LKMA Evaluation Formed from PUAP Program in Overcoming Farming Financing in Rural Areas (Case study: Magelang Regency)

Valeriana Darwis,Chairul Muslim,Ashari Ashari,Juwaidah Juwaidah,P Saiyut,Z Rozaki,M.M Tjale

doi:10.1051/e3sconf/202123202002

Valeriana Darwis, Chairul Muslim + Show 5 more

Open Access

https://doi.org/10.1051/e3sconf/202123202002

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Abstract

Rural Agribusiness Development (PUAP) is a program to provide capital for smallholder in the agricultural sector. The final goal of this program is to format Agribusiness Micro Credit Institutions (LKMA) in rural. In the implementation 6,887 LKMAs have been formed, including in Magelang Regency. The purpose of this paper is to evaluate the LKMA and its benefit for farmers’ capital fulfillment. The survey was conducted in July 2019 using the FGD method with administrators and interviews with the farmer using a questionnaire. The evaluation focused on the institutional, business, and capital development aspects. The data analyzed through the ranking method to determine the LKMA rank. Of the 9 LKMA, the best LKMA is Ngudi Luhur LKMA, with criteria (i) the institutional aspect is already incorporated, has an office, employees with a fixed monthly salary; (ii) business aspects: saving and loan business carried out based on SOP of financial institutions and (iii) of capital development have reached 3.3 billion. However, loans only cover less than 30% of farmers’ needs due to the limited availability of LKMA capital. Therefore, it is recommended to assist capital loan assistance to LKMA, which will then be transmitted to farmmers.

Highlights

The concept of financial inclusion emerged in the 2000s as a more comprehensive way to justify the need to establish financial services [1]
The respondent is the administrator of LKMA that has obtained a business license from the Financial Services Authority (FSA/OJK)
One example is the form of a loan application Standard Operating Procedure (SOP) as shown in figure 1

Summary

Introduction

The concept of financial inclusion emerged in the 2000s as a more comprehensive way to justify the need to establish financial services [1]. It indicates that everyone should have access to financial services at reasonable prices (interest) in a suitable manner with respect and dignity. The effectiveness of microfinance in supporting the agricultural industry still debatable. [4] reported that microfinance is regarded as a powerful instrument in Vietnam’s economy. The study of [5] found no significant impact of microfinance on agriculture industry performance in Pakistan. The condition of social, economic, and natural resources contributes to the level of microfinance

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Conclusion