Indonesia is made up of more than 17,000 islands and is home to nearly 230 million people. Nearly half the population lives under the $2.50/day poverty line.
- Seventy-seven percent of rural Indonesians are poor
Although a sizeable percentage of the population are considered ‘near-poor’, living just above the poverty line, studies have found that the risk of a household falling below the poverty line is very high in Indonesia. For example, over 38 percent of poor households in 2004 were not considered poor in 2003, which can be attributed to the country’s vulnerability to price shocks—particularly increases in rice prices. Over 75 percent of the poor spend a quarter of their incomes on rice. When rice prices increase, as they did in 2006, millions of people fall back into poverty.
Rural households account for about 57 percent of the country’s poor, and almost two-thirds of poor households involved in agriculture, such as fishing and farming. On the other hand, urban poverty is on the rise and the conditions in urban areas are comparatively worse. Most live in packed settlements without access to adequate and affordable services such as health care, nutrition, education, housing, water and sanitation.
The islands of Java and Bali contain 59 percent of Indonesia’s population, and 57 percent of its poor—nearly 140 million people. Although the region has the lowest incidence of poverty in the country, it contains the highest number of poor people in Indonesia. Aceh province, on the northern tip of Sumatra, was one of the poorest regions before the 2004 tsunami. Despite the influx of aid and recovery efforts, Aceh remains one of the poorest regions in Indonesia. Despite a continuous reduction in poverty rates over the last several decades, nearly half of the population still lives below the $2.50/day poverty line.
The demand for microfinance services is immense. Despite the existence of over 50,000 registered microfinance institutions, very few are targeting the poor and poorest and 51 percent of Indonesia’s entire population remains without access to formal financial services.
Our Growth Guarantees program, which has provided $8.2 million to six MFIs in Indonesia, provides loan guarantees for MFIs to receive funding from their local commercial banks in their local currency.
Village Phone allows local micro-businesses, or Village Phone operators, to provide customers in rural villages with mobile phone access.
Realizing that two-thirds of the 3.3 billion mobile phones in the world are in developing countries, AppLab develops, tests, and strengthens mobile applications capable of providing vital health, agricultural and income-generating information to the poor.
Learn more about Grameen Foundation's 2004 Tsunami Recovery work.
Local Partners in the Fight against Poverty in Indonesia