Financial inclusion and community conservation

Planet Indonesia has been pioneering financial inclusion as a tool to strengthen livelihoods and advance community conservation for the past decade.
Our approach differs from others in the following way
3.6x
Data shows farmers and fishers in Indonesia often have many sources of income.
A survey of over 1,200 smallholder farmers and fishers we work with showed the median number of income sources was 3.6
This tells us to focus on strengthening existing livelihoods and providing access to equitable financial services, instead of focusing on ‘alternative’ or constantly introducing new commodities to communities
Community finance and financial inclusion as the “alternative” to the norm of “alternative livelihoods” in conservation
In 2024, we conducted research to better understand how financial inclusion impacts communities and interacts with community conservation outcomes

3,701 members

46.5% women

10,010 individual loans

265 grant groups

We have had a big reach using this approach, and looked at data from individual loans from savings clubs as well as community grants distributed to these groups via Planet Indonesia
We integrated this with data qualitative data from participatory impact assessments collected within five different districts within West Kalimantan. A total of 38 Focus Groups Discussions were conducted with 476 total participants.
Findings
People take out loans for a variety of reasons, for those looking to work holistically and touch many aspects of peoples lives, community finance can support livelihood to health to education.
<
Data from 3 districts shows when gives the choice, community members will invest in an existing livelihoods rather than focussing on a new alternative.
*Data from group grants and loans in 2020-2023 only
We also used Net Profit Margins (NPM) to understand the ratio of profit created for local community members and borrowers, based on the size o the loan. The net profit margin (NPM) was calculated using the following formula:
(Net Profit/(Loan Size + Net Profit)) * 100
NPM is interpreted as the percentage of money brought in that becomes income for the business.
Landak has the highest NPM (21%), followed by Kubu Raya (20%) and Bengkayang (16%). The average NPM is at 19%.
*Data from group grants and loans in 2020-2023 only
Global data standardize a 10-20% profit is considered successful, putting Planet Indonesia's approach well above global averages in financial inclusion programs
Finally, we looked at participatory impact assessment data found communities linked financial inclusion and community finance program activities to a variety of different outcomes.
In focus group discussions, 73% of the time environmental outcomes were identified (e.g. less deforestation, more wildlife) better financial security was also present
SUMMARY

Here are the five major points of findings:

The study identifies four key effects—Goodwill, Governance, Debt Cycle, and Human Capital—that mediate the relationship between financial inclusion and community conservation.

Financial inclusion was found to improve community governance and increase financial security, enhancing the overall effectiveness of conservation efforts.

Financial activities within Community Governance Bodies (CGBs) positively impacted health and education, which, in turn, boosted participation in conservation initiatives.

Community finance programs can break the debt cycle for small-scale farmers and fishers by strengthening and making their livelihoods more sustainable.

The findings suggest that integrating financial inclusion activities into conservation programs can address broader social-ecological issues, making it a valuable tool for community-based conservation, especially in rural areas.

Financial security and inclusion is a scalable tool that when accompanied with environmental governance can lead to accelerated multi-dimensional impact
Sign up to recieve news and updates.

© 2024 Planet Indonesia

Planet Indonesia is a 501(c)(3) nonprofit organization.

 By signing up you agree that we can contact you via our email newsletter and to our Terms and Conditions and Privacy Policy.

The term ‘integrated landscape initiative’ (ILI) has gained popularity as an ‘umbrella concept’ that describes projects that aim to explicitly improve food production, biodiversity conservation, and rural livelihoods on a landscape scale.

It describes approaches that consider the entire landscape, including its environmental, social, and economic aspects, by bringing together diverse stakeholders to manage land use in a way that balances competing needs, aiming for sustainable outcomes across the whole system, rather than focusing on isolated issues within the landscape.