Dini Dwi Kusumaningrum, Jakarta – The 2020 World Economic Forum stated that women's empowerment was the key to increasing national income. The 2018 McKinsey Global Institute Analysis also stated that Indonesia could earn a gross domestic product of US$135 billion per year in 2025, with the prerequisite that more women participated in economic activities.
Unfortunately, female labor force participation in the formal sector in 2021 was still 53.3 percent, lower than the 67.7 percent average in East Asia and the Pacific. The formal sector has great potential in absorbing female workers, considering the high proportion of women of productive age, as much as 68.52 percent.
However, the need to increase the rate of women's economic participation in the formal sector has yet to be matched by the quality of its human resources. Nearly two out of 10 women aged 15 years and above in Indonesia do not have a diploma or its equivalent, and most women (64.12 percent) have primary school education and below (Statistics Indonesia/BPS, 2021).
Developing Indonesia's women human resources is no less important than men. According to 2020 BPS data, women make up as much as 49.42 percent of the population. At the same time, 13.91 percent of women act as heads of households and 31.60 percent are single, which is significantly more than single male heads of households (3.53 percent).
This means that women need education. Educated women can make decisions, increase household income in the long run, and play a significant role in supporting national economic recovery. In addition, higher education certification can increase the opportunities for women to find a job with a steady income in the formal sector.
Women have become the backbone of the national economy, especially during the pandemic. The number of male employees who were laid off have made women the primary breadwinners. According to 2021 BPS data, women's contributions to household income had increased compared to the previous year. In fact, for the regencies of Nias, Karo, Humbang Hasundutan, Samosir, West Nias (North Sumatra), Gunung Mas (West Kalimantan) and South Manokwari (West Papua), women were the primary contributors to the household economy, contributing more than 50 percent of income.
In line with this, data from the Financial Services Authority (OJK) in 2021 showed that women owned 53 percent of micro, small and medium enterprises (MSMEs) in Indonesia, which contributed 61 percent of GDP. In addition, women make up 21 percent of entrepreneurs, higher than the global figure of only 8 percent.
Furthermore, MSMEs run by women were more resilient during the pandemic, because women tended to be more diligent in developing their businesses and looking for online marketing avenues. This was also in line with 2021 data from UN Women: women's incomes increased up to 82 percent during the pandemic.
As such, the role of women in economic recovery cannot be ignored.
At the same time, however, women also number among the vulnerable population. This is because most female MSME entrepreneurs have only elementary school education. 2022). The low level of education among female MSME entrepreneurs affects their ability to manage their businesses. Many of them still need more competencies in managing capital turnovers and business accounting. Their business capital is still mixed with daily household finances, making it difficult to keep track of profits and capital expenditures.
Moreover, the mandates on social distancing and store closures during the pandemic cut into the daily incomes of MSMEs, prompting many female entrepreneurs to seek alternative sources of income.
Likewise, the economic pressure during the COVID-19 pandemic added to women's burdens in making ends meet. Not a few MSME entrepreneurs became trapped by online loans. Borrowing was tempting because online lenders have no administrative requirements, unlike a bank loan, and the installments are relatively small. For example, in taking out an online loan of Rp 500,000 ($32), the borrowers receive only Rp 480,000 while they pay 78,000 in daily installments, which might feel light.
At the same time, they tend not consider fines for late payments. When calculated correctly, borrowers must repay an amount multiple times higher than the amount of the loan they received.
Ironically, loans are a source of emergency funds for small businesses and a shortcut to making a living that should not be taken.
Nailul Huda, who heads the Center for Innovation and Digital Economy at the Institute for Development of Economics and Finance (INDEF), told a Jakarta newspaper that women were an easy target for illegal lenders because financial literacy was relatively low among women. Hence, online lenders targeted women to gain high returns.
In addition, the OJK stated that women experienced more problems with financial technology (fintech) lenders and intimidation and harassment from illegal online lenders.
This happens because of women lacked understanding of the terms, administrative costs, and high fines. Thus, financial literacy is also critical to creating financial health for families and businesses headed by women.
The government is working with the fintech industry to eliminate illegal lenders and to create a safe financial climate for the people. The government, through the National Police chief, the OJK, Bank Indonesia (BI), and the Communication and Information Ministry, is continuing its efforts to eradicate illegal lenders by launching CekFintech.id (www.cekfintech.id), a platform for checking online lenders that are approved by BI and the OJK, with the Indonesian Joint Funding Fintech Association (AFPI). Further, the AFPI and the Indonesian Fintech Association (AFTECH) have published a code of conduct on responsible fintech implementation.
At the macro level, the Finance Ministry has made efforts to create policies that support women MSME entrepreneurs. First, it provided budgetary support program targeting female heads of households as beneficiaries by increasing social assistance to Rp 220 trillion in 2021, as well as by providing credit assistance for ultra-micro enterprises and productive assistance to more than 12 million MSMEs.Second, it developed digital infrastructure to spur inclusive financial development for women in disadvantaged areas, as the COVID-19 pandemic and related restrictions forced all activities to move to digital platforms.
Meanwhile, inequality in digital infrastructure became much more visible during the pandemic. For example, while access to the internet and information technology is taken for granted in Jakarta, many regions in the country still lack basic infrastructure.
Therefore, through the Finance Ministry in 2021, the government helped at least 12,377 public services facilities without 4G access in the 3T (outermost, underdeveloped, frontier) areas with an additional 5,500 base transceiver stations (BTS). This project was separate from existing programs, such as fiber optic installations and the Palapa Ring.
These efforts all aim to increase the reach of public services, improve the quality of communication and overcome vulnerabilities during a crisis.
The finance minister previously stated that the digital economy had great potential, even before the pandemic. Last year, Indonesia could have made as much as $44-124 billion if it had developed digital infrastructure and the digital economy.
The government is therefore supporting the digital economy ecosystem through its Ultra Micro Financing (UMi) program, which targets micro businesses at the lowest level that banks cannot facilitate through the People's Business Credit (KUR) program. The UMi program provides loans of less than Rp 10 million to online businesses to realize financial and digital inclusion, particularly during the pandemic and the post-pandemic period.
Finally, women's resilience in small-scale financial management to save the family's economy should be recognized by arming them with financial literacy. Financial literacy provides many benefits, such as the capacity to choose and utilize financial products and services to match their needs, to be better at financial planning and to avoid investing in unclear financial instruments.