Indonesia financial inclusion: GoJek’s metal ignition

Posted on October 05, 2018

Ten years ago Aldi Haryopratomo was working for Kiva, a San Francisco-based non-profit with an online lending idea, and had been touring around Vietnam and Indonesia on a motorbike looking for microfinance banks. It was sometimes a struggle.

“People would take my laptop and try to shake it to get the money out,” he says. “They had never seen online lending.” Seeing the villages first-hand, it occurred to him that what communities needed to climb out of poverty came down to the most basic things, starting with affordable access to pots and pans. In his native Indonesia, this is how life worked at the truly grass-roots level: a pot that would cost Rp300,000 ($40) in a store in the city was twice that price in the village because they could only ever be bought on credit. With costs so prohibitive, villagers couldn’t afford enough pots, and so they would take turns using them. Aldi learned a simple lesson about business from this.

“Rather than build something from the top down and saying: ‘I’m an e-commerce company’, why don’t you start with asking: ‘What does the user need?’” he says. In this case: “I need to buy a pot that helps me cook rendang [a spicy meat dish] for Eid so I don’t have to wait seven days to eat it because I have to take turns using my pot.” So he founded Mapan, also known by its holding company name, Ruma, in 2009.

Mapan rests upon the fact that in any village or community, there is a natural leader. “If you can find the community leader, who may not be the most wealthy or the most powerful but the person who really cares about the village, and ask them what they need, you can come up with a solution you might not have thought of yourself.”

In the first village where Mapan tried this out, this person was a woman who owned a shop in front of the school; people would leave their children at her shop and everyone called her auntie. “Everyone trusts her with their children: she must have some influence,” says Aldi. “You’re not going to give your children to someone you don’t trust.” More often that person is a teacher, who is usually already a community leader.

“It depends,” says Aldi. “There is no one occupation. But when you go to a village, people will tell you. You can see it sometimes: the way they walk, the way people talk to them, the way they smile. There’s a lot of trademarks to these influencers.” I had to convince the community that this was something that could be done.

Having identified this person, Mapan seeks to use them for two things. First, “these leaders are like your user research, your eyes and ears to the village,” says Aldi. They give a clear sense of what is needed, rather than what outsiders think they need. Second, they form something called an Arisan, a rotating savings and loan group for the village. The idea for this came from the woman who needed the pot to cook rendang for Eid. Aldi and his team, by negotiating directly with suppliers, were able to get pots at a quarter of the price the villagers were paying on credit, by ordering in bulk and telling the manufacturer to ditch things like handles and glass tops and just focus on making a good quality pot. Adding in shipping costs and commission for the village leader as an incentive got the cost to Rp250,000 per pan, less than half the local price.

But it was still too much for a village capable of paying only modest installments. So Aldi went along to a weekly community meeting one Wednesday and together they figured out a plan: the community would form a collective of five people who take turns to make the payment, meaning at the end of each month one person gets their item, and within five months everyone’s got one. There is no interest, just commission to the person, usually a woman, who leads the Arisan. It took off. Within two and a half years, one million families in 120 cities were using Mapan. That’s a lot of pots.

Meanwhile, Aldi’s old friend Nadiem Makarim had started something of a revolution in Indonesia’s cities with GoJek. Nadiem and Aldi studied together at business school and have remained friends. By now fully established in different fields – Nadiem in the cities, Aldi at the rural level – it occurred to them they might be able to work together.

“We have always had the same passion,” says Aldi. “How do we leapfrog this country into prosperity and equality?” So they piloted a programme in Jogjakarta, Java, in November 2016, where they would bring the two together directly into a family. The husband would be a GoJek driver; the wife would be an Arisan leader. GoJek would bring in income, Arisan a method of using it effectively and responsibly. Aldi says one family went from earning one million rupiah to Rp10 million in three months.

“It was crazy. They went from poverty to middle class, like that. When you see things like that you start thinking maybe one plus one creates more than two, because it helps families more holistically.” Aldi Haryopratomo, GoPay Nadiem had big ambitions for GoPay, and had been looking for ways to build it beyond its basic origins. Now he had the answer. In December 2017, GoJek announced an audacious triple acquisition in financial services and technology: it bought Kartuku, Indonesia’s largest offline payments processing company; Midtrans, the biggest online payment gateway, and Mapan. Aldi would become chief executive of the merged GoPay business.

For the full article, visit EuroMoney.