Digital agricultural financing in Indonesia
12 December 2023
Agriculture is the second largest sector of the Indonesian economy. Valued at US$148 million, it contributes over 13% to the national GDP in 2021. The country’s vast, fertile and abundant land makes it a global producer of agricultural products.
Indonesian farmers face several barriers to funding, despite positive industry growth. These include high interest rates and complicated loan procedures. The reasons are the high risks associated with uncertain seasonality, a difference in turnover between high and low growth seasons, a lack of loan repayment capability, and the lack of financial institution support.
Digitalising financing for the sector can help boost the potentials of the agriculture industry. Digital agricultural financing is financing that implements information and communication technology while using networks, services and applications focused on agriculture. It helps stakeholders develop policies that make use of available resources in a sustainable manner.
Infrastructure development and planned strategies in digital financing can help connect agricultural services with banking institutions in remote areas. By integrating agriculture services, Indonesia can build ecosystems that encourage investments and connect producers with consumers.
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