Study of the Benefits of MSME Funding Programs for Improving MSMEs’ Capacity and Productivity

Monitoring, Evaluation and Learning
Policy Research
Background 

Micro, small, and medium enterprises (MSMEs) dominate Indonesia’s economy, in terms of both the number of businesses and employment. In 2019, MSMEs represented more than 99% of businesses in Indonesia, absorbing almost 97% of the workforce. Nevertheless, this domination was not matched with MSMEs’ contribution to the gross domestic product (GDP) and export value. It is expected that the role of MSMEs in Indonesia can improve by addressing current challenges through better adoption of digital technology. Minimum access to financing facilities has been the major obstacle to the development of MSMEs, aside from the limited quality of human resources and limited marketing networks. 

Access to financing facilities for MSMEs has become the focus and priority in the 2020–2024 National Medium-Term Development Plan. Currently, there are 21 MSME empowerment programs, comprising programs to improve business capacity, financing, and ecosystem. They have been run for some time by multiple ministries/institutions with relatively large budgets and a large number of beneficiaries. However, there is currently no new study to evaluate these financing programs. That is why the Ministry of National Development Planning (PPN)/Bappenas has collaborated with The SMERU Research Institute to conduct a study to learn about the implementation of the chosen financing programs and identify their benefits for MSMEs and impacts on MSMEs’ capacity and productivity. 

The three MSME financing programs analyzed in this study are (i) New Entrepreneurs’ Assistance-Business Incubation (WB-IB) from the Ministry of Labor (Kemnaker), (ii) Government Assistance in Other Goods Spending Account to Be Distributed to the Community/Regional Governments for Young Start-Up Entrepreneurs and Center for Young Entrepreneurs (WMP and/or SKP program) from the Ministry of Youth and Sports (Kemenpora), and (iii) Incentive Assistance with Additional Working Capital and/or Fixed Asset Investment to Improve Business/Production Capacity of Tourism and Creative Economy Entrepreneurs (BIP program) from the Ministry of Tourism and Creative Economy (Kemenparekraf).

Objective 

The study is aimed at identifying the benefits or impacts of financing programs on MSME’s capacity and productivity. In this study, the researchers will analyze three chosen MSME financing programs run by three ministries/agencies. The result of this study is expected to provide a more complete and clearer description of the implementation of the three programs and give input for further improvement.

Methodology 

This study will use quantitative and qualitative methods (mixed methods). Data collection will be carried out through an online survey of the beneficiaries and in-depth interviews with various stakeholders at the central and regional levels and entrepreneur-cum-beneficiaries. Before conducting the primary data collection, the research team will conduct a desk review of various policies and regulations related to MSME financing programs. The research team will also analyze secondary data (qualitative and quantitative) related to the three programs. 

To find out about the implementation of the programs, the researchers have selected three cities as the study locations based on certain considerations (purposive sampling). The three cities are Kota Medan, Kota Jakarta Selatan, and Kota Makassar. In the three cities, the researchers will interview officials/staff from related agencies and entrepreneurs-cum-beneficiaries. Especially in Medan and Makassar, the number of beneficiaries who became informants was not enough, so the researchers decided to look for informants from the neighboring kabupaten (districts)/kota (cities) and/or provinces.

Advisor 
Asep Suryahadi
Hastuti
Coordinator 
Nina Toyamah
Team Member 
Akhmadi
Akhmad Ramadhan Fatah
Status 
Completed
Completion Year 
2021
Project Donor 
Ministry of National Development Planning/Bappenas
Area 

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