Masril Koto

Ashoka Fellow
Indonesia,
Fellow Since 2011
LKMA Prima Tani

Citation

This profile was prepared when Masril Koto was elected to the Ashoka Fellowship in 2011.
The New Idea
Masril initiated the Agribusiness Microfinance Institution (LKMA), dedicated to village farmers’ agribusinesses, in response to the lack of financial services for small farmers. The idea introduces capital agglomeration by combining banking financial products and a co-op system. It sells shares and collects deposits while also offering savings schemes. Through this model Masril has engaged over 100,000 farmers and mobilized more than US$12 million of their financial assets in over 550 LKMA branches in South Sumatra province.

What is most striking about Masril’s bank is the human resources structure. Farmers dictate the bank’s offerings through their equity position. The young people are the mobilizers and are trained as bank managers. This provides them with jobs, confidence, and meaningful employment, to keep them from migrating to cities. Elders and other respected citizens serve as advisors and mediators if disputes arise, thereby acting as guardians of the system.

Besides amassing capital from farmers, this new financial system is a channeling scheme for other programs for farmers that increase their confidence. In line with farmers’ seasonal and cash flow needs, credit schemes are set up to improve horticultural productivity and to develop post-harvesting small businesses. The bank also provides general loans to free farmers’ land, which is usually set as collateral to the moneylender. The credit is small and flexible in terms of the repayment period, making the service competitive with conventional banks. So far, the LKMA has realized a 90 percent repayment rate. However, to further minimize risks of non-performing credit, LKMA educates farmers in production techniques and household financial management, in addition to strengthening traditional values through regulation. New savings products are also developed, such as saving for pregnancy, education, marriage, or to pay a motorcycle tax. Loans are given to the whole family as a way to secure the rights of women.
The Problem
The Strategy
The Person

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