presentasi leon kamilius sxc summit

The collective journey

towards a decent, happy life

Presentation at StudentsxCEOs Summit

Bandung, June 4, 2011

Koperasi KASIH Indonesia | 2

Our vision

SOURCE: KKI

‘KASIH’ (LOVE) is the foundation of what we do

To help as many people as possible to exit

financial difficulties and achieve a decent

and happy life. Financial difficulties include

having low income, lacking of financial

management capability and access to capital

Koperasi KASIH Indonesia |

We chose Cilincing – one of the poorest area in Jakarta – as our pilot project

North Jakarta

Poor household location splitPercent (100% = 67,104 households)

• Sub-district Cilincing contributes ~1/3 of poor

households (~19,000) in North Jakarta

• Kalibaru in Cilincing is one of the poorest

kelurahan in North Jakarta, with ~8,400 poor

households (83% from total)

Jakarta map

SOURCE: Republika.co.id (Nov 26, 2010), KKI

Cilincing


To date, we have been supporting 156 borrowers; They are typically a mother of ≥ 2 children, rent their house and earn monthly income of IDR 200-400k/person

SOURCE: KKI

To date, we have been supporting 140 borrowers …

… With following typical traits

• Woman aged 30-50

• Married with ≥ 2 children, mostly

still in school

• Husband has low income or

jobless

• Rent a house/room

• Family income of IDR 200-400k/

person/month

• Own a TV, but no motorcycle/

refrigerator/ washing machine

• Had borrowed from loan shark

• Do not have long-term

savings, only arisan* or

Ramadhan savings

Loan usage splitPercent (100% = 156)

% of client with income < 2 $/day : 96%

Total disbursed loan : IDR ~90 million

Average loan/client : IDR ~580,000

Clients’ savings collected : IDR ~7 million

Non performing loan : 0%

Portfolio at Risk (PAR>30) : 0.7%

Clients at Risk : 1 person

Borrowers’ gender splitPercent (100% = 156)

Other statistics

* Arisan is a group-based saving system, where one stored money regularly within a certain period and get the result in bulk, once within aperiod

97%

3%

Women

Men

Achieved without joint responsibility


Ibu Ndih is an example of our typical client

▪ Aged 50, married with 6 children*

▪ Sells cookies, cooking tools, collect plastic trash at free time

▪ Working 7 days/week, sleep 3 hours/day (from 23.00 – 01.00)

▪ Husband works as freelance construction worker

▪ Rent a house, 6 x 6 meters

• Family income of IDR 200 – 300k

/person/month

• Only own a TV, no motorcycle/

refrigerator/ washing machine

• Participating in small social lottery

(‘arisan’) and Ramadhan savings

* 4 married, 2 still lives with her; She also cover some costs of her grandchildren

5SOURCE: Jakarta Globe, KKI

Facts on Ibu Ndih


KKI holds a basic belief that giving loan is helpful but insufficient to really help someone to exit poverty. Education and other supports are also essential.

SOURCE: KKI

Financial

• Loan paid

weekly

(majority),

daily and

monthly

• Savings facility

Education

• Savings-

related

• Business-

related

• Lifestyle &

habit-related

Supports

• Bulk

purchasing of

basic needs

• Incidental

supports, e.g.,

after a fire

Current assets + income + capability + habit + beliefs

Decent & happy life for all ☺☺☺☺

Better income + capability + habits + beliefs = more assets & opportunities

1 2 3

Dream

Goals

Pillars and

foundation for

goals attainment

Starting point

Continuous motivation and beliefs internalization


We applied a multi-layered risk management system

Control applied

• Applicant’s character is checked during survey. Any doubt over a

person’s honesty will lead into application’s rejection

• Survey result is then checked with current borrowers. Concern from

most borrowers will also lead into application’s rejection

• KKI started to apply joint responsibility (tanggung renteng) from the

141st borrowers onwards. Dishonest people might not get a group

• It covers risk from (1) cash flow problem and (2) default loan, while

forcing members to collaborate and support each others

• Discipline applied in all interaction with KKI will help to control

subconscious part of borrowers to repay their loan

• Proximity with Field Officers and branch’s staffs also reduces

possibility of defaulting

Selection control

Individual control

Group control

Intangible control

• KKI provides many incentives (increase in loan amount, chance to get

housing and educational loan, various prizes and opportunities and

some sanctions (legal process, family ban and locking of access to

other microfinance institutions)

