Regional Microfinance Development Nusa Tenggara Barat : Concept and Implementation Strategy

This document details the process of setting up and operating the Microfinance Development Project in the province of Nusa Tenggara Barat (NTB) in Indonesia.

The document provides information about:

• NTB its population and income-generating activities;
• The rural microfinance market analysis that compared current demand and supply and found:
  • A large potential for savings mobilization;
  • A range of sources of microfinance supply.
• The Kecamatan development project that had a unique feature, the finance management unit (UPKB), as a second-tier organization that provides loans to self-help-groups (SHGs) and microfinance institutions (MFIs);
• The functioning and advantages of the UPKBs, stating that:
  • They close both the financial and distance gaps;
  • The deteriorating quality of most UPKBs did not result in discontinuation of its activities.
• Reasons for UPKB's increasing non-performing loans (NPLs);
• The new approach to UPKB development that changed the name of the institution to Village Financial Services Company (UsPKD) and focused on sustainability.

The document recommends that:

• The transfer of assets from UPKB to UsPKD include verification and reassessment of all loans;
• The village own the UsKPD completely;
• The loan fund become a subordinate loan to UsPKD in order to strengthen equity.

The document concludes by describing the Regional Microfinance development in NTB project - its objectives, its advantages and its implementation process.