OJK declares two ILO-supported villages as EKI Village for their financial and technology transformation

Two ILO-supported villages—Kaliuda Village in East Sumba Regency, East Nusa Tenggara (NTT) and Umong Seuribee Village in Aceh Besar Regency, Aceh—have been selected and declared as pilot villages for the implementation of the Financial Inclusion Ecosystem Programme (EKI) by the Indonesia Financial Services Authority (OJK). The launch ceremony for Kaliuda Village was held in May 2024, while the Umong Seuribee in April 2024.

By being declared as EKI villages, both Kaliuda and Umong Seuribee villages would be provided with various financial activities such as financial education and literacy programmes, access to business capital and investment. The EKI programme was initiated by OJK in collaboration with the Regional Financial Access Acceleration Team (TPAKD) and the Ministry of Villages, Development of Disadvantaged Regions and Transmigration.

© ILO

During the declaration of these two villages, representatives of OJK in NTT and Aceh emphasized the strategic role of EKI programmes to improve the society’s welfare and quality of life and to tackle poverty in rural areas. Villages as one of the strategic development areas play an important role in increasing the use of inclusive financial products in rural areas as part of sustainable national development.

Promoting SMEs has been one of the ILO’s priorities to assist them in improving their competitiveness and productivity as well as accelerating their business recovery through financial literacy and digitalization.

Simrin C. Singh, ILO Country Director for Indonesia and Timor-Leste 

The ILO has been supporting these two villages through its Promoting Micro and Small Enterprises through Entrepreneurial Access to Financial Services Project Phase 2 (Promise II Impact). Funded by the Swiss State Secretariat for the Economy (SECO), the ILO’s Promise II Impact programme is implemented in collaboration with OJK, regional development banks (BPD) and rural banks (BPR).

Djauhari Sitorus, ILO’s Promise II Impact Programme Manager, stated that the Promise II Impact programme has been implemented in three provinces with different targeted areas: Dairy cattle in West Java, seaweed in NTT and patchouli in Aceh. “The programme aims to empower communities and strengthen value chain ecosystems through digital application platforms that create structured information for community business development. The application also makes the community's business more well-organized and documented to increase access to banking finance.

Digital and financial transformation

NTT Province is the largest producer of high-quality seaweed in Indonesia and seaweed is a superior commodity in East Sumba. Therefore, In Kaliuda village, the ILO’s Promise II Impact has provided financial and entrepreneurship education training programmes for 200 seaweed farmers.

© Gita Lingga/ILO

Based on their business development performance, 80 farmers had passed the initial selection to receive business assistances for eight months. Out of these 80 farmers, 20 farmers were selected to receive the microcredit assistance after they successfully passed the OJK's Financial Information Services System (SLIK) and were declared having a good credit history.

In addition, a digital application has also been developed for seaweed farmers in collaboration with Agree, PT Telkom Indonesia’s agrobusiness platform. The application aims to assist in monitoring and recording every stage of seaweed cultivation, such as maintenance, processing and product distribution. The application also aims to open the opportunity to connect between farmers, farmers and regulators and farmers with buyers.

Similar training programmes have also been conducted for 130 of patchouli farmers in Aceh Besar and Aceh Tamiang districs. In addition to financial and entrepreneurship education training programmes, the ILO’s Promise II Impact programme also plan to provide a marketing training programme so that Aceh’s patchouli oil would be more recognized and enter international market.

© ILO

Aceh is known as a source of the highest quality patchouli oil in the world. Aceh is also one of the most suitable areas for developing patchouli cultivation, and patchouli oil is exported abroad. Therefore, the programme has closely worked with the Atsiri Research Centre of Syiah Kuala University (ARC-USK) which has developed value chain ecosystems of patchouli to ensure the quality and quantity of the patchouli essential oil produced by the farmers or smallholders. A customized digital platform in the form of an Enterprise Resource Planning will be developed and used in that ecosystem.

“The ERP for patchouli industry is still a working progress. The ILO closely worked with the ARC-USK to map relevant beneficiaries and to identify supply chains of patchouli industry in Aceh in detail. It is expected that the application will be finalized this year to be used by patchouli farmers and refiners,” added Djauhari.

Simrin C. Singh, ILO Country Director for Indonesia and Timor-Leste greatly appreciated the recognition ILO works through the declaration of two ILO-supported villages as EKI villages. “SMEs are vital to achieving decent and productive employment as they account for two-thirds of all jobs and create most new jobs. Therefore, promoting SMEs has been one of the ILO’s priorities to assist them in improving their competitiveness and productivity as well as accelerating their business recovery through financial literacy and digitalization,” she said.