Indonesia's dairy sector is ripe for investment, driven by growing domestic demand and government initiatives such as the Free Nutritious Meals Program. With local production meeting less than 25 per cent of national consumption, mostly from smallholder farmers, the sector needs financing to expand herds, modernise farms, and strengthen supply chains.
To strengthen this important sector and enhance financial access for smallholder dairy farmers, the International Labour Organization (ILO) and Indonesia Fintech Association (AFTECH) have signed a collaboration to make the best use of digital innovation and alternative credit scoring. The signing ceremony was held in Semarang on 12 August to pilot an initiative integrating Enterprise Resource Planning (ERP) data with fintech solutions to improve farmers' credit profiles and streamline access to working capital loans in East Java.
Under the ILO's Promoting SME Enterprises through Improved Entrepreneurs' Access to Financial Services (Promise II Impact) project, funded by the Swiss State Secretariat for Economic Affairs (SECO), this pilot initiative will capture real-time production and income data, enabling financial service providers to more accurately assess creditworthiness and offer tailored financial products.
The pilot will run from August 2025 to June 2026, with strong coordination from the Financial Services Authority (OJK). The pilot is expected to become a strong model for expanding digital financial inclusion across other agricultural value chains, helping more communities gain fair access to financing.
"This initiative will unlock opportunities for farmers who have been historically underserved by formal financial systems," said Djauhari Sitorus, ILO Project Manager for Promise II Impact. "By integrating ERP data with fintech solutions, we can help financial institutions make faster, more accurate lending decisions and empower farmers to invest in their businesses."
This initiative will unlock opportunities for farmers who have been historically underserved by formal financial systems
Djauhari Sitorus, ILO Project Manager for Promise II Impact
The collaboration will also design customized financial products for dairy farmers and micro, small and medium enterprises (MSMEs), including asset financing, client-centric working capital loans, and fintech-enabled credit lines. Training programmes will be conducted to improve farmers' digital literacy and financial management skills, ensuring they can effectively use these tools.
AFTECH, established in 2016 as Indonesia's official fintech industry association, will play a central role in advising on technology solutions and facilitating partnerships with relevant fintech providers.
Anggie Setia Ariningsih, AFTECH Vice Chairwoman III, emphasized the sector-wide impact that fintech has the power to bridge the financing gap for farmers by leveraging data that truly reflects their productivity and potential. "Through this partnership with the ILO, we aim to create sustainable financial solutions that can be scaled to other sectors beyond dairy," said Anggie.
