
than a sole proprietor.
Catering for groups of people, rather than
individuals will also help reduce Amartha’s
administration costs.
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

10. Implementation
Five-Year Time Frame
GAE
Year 1
Socialise the
program to the target
market.
OPO
Year 2
Once there is
sufficient familiarity
and knowledge of
the programs, initiate
the OPO scheme.
Open new branches
Year 3
Once reaching
capacity limit, open
new branches to
cater for the growing
market
Open new branches
Year 4
Continue progress of
Year 3
Continually focus
risk mitigation to
avoid the loss of
identity.
Open new branches
Year 5
Continue to fulfill the
growth capacity
Revise the five-year
plan
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

11. Risk and Mitigation
RISK 1:
Risk of Default
RISK 2:
The proposed programs
offered might not be attractive
RISK 3:
Being too focused on
profitability growth and straying
away from core vision
Mitigation 1:
Incorporated in our GAE OPO program.
educating people, encouraging them to
partner up, create consulting service
and volunteers will help mitigate the risk
of default. implement Quality Service
Control periodically
MITIGATION 2:
We would introduce the benefits from
opening up a business to people in rural
areas, highlight the benefit to the
Indonesian economy in terms of a higher
standard of living and provide
encouragement by provide testimonials
from successful borrowers
MITIGATION 3:
Create sense of belonging to the
employee by providing them perks and
benefits. Incentivise them. Creating the
slogan (GAE OPO) that act as the
reminder to the employees and
volunteers to work accordingly.
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

12. Conclusion
Goal
Assumption: Constant rate of growth and dropout over the course of 5 years
----------------------------------
With the successful
implementation of the
GAE OPO programs,
the forecast indicates
t h a t A m a r t h a w i l l
achieve its objective of
o v e r 5 0 , 0 0 0 l o a n
disbursement by 2021.
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Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

13. Appendix A
● Compounded Annual Growth Rate: est. 2009 - 2013
50 = 42 (1 + x)4
x = 4.46%
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

14. Appendix B
● Growth Rate: est. 2012-2013
[Number of New Members (2013) - Number of New Members (2012)] / [Number of New Members (2012)]
● Dropout Rate: est. 2013
Retention Rate:
[Active Members End of Year (2013)] / [Active Members Beginning of Year (2013) + New Members (2013)]
Dropout Rate:
[1 - Retention Rate]
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

15. Appendix C
Translation : Lebaran (Eid Mubarak) does not only purify your
heart, it will also purify your wallet, making it holy, and clean
and empty again.
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix

16. Appendix D
http://www.gbgindonesia.com/en/finance/article/2013/
an_outlook_on_indonesia_s_microfinance_sector.php
http://www.bwtp.org/MF_Industry_Report_Indonesia_ELECTRONIC.pdf
http://www.gbgindonesia.com/en/finance/article/2013/
an_outlook_on_indonesia_s_microfinance_sector.php
http://www.gbgindonesia.com/en/finance/article/2013/
the_outlook_for_indonesia_s_islamic_banking_sector.php
http://vuir.vu.edu.au/22309/1/Iwan%20R%20Prawiranata.pdf
Industry Context Firm Context Objective
Proposed
Programs Implementation
Risk and
Mitigation Conclusion Appendix