The Indonesian government is setting up a network of up to 80,000 village co-ops to work as “strategic instruments” for reducing rural poverty.
Government figures show that Indonesia has to 24 million economically disadvantaged residents, 3.17 million of whom fall in the extremely poor category, and ministers hope the new Red and White Village Co-operatives will help develop the regions.
National news agency Antara reported on a ministerial meeting in Antara where deputy social affairs minister Agus Jabo Priyono said: “A majority of people classified as poor and extremely poor reside in villages. The president has demanded that extreme poverty be dealt with by 2026, and I want the Red and White Village Cooperatives programme to be on point.”
It is hoped the co-ops will improve access to finance. They are designed as one-stop facilities for savings and loans, village clinics and pharmacies, logistics, cold storage, and the distribution of agricultural and fishery products.
Ministers say the cost of developing one village co-op would be Rp5bn (around £223,000) – and to safeguard the investment the Ministry of Cooperatives plans to train 240,000 supervisors, to eliminate the risk of fraud losses.
Antara reported from a press conference last week where Herbert Siagian, deputy of supervision at the Ministry of Cooperatives, said each co-op would have three supervisors.
“We will fully focus on preparing human resources that are competent and meet the co-operatives’ management needs,“ deputy cooperatives minister Ferry Juliantono told Antara.
Financing of the scheme will come through loans through Himbara, the association of state-owned banks, with the first co-ops set for launch in July.
This has sparked concern from analysts, with Eliza Mardian, a researcher at Indonesia’s Center of Reform on Economics (Core), noting that, with some villages already having co-ops, a range of funding mechanisms is needed.
Mardian says new co-ops should not be given immediate loans from state-owned banks, as they do not possess a stable income to repay the debt. Instead, the government should use other mechanisms, and save money adapting existing infrastructure.
