The Bases of the Viability of Agribusiness Microfinance Institution (AMFI): Findings of a Survey of Successfull Government-Sponsored AMFIs in West Sumatra, Indonesia

Osmet, Osmet and Paloma, Cindy and Putra, Hendrisyah (2017) The Bases of the Viability of Agribusiness Microfinance Institution (AMFI): Findings of a Survey of Successfull Government-Sponsored AMFIs in West Sumatra, Indonesia. In: New Social Economics of Sustainable Agricuture and Food System: the Rise of Welfare State Approach. A Proceeding of ICC ISAE, Bali, 23-24 August 2017. ISAE/PERHEPI, Bogor, Indonesia, pp. 335-349. ISBN 978-979-8420-20-7

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Abstract

Government involvement in developing microfinance institutions highlights the rise of welfare state approach to sustainable rural-agricultural development. In West Sumatra province, government initiated the development of 1037 units Agribusiness Micro Finance Institution (AMFI) since 2008. By 2016, however, more than 30 percent of these AMFIs were reported inactive, most of those considered active were actually stagnant in terms of assets accumulation, and only a small number were able to double, or more, their assets. This research aims at disclosing some key characteristics of this successful AMFIs based on a survey of 30 successful AMFIs in three districts in West Sumatra. Based on the methods these AMFIs used to mobilize funds, their policies in the ways credit being delivered and the methods they used to ensure credit repayment it is concluded that these AMFIs are developing closer toward institutionalist, rather than welfarist, perspective on microfinance institutional development. Inevitably, serving particularly the better-off segments of the rural population is likely to be the basis of their viability. The poorer segments of rural agricultural population are unlikely to be able to access credit from these AMFIs.

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