Digital innovation improves the access of dairy farmers in West Java to financial services

PENGALENGAN, West Java, Indonesia (ILO News) – The ILO’s Deputy Director-General, Celeste Drake, undertook a site visit to the South Bandung Livestock Cooperative (KPBS) Pengalengan, West Java on 21 June. The site visit concluded her first official visit to Indonesia for four days from 18 June.

The official visit to KPBS Pengalengan was conducted together with Philippe Strub, Charge d’Affaires of the Embassy of Switzerland in Indonesia, Imansyah, Head of Financial Services Authority (OJK) Office of West Java, Simrin Singh, ILO Country Director for Indonesia and Timor-Leste, and Djauhari Sitorus, ILO Project Manager on Financial Services for SMEs.

During the visit, the entourage had a first-hand look at KPBS Pengalengan, one of the largest dairy cooperatives in West Java with a total of 2,050 active dairy farming members. They were welcomed by H. Aun Gunawan, Head of KPBS, toured the KPBS facilities such as the milk collection point, hospital, the processing factory, mini-market, and interacted with female and male dairy cattle farmers of all age groups.

© Feri Latief/ILO

The ILO Country Office for Indonesia and Timor-Leste, through its Promoting SME Enterprises through Improved Entrepreneurs' Access to Financial Services Phase 2 (Promise II Impact) project, funded by the Swiss State Secretariat for Economic Affairs (SECO), has closely worked with KPBS Pengalengan to foster digital transformation and increase financial inclusion using the Digital Financial Service aimed to enhance KPBS’ value chain ecosystem, scale of business, productivity, expansion of business and better access to finance.

“We greatly appreciate the support given by the ILO that allows our members to benefit more from the use of digital technology and gained new skills that enhance their productivity, knowledge and financial access. In turn, this will improve milk quality and quantity, and ultimately, enhance the farmers’ incomes and livelihoods,” said H. Aun Gunawan, Head of KPBS, during the tour.

The benefits gained by the dairy farmers from digital applications that we are witnessing today are crucial evidence of the positive impacts of digital technology on business enhancement and expansion.

Celeste Drake, ILO’s Deputy Director-General

The support will improve KPBS' Enterprise Resource Planning (ERP) by adding various user-friendly features on logistics, membership, and animal health modules which will benefit all current 2,050 KPBS members in its dairy cattle value chain ecosystem. This new fast-approval loans facility was recently launched in March 2024. To date, 104 members have received loans through this facility.

The loan recipients have already appraised the effectiveness of using the application. They now receive the loan within a day of approval, which benefits their productivity as they no longer have to miss their essential working hours to tend to their cattle and dairy production. Dairy farmers can now apply for loans easily and fast, anytime and from anywhere.

In addition, the ILO’s Promise II Impact has trained 29 local trainers on entrepreneurship and financial education through a Training of Trainers (ToT) programme. These trainers have trained 340 dairy farmers, of whom 30 per cent are women, on how to better manage their income, and improve their dairy business.

Celeste Drake, ILO’s Deputy Director-General, highlighted the importance of digitalization for enhancing the productivity and competitiveness of Small and Medium Enterprises (SMEs). “The benefits gained by the dairy farmers from digital applications that we are witnessing today are crucial evidence of the positive impacts of digital technology on business enhancement and expansion. This is also good evidence about the need to narrow the gap in technology access and use, ensuring no one is left behind in gaining benefits from digitalization,” she stated.

“The Swiss Government is committed to supporting the development of SMEs in Indonesia – the backbone of the country’s economy – through unlocking access to finance and fostering digital transformation. The ILO’s Promise II Impact programme has made a significant contribution to Indonesia’s financial inclusion agenda and supported SMEs in realizing their growth potential as shown by the dairy farmers under KPBS Pengalengan,” said Philippe Strub of the Embassy of Switzerland in Indonesia. 

For more information, please contact:
Tomas Sugiono   
ILO’s National Project Coordinator for Promise II Impact
sugiono@ilo.org

Yanis Saputra  
ILO’s Project Officer for Promise II Impact Project
yanis@ilo.org

Gita F. Lingga  
Senior Communications and Information Management Assistant
gita@ilo.org