Sekar Dewi
Richard Jaison
TIAS School for Business and Society
Mirjam Minderman
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The innovation of Koperasi Maju lies in their idea of providing financial services to the people of Indonesia by becoming a vehicle of change to support their capacity building through interrelationships and common growth. They provide loans and savings to micro, small and medium enterprises in Indonesia. On top of that, they also provide 5 key success factor programs that help transform their members through training and education, discussion group forums, mentoring, regular visits and communication.
“We have 5 key success factors as we commit to benefiting our members. So, we regularly conduct education sessions for members, even by members to members. Second, we have a forum group discussions that help create business opportunities and develop business network. We regularly conduct membership gatherings so they know each other. Third, we mentor our members, so that they can improve their business. Fourth, we regularly conduct visits (in Indonesia, we call it Blusukan like the one by Jokowi, but we do it every day). We have a dedicated team to visit members in Jakarta and ask them door to door if they want to save or loan money. And the last one, aligning with the vision of Koperasi Maju, we regularly inform our members about Koperasi Maju’s progress and financial perfromance.”
The founders of Koperasi Maju concluded that apart from transactional services, Koperasi Maju also needs to focus on its member transformation. The business concept of Koperasi Maju is in the form of a cooperative with members communicating back to members as its backbone. This concept has already existed for many decades, but the traditional cooperative concept is only transactional in the form of savings and loans. This transactional model does not educate members and does not enable them to get a much better result. However, Koperasi Maju is empowering their members through its 5 key success factor programs. Those key success programs are 1) Training & Education; 2) Discussion Group Forum; 3) Mentoring; 4) Regular Visits and 5) Regular Information & Communication. By doing the above, they are able to address some of the United Nations Sustainable Development goals: No Poverty, Quality Education, Gender Equality, Decent Work and Economic Growth, Industry and Innovation, and Sustainable Cities and Communities.
In 2019, Koperasi Maju has 25 employees with a total of around 1400 members in 21 provinces in Indonesia. The employees in the Finance, Teller & Loan department run the daily business of savings and loans, while the other employees deliver and coordinate Training Education, Marketing Communication, Mentoring and Member visits. Education and training events are held twice a month at the Koperasi Maju main office with speakers that come from the member companies. Regular visits to targeted micro and small entrepreneurs and members are undertaken on a daily basis employees. In the beginning, only employees facilitated group discussions and the mentoring of members, but now, members can also reach out to other members to get this support directly.
“I think there are some cooperatives like ours, but not many. In Indonesia, most people look at cooperatives in a negative way. Cooperative members can save a lot of money, but if the principle (cooperative) is not good, they can go on with the members’ money. As a cooperative, we should care, share, and be fair.”
Several business owners and Majelis Buddhayana Indonesia (Indonesian Buddhist Assembly) had concerns about the amount of people without access to proper financial services in 2012. Many people, unfortunate in terms of the economic situation, found it very difficult to get a loan from proper financial institutions such as banks. “They were usually uneducated and had limited income, so they could not meet the requirements to apply for a loan from a bank (no collaterals, bank account and fixed income). Having no better choice, they usually get their loan from a loan shark who offers fast approval, but also very high interest rates, resulting in difficulties when paying back the debt. Thus, we created Koperasi Maju with the aim of being able to help members to get financial services." If the cooperation has profit, the members will also benefit by getting a dividend based on their contribution, unlike the bank or other financial services. This cooperation is accepting members regardless of their background (religion, economic or social status), not only from the Buddhist society.
The cooperative business form of Koperasi Maju was inspired by Mohammad Hatta and Muhammad Yunus. Mohammad Hatta, vice president of Indonesia from 1945 to 1959, is known as Father of the Indonesian Cooperative Movement. He believed that a cooperative was a suitable business form for Indonesian culture with its principle known as Gotong Royong (cooperation) - to raise the economic standard of life for people. Muhammad Yunus is a social entrepreneur from Bangladesh that was awarded the Nobel Peace Prize for founding the Grameen Bank with its pioneering concept of microcredit and microfinance. Loans are given to those entrepreneurs that are too poor to qualify for a traditional bank loan, thus enabling economic and social development from below.
