Transforming microfinance in Indonesia

Calee Lucht
April 6, 2017
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Ivana Rachmawati MPA/ID 2018 has trained herself to see connection in diversity. She comes from Indonesia, a diverse nation of citizens spread across thousands of islands—yet one nation, nonetheless.

The archipelago sits at the crossroads of the Pacific and Indian Oceans, bridging two continents. In her home city of Jakarta, contemporary high-rise buildings abut poor, local markets. Contrasts abound.

Rachmawati has spent her career in microfinance in this multi-dimensional landscape where 80 percent of the economy is supported by an informal sector of microenterprise.

Bridging this gap—acknowledging the informal sector and improving it—is where Rachmawati sees herself making the most impact.

“In order to transform the developing economy of my country, I want to focus on improving the efficiency of the microfinance sector,” she says.

At Bank Rakyat, a government-owned bank, Rachmawati has focused on the macro vein of microfinance, examining subsidies and diving into such questions as: What is the optimal amount of micro-lending the bank should disburse? What is the optimal number of people the bank should hire to acquire lending? How much profit should the bank gain? As the bank is a government entity, it has the dual objectives of serving as a development agent and gaining revenue for the government agenda. Rachmawati hopes to find solutions to these intricate issues in order to bolster Indonesia’s economy.

To find the answers, Rachmawati knew she needed to hone her skillset. The Master in Public Administration/International Development Program appealed to her because of its unique focus on both development and quantitative skills. Now, well into her first year of the program, she speaks appreciatively of the multidisciplinary and cohesive design of the program, likening it to an interconnected story.

“We examine issues holistically. This week, we’re studying the Argentina financial crisis in all of our courses—we’re examining the theory of international trade and finance in macroeconomics, and exploring a case study that helps us understand the theory and practice of how we should manage an economy. In class, there is always someone from the country we’re discussing to lend their perspective.”

Rachmawati values the diversity of fellow students who come from various backgrounds and roles and from more than 30 countries.

“There are diplomats, practitioners, government officials, central bankers and evaluators. Diverse perspectives help me think about different points of view, which is crucial,” she says. “It’s like a UN meeting every day.”

Study groups are designed to convene students of various backgrounds in order to leverage the breadth of expertise and viewpoints, and students commonly work together on weekends to tackle their problem sets—as well as to cook for one another.

“We all get to eat different types of food! Mexican classmates cook one night, then Asian. It’s great,” laughs Rachmawati.

In addition to connecting with and learning from her classmates, Rachmawati is also impressed with the faculty. She points to Professor Jeffrey Frankel's course Advanced Macroeconomics for the Open Economy as being particularly useful as well as her quantitative courses, which have deepened her skills in working with data.

Rachmawati also understands that hard skills are only as useful as the soft skills it takes to implement them.

“Much of the time, my job was not only to do the analysis, but to convince superiors to do what my analysis suggested. Otherwise, it won’t have any impact,” she explains.

To hone this skill, over the January term, when students have a chance to immerse themselves in an intensive, month-long course, she took Persuasion: The Science and Art of Effective Influence with Professor Gary Orren to practice elevator pitches, persuasion in the setting of a meeting, and even influencing people in voting scenarios.

Born and raised in Indonesia, her Kennedy School experience is Rachmawati’s first time living abroad. Now, she understands better the interconnectedness of nations and how models in other countries might be adopted and adapted in Indonesia. She is at HKS sponsored by her government, so will return to Indonesia after she graduates. She says she’ll take with her a more global perspective.

“When we graduate, we’ll have connections all over the world. Carol Finney (the program director) told us, ‘Don’t compete with each other! Help one another, learn together.’”

Her cohort even did an exercise where classmates’ hands were tied together in order to illustrate how, in order to tackle multidimensional and complex development issues around the globe, they must rely on and support one another.

Rachmawati is taking this to heart as she plans her return to Indonesia where she will begin building multidimensional bridges that strengthen her nation.