SOURCE: KKI


Some of KKI moments ☺☺☺☺

SOURCE: KKI

Pre-disbursement training Disbursement

Games in 1st weekly meeting Winners got prizes!!!

8


We are building a solid foundation in the 1st year to enable future acceleration

SOURCE: KKI

Focus

Year 1

Year 2

Year 3Building a solid foundation

2nd pilot: Rural poor areaFull roll-out: Let’s go!

• Stress-test systems, products, policies and curriculum

• Identify and develop talents

• Establish legal entity

• Raise funding

• Develop 2nd office in 1 rural poor area

• Raise funding

• Identify and develop talents

• Improve systems further

• Open 3rd and 4th offices• Raise funding

• Develop strong talent pool

• Improve systems further

▪ 700 borrowers

▪ 99% performing loan

▪ 1% PAR at risk > 30 days

▪ IDR 50mn savings collected

▪ IDR 700mn funding raised

▪ 8 full-time field officers, 1 admin and treasurer hired, and independently working

▪ 5,000 borrowers in the end of year 3

▪ 98% performing loan

▪ Other targets will be defined in the end of year 1

Target


Several thoughts on MFI


3 words to summarize my opinion on Indonesia’s microfinance industry:BIG, FRAGMENTED and EXPLODING

BIG

• The pie size is just too big to

be served by one player; It is

available across Indonesia

• UKM Center FE UI reported on

2008 that there are ~50 million

customers that still need

microfinance support

FRAGMENTED

• There are various players with

massive quantity: credit union,

BMT, venture cap., foundation,

BPR, commercial bank

• Biggest today is MBK Ventura

with 250k clients

• Most of MFIs took form of credit union (Koperasi Simpan Pinjam) or BMT

• They mainly serve local needs, only some has national scale, making the market fragmented

Description Reason/source

EXPLODING

• Many new, strong local and

foreign players are entering

the market, e.g., Bakrie Group,

Bank Mandiri, Microinvest

• This is driven by the wide

“white space” available, and

potential for good profits

SOURCE: Personal opinion


Interested in this industry? There are multiple ways to get in. Your choice!

Description

• Options: World Bank, MICRA, Care International, others

• Why it makes sense: good to get the overview of microfinance industry and how NGOs on this area work

• Why other options might be better: Less direct learning on the business aspects

Join NGOs

• Options: Commercial banks (Danamon, BTPN, Mandiri), BPRs, Venture Capital (Mitra Bisnis Keluarga), Cooperatives (Koperasi Dian Mandiri, Koperasi Mitra Dhuafa), BMT (BMT Ventura, owned by Dompet Dhuafa), foundation (Yayasan Mitra Usaha)

• Why it makes sense: good direct learning on how to do the business; Joining commercial banks means better salary ☺

• Why other options might be better: Joining commercial MFIs might mean your activities are driven by profit-making mindset all the time

Join existing MFIs

• Options: YOURS ☺

• Why it makes sense: Good learning on how to start and manage your own business and about microfinance industry

• Why other options might be better: setting up own business means higher risk and commitment, while being able to shape things the way you want and potentially be more satisfied in many ways ☺

Create your own



Wanting to start your own MFIs? Couple of tips from my 4-month experience

Description

• … that balances the opportunity (demand for microfinance services) and your resources (e.g., your knowledge and comfort with the area, who you know in the area, etc.)

Pick the right place …

• … including the following:

� Get to know the area, e.g. to find types of product that are needed, characteristic of the people in the area, people whose support you will need to start your business

� Get to know this business, e.g., what are possible product types, what are the risk management system, etc.