Koperasi Maju has gradually benefited its members through their Saving and Loans transactional programs as well as their 5 key success programs. In term of financial benefit, the members get higher interest rates for their savings compared to those of banks. Members also can have a loan from the cooperation with competitive interest rates. Every year, the members will also get a dividend from the cooperation which depends on their contribution.
The specific impacts of the 5 key success programs are related to the member transformations. The micro and small entrepreneurs get support for their business in terms of financing options and using finances productively to increase their welfare. Employees of the cooperative will help the members to use their loan as productively as possible. Members can get free education and training in business management. They also get a chance to develop a new business model and build a business network with other business owners. The mentoring program also helps the members to develop their capacity in every aspect of business. Regular visits also help micro businesses to get additional feedback on how to improve their company further. Providing this program indirectly increases the number of job openings through business development for a better economy.
“Koperasi Maju is engaged in savings and loans. Providing only capital is an ordinary service, it’s not providing added value to members. We also see that our members are very diverse, with for example employees, housewives, entrepreneurs, and others. We want Koperasi Maju to be not only about financial transactions. We want to reach a transformation of every member.”
Koperasi Maju will get several benefits by providing Saving and Loans and their 5 key success programs. Koperasi Maju gets its funding from Saving (compulsory saving, voluntary saving, and term deposit). They pay higher interest rates than banks for the voluntary saving and term deposits to attract more funds. These funds are used to give loans to members - especially micro, small and medium entrepreneurs. In return, members that borrow money will pay interest to Koperasi Maju that is much lower than the interest rates of loan sharks. Koperasi Maju profit comes from thes Saving and Loan transactions. The risk of bad loans is greatly reduced by providing the 5 key success programs, especially by providing training and education to members.
“Also medium or big entrepreneur members borrow money from Koperasi Maju although the interest is higher than that of banks. But they have the mindset that it is ok to borrow money from Koperasi Maju because it helps micro and small members in the right way. It’s not a donation, and it's also not charity.”
For an economy to grow, it is very important that the micro, small and medium scale businesses boom. Koperasi Maju is playing a crucial role in funding many micro and small to medium scale businesses. They don’t just give loans but also help the members by continuous monitoring, assisting and supporting throughout their journey. Training and education provided to members help them develop their business and consequently improve their standard of living. In addition, since housewives are often engaged in micro level businesses, it definitely boosts the empowerment of women in a developing country like Indonesia.
When we put all these efforts by Koperasi Maju together, it makes a huge difference to the Indonesian society. Out of the five UN Sustainable Development Goals they address, Koperasi Maju has the most impact on Decent Work and Economic Growth and Sustainable Cities and Communities goals.
“As time goes by, the number of members also increases. We can know who the change agents are, regardless of whether they run a micro, small or medium business, or something else. Among them, we know who has a good heart to share their experiences with other members. The social impact lies in the mutual trust and that members can also act independently to help other members. In the past, only a cooperative could carry out this kind of activity, but now, we don’t have to create a special event, the members can go directly to other members.”
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Budi Murwanto, Coordinator of Advanced Cooperative Education Center (PPKM)
Koperasi Maju is a profitable business firm in the form of a cooperative that provides financial services to the people of Indonesia. As a cooperative with universal values, it strives to be a source of inspiration in Indonesia in terms of transparency and accountability. Koperasi Maju is a partner of Change Actors, who aim to improve social justice by helping MSME Economic Actors (i.e. micro, small, and medium entrepreneurs) to increase their capacity through cooperative associations a, based on the principle of mutual relations and common growth.
“We have missions for micro, small and medium entrepreneurs because we are their partner who seek to continuously improve their capacity through the cooperative. Our vision is to become the cooperative that is a source of inspiration in terms of transparency and accountability.”