The Indonesian microfinance sector is one of the largest in the world, encompassing over 50,000 institutions, including community banks, rural banks, cooperatives, and credit unions. Despite the scale, more than 40 million people still lack access to financial services, mainly in rural areas and urban slums.

The PAC program was initiated by MICRA foundation in order to build MFI outreach to the poor. PAC strongly believes that everyone, including those with low or no income, deserves access to financial services. At present, many of those people are not served by commercial banks and only a few microfinance institutions reach out to this market segment. A recent MICRA study revealed that only a third of 450 MFIs surveyed provide significant services to the poor.

In Indonesia, poverty remains a driving factor. The following figures illustrate this:

  • Over 110 million people are living with income between US$1 and US$2 per day; another 17 million live on less than US$1 per day.
  • Nearly 30 million elementary school children are suffering from moderate to severe anemia.
  • There are 30 million unemployed people and 37% of the population was unemployed in 2006.
  • As many as 38.5 million Indonesians are self-employed, comprising over 40% of those employed.
  • Of more than 43 million micro and small enterprises in Indonesia, only less than 13% have access to commercial sources of finance.

As a program, PAC focuses on identifying, promoting and linking pro-poor MFIs to resources. The program is integrated and serves as a center for learning. It also acts as the center of activities for pro-poor MFIs to develop their outreach and effectiveness. PAC enables MFIs to receive access to various resources so that they can grow and share experiences. PAC also promotes pro-poor models to other MFIs interested in working on the microfinance market. Best practices and tools will be documented and disseminated through newsletters, websites, and conferences.

Managed by a team within MICRA, PAC fuses its resources with internal support from Mercy Corps to provide direct services to up to 500 pro-poor MFIs in the next five years. It will build market awareness among all MFIs about viable pro-poor products and approaches to increase overall service to an underserved market segment. Eventually, effective and sustainable MFI financial services are hoped to lift millions of Indonesians living in poverty.