Social Finance and Social Enterprises: A New Frontier for Development in Indonesia

The discussion on social finance has a development tool has been on the rise in Indonesia for almost over a decade with Muhammad Yunus’ Grameen Bank winning the Nobel Prize in 2006, the slowdown of government grant-based activities due to the economic turmoil in the 2009, and the urge from foundations and governments to provide more sustainable financing for social initiatives. It gradually started to raise from a limited number of pioneers (e.g. Grameen Foundation, Kinara Indonesia, ANGIN Women Fund) to a larger group of organizations, domestic and from overseas.

A lot of enthusiasm has surrounded social finance over the last two (2) years. A plethora of communities, reports, forums and funds interests have sprouted up around the South-East Asia region with a focus on Indonesia. To give a perspective to this excitement, raise certain key questions and support UNDP in its mission to impact the social finance development, ANGIN has researched the social finance ecosystem over a month, in a broad approach, looking at different layers of the ecosystem; the
regulatory constraints affecting social enterprises, the buy-side (investor), sale-side (social enterprise) and support-side (enablers) which comprise the social finance ecosystem.

From its conclusion, ANGIN sees the Indonesian social finance ecosystem slowly transitioning to its growth stage2, having passed the nascent stage within the last seven (7) years. Some figures are demonstrating sign of this transition: There is a growing number of social enterprises in Indonesia.

2 We refer to the categorization into three (3) categories: nascent, growing and mature based on the BCG report on social enterprise The Art of Sustainable Giving (2014)