Digital Transactions for MSMEs Could Unlock Alternative Credit Access

Jakarta - The digital transaction footprint of women-owned micro and ultra-micro enterprises could provide an opportunity to obtain alternative credit eligibility from banks to grow their businesses, according to Angelique Timmer, Southeast Asia Regional Head of Women’s World Banking. The international non-profit organisation notes that around 64 percent of MSMEs in Indonesia are owned by women. However, nearly 75 percent of women MSME players still lack access to formal credit, even though most are already running businesses and generating regular income. “When their business activities can be proven through digital data, they become more visible to banks and have a greater chance of obtaining financing to develop their businesses,” Angelique said during a media discussion on alternative credit scoring for women MSMEs in Jakarta on Thursday. She stated that women micro and ultra-micro entrepreneurs hold significant potential to drive national economic growth. Yet millions of women entrepreneurs still struggle to obtain financing because they lack a credit history recognised by financial institutions. Women’s World Banking assesses that the core issue lies not in the low productivity of women entrepreneurs, but in a credit assessment system that fails to capture their economic activities. Angelique explained that utilising financial data from QRIS transactions, electricity and telecommunications bill payments, stock purchases, and sales through digital systems can serve as an alternative for banks to evaluate prospective debtors, rather than relying solely on collateral or loan history. However, access to financial services has not yet been fully matched by access to productive financing. Therefore, the organisation is pushing for the use of alternative data so that entrepreneurs who have not previously had a credit history can gain equal opportunities to access formal loans. She also stressed that expanding financing access for women not only improves their businesses but also creates a multiplier effect on the economy. “When women gain access to financing, the benefits are felt not only by their businesses, but also by their families, supply chains, communities, and overall economic growth,” she said. As for the success indicators of this credit recommendation, Angelique noted that collaboration is needed between regulators, the government, banks, data providers, and financial industry players. Furthermore, credit scoring models must also utilise gender-sensitive data to reduce bias and produce fairer financing decisions for women entrepreneurs.