Indonesia’s dairy sector is witnessing increasing opportunities for investment, fueled by rising domestic demand and government initiatives such as the Free Nutritious Meals Program. However, local production currently supplies less than a quarter of national consumption, largely from smallholder farmers, highlighting the need for greater financing to expand herds, modernize farms, and strengthen supply chains.
To address these challenges, the International Labour Organization (ILO) and the Indonesia Fintech Association (AFTECH) have partnered to enhance financial access for dairy farmers using digital innovation and alternative credit scoring. The collaboration was formalized in Semarang on 12 August, launching a pilot initiative that integrates Enterprise Resource Planning (ERP) data with fintech solutions to improve credit profiles and expand access to working capital loans in East Java.
The initiative is part of the ILO’s Promise II Impact project, funded by the Swiss State Secretariat for Economic Affairs (SECO). By capturing real-time production and income data, the project will enable financial institutions to make more accurate credit assessments and provide tailored financial products. Running from August 2025 to June 2026, and coordinated by the Financial Services Authority (OJK), the pilot aims to serve as a scalable model for advancing digital financial inclusion in other agricultural value chains.
According to ILO Project Manager Djauhari Sitorus, this initiative will open doors for farmers who have historically lacked access to formal financial systems. By leveraging ERP and fintech integration, financial institutions will be able to make faster lending decisions, empowering farmers to invest in their businesses and improve livelihoods.
The collaboration will also design customized financial products for dairy farmers and micro, small, and medium enterprises (MSMEs), including asset financing, working capital loans, and fintech-enabled credit lines. Additionally, training programs will be introduced to strengthen digital literacy and financial management skills, ensuring farmers can effectively utilize these financial tools.
AFTECH, Indonesia’s official fintech industry association established in 2016, will provide key guidance on technological solutions and foster partnerships with fintech providers. Anggie Setia Ariningsih, AFTECH Vice Chairwoman III, highlighted the transformative role of fintech in bridging financing gaps, noting that the partnership with the ILO has the potential to create sustainable financial solutions that can be extended to other sectors beyond dairy.
