ClosingRemark

Mr. Charmeida Tjokrosuwarno

Islamic Development Bank Field Representative for Indonesia

Assalamu ’alaikum warohmatullahi wabarokatuh

Ladies and gentlemen, now we are coming to the end of the busy days which has been concentrated seriously to the work of microfinancing. We are proud of your hard work and effort to give real contribution to our society, our people, in order to improve their welfare, which has been our problem, regardless of their ethnic, nation, region, or even continent.

As we are all aware of, microfinancing is an issue of interest of the majority of people in our country, or even in the world. This segment of our society has many constraints to sustain their endeavor in improving their standard of living. They fall outside the reach of formal system. Most of them live in rural area, work in informal environment, far from the capital, in which the existing financial and economic structure hardly reaches them. These people indeed need an implemented policy prescription. The area of microfinance should not be seen from economic and business point of views only. It involves the issue of poverty, education, and technology, and other related matters.

Understanding the myriad range of challenges and problems facing microfinance sector, we are aware that the approach to tackle the problem should not be partial. As such, a holy approach, comprehensive, and practical method to tackle the problem would be appropriate. For instance, it involves an appropriate regulation and an enabling policy and programme environment at various levels - from local to national and international level to synergize the program. Combating property effort should be in a way proving their capacity to sustain their own life, which means increasing their capacity to work. Hence, we are confronted to two contradictory systems, on the one hand we are living in this modern world which almost all of our aspects of life have been standardized and systemized, on the other hand the majority of our people is outside of this modern world system.

However, economic and business approach may induce a long-term survival and sustainability for microfinance, particularly to be able to reach its target clientele and cover administrative and other costs. While social goals of reaching the poorest, and poverty alleviation are valid, sustainability - standing on ones own feet - is as true for a low-income household receiving microfinance, as for the microfinance institution itself!

Sustainability of microfinance has two implications – internally, in terms of deposit and saving mobilization, financial performance, staff motivation, loan and administrative costs; externally, in terms of availability of funds for loan disbursement, grants for community organizing and training.

Besides being efficient and self-sufficient, sustainable goals for a microfinancing also carries other benefits - attracting external financial investment, satisfying any central bank reporting requirements if any, building trust among its clients and supporting institutions (including donors), as well as satisfying and attracting commercial bank partners.

Other issue has also significant element for microfinancing, that is the capacity building. It refers to both financial and non-financial capacity. Financial capacity building is essential for an MFI to absorb and manage increased funds for loan disbursement, an increased number of loans, clientele base, and saving. Non-financial capacity building primarily focuses on institutional and human resources of an MFI - in terms of networking and partnership for training, skill development, information management systems. In a broader sense, capacity building also involves advocacy and networking, where the viability and suitability of microfinance for poverty alleviation is demonstrated, in order to gain better acceptance and involvement from the larger civil society. As mentioned in the introduction, the current interest in microfinance has led to a number of micro financing being set up in most developing countries of Asia, Africa and Latin America, including their transfer to developed countries, and of course Islamic Development Bank member countries.

This moment accordingly, is an important attempt for us to make contribution to our people, as it is also an essential vision and mission of Islamic Development Bank to build a better future and to work together with other societies in this world to increase the welfare of the poor.

Lastly, I would like to congratulate all of you who have been participating and put a lot of efforts to make the hope of million of people come true, to improve their welfare through microfinancing policy. I would also like to congratulate the Ministry of Foreign Affairs who has initiated this joint program to realize a cooperation between South-South nations with IDB, and also the Management and all staffs of NAM Center who have excellent job to organize the meeting successfully. May Allah the Almighty reward us more than what we have done. Have a pleasant and save journey for the participants on your way back to your country.

Wassalamu’alaikum warohmatullahi wabarokatuh.

Thank you.