Do the homework …

• … focusing on what you must have, not everything, starting from long-term objectives, to 1st year objective, combine it with your SWOT to define your strategy. Then translate your strategy into a product design and operational system and its corresponding tools. Last, prepare basic financial system to capture what happens

Prepare pragmatically …


• Execution capability is what truly sets one MFI from the others, as systems are widely known and tools are widely available

• So, set your heart for the journey (including all the challenges and excitements), and do it!

Set your heart, and EXECUTE!


Last 3 cents to be remembered


• In microfinance industry, you can make money while

helping people. Decide wisely between the two

• Indonesia’s microfinance industry will grow rapidly in

upcoming years. It needs Indonesia’s best talents.

Considering it as a career option might makes sense

• Going back to the 1st point, remember that microfinance

industry dealt with poor people – fellow Indonesians

that are much less-fortunate. They need your help to

achieve a better life. NEVER FORGET this when you

are in the industry. Help yourself and help them, too.


THANK YOU


Koperasi KASIH Indonesia | 16SOURCE: KKI

APPENDIX


Our team combines people with diverse backgrounds, expertise and resources, which has enabled us to effectively tapped into the market

SOURCE: KKI

Petrus Partono*

▪ Role: Commissioner

▪ 38 years old

▪ Catholic church’s brother

▪ ~13 years on people empowerment in Cilincing, in areas of education, health, elderly support, employment creation, housing support

Leonardo Kamilius

▪ Role: Managing Director

▪ 25 years old

▪ Bsc. in Accounting, University of Indonesia, class of 2004

▪ 2.5 years with McKinsey & Company, Jakarta, focusing on operation transformation and strategy

Lucyana Siregar

▪ Role: Director

▪ 25 years old

▪ Bsc. in Accounting, University of Indonesia, class of 2004

▪ 0.5 year in accounting division, Sinar Mas Land

▪ Involve in various social activities in university

Full-time Part-time

Yuswati

▪ Role: Field Officer

▪ 39 years old

▪ High school graduate

▪ Previously worked in institution run by Sisters, making bags from plastic trashes

Denni Pasaribu

▪ Role: Field Officer

▪ 20 years old

▪ High school graduate

▪ Previously worked in clothing manufacturer

Rosmida

▪ Role: Public Relation

▪ 57 years old

▪ Health cadre for the last 15 years

▪ Has extensive network in Cilincing


Yel – Yel Koperasi KASIH Indonesia

Kami pasti bisa

Mencapai KESEJAHTERAAN

Dengan jujur, disiplin, usaha keras dan doa

Kami akan berjuang

Bekerja dan menabung

Demi keluarga tercinta

Kami PASTI, PASTI, PASTI BISA!!!

18SOURCE: KKI

We BELIEVE that our vision is there to be achieved


Most of KKI’s systems were adopted from Grameen Bank, added with some new ideas and necessary modifications

SOURCE: KKI; Grameen Bank guideline

Description Difference with GB model

Selection

• KKI uses Poverty Index assessment to determine whether someone can get a loan or not

• KKI uses its own version of assessment, built from different types used in other institutions

Education

• KKI gives continuous training on different topics and leverages various methods stressing on practice to form the good habits

• Not enough information

Risk management

• KKI provides many incentives for good members and applies legal action to defaulters

• Collective responsibility will be applied in in upcoming batches*

• Early version Grameen Bank applies collective responsibility; Current version does not

• Some incentives used are taken from Grameen model

Impact measurement

• KKI measures 2 lead and 2 lag indicators: Increase in income and savings (lead) and house ownership and ability to send children to university (lag)

• Not enough information

* Thorough assessment shows benefits exceeds cost by far; Method picked will be the one thatts least harmful to members


Let us know if you have inquiries or want to join our effort ☺☺☺☺

20SOURCE: KKI

presentasi leon kamilius sxc summit

Documents

kki koperasi kasih indonesia

kkikoperasi kasih indonesia

low income

default loan

monthly income of idr

educational loan

goalsbetter income

meters family income