Micro-financing mothers to invest in Indonesia’s next generation
The In-Venture team
Over the past decades education rates have significantly risen in Indonesia but the latest improvements have not yet benefited all the population. Still, children from underprivileged areas are rarely given a choice and dropout rates remain high within poor Indonesian households. Acting for child education all over the country, YCAB has decided to tackle the problem from the roots and came up with a rather unique social contract, precondition to its microfinance services.
YCAB was firstly established as a philanthropic foundation to provide education and training for the youth. It has notably opened Rumah Belajar (learning centers) where children can receive quality education. They are taught about entrepreneurship and are given better chances on the job market as they grow up. However, the foundation services acting for youth economic empowerment were not reaching children from poor households. In spite of the gratuity, the opportunity cost to send children to school remained high for poor Indonesian families.
YCAB has therefore decided to focus on women’s economic empowerment to work towards inclusive education all around the country. Indeed, economic sustainability is key to familial stability, which is itself primordial for childcare. YCAB has thus bet on the catalyzing role of women within a household: as they remain the main caregivers in the family, their own economic independence may lead to their children’s economic empowerment later on, and then shatter the vicious cycle of intergenerational poverty.
YCAB has progressively refined its model and has looked for ways to economically sustain its missions for women and children. Business units have emerged to encourage women to be financially independent, either through employment or entrepreneurship. YCAB is henceforth a social enterprise group providing microfinance services to mothers and their family.
Since 2010, 116 000 loans have been granted to Indonesian women, who must sign a contract ensuring that their children are attending school in return. During the 20-week loan period, YCAB is surveying their borrowers and some officers ensure that the contract is thoroughly implemented. Loans have notably been used to set up small businesses such as street food stalls, handicrafts or beverages shops. These income-generating activities have ensured a repayment rate tantamount to 92%. YCAB thus presents a very unique microfinance scheme, where loans are granted to encourage both women and youth empowerment, while efficiently combating financial exclusion in Indonesia.