Indonesia MSME financing gap reaches $50.8 billion annually

The Indonesia Impact Alliance estimates that the financing gap for Micro, Small, and Medium Enterprises (MSMEs) in Indonesia has reached $50.8 billion per year. This shortage primarily affects businesses requiring capital between $100,000 and $2 million to expand, a segment often referred to as the ‘missing middle.’

Many impact investors set minimum investment thresholds of $1 million, which excludes 55 percent of businesses identified in a 2024 mapping as needing capital in the $100,000 to $2 million range. Atika Benedikta, Executive Director of the Indonesia Impact Alliance, noted that local capital providers may be better positioned to bridge this gap due to their understanding of the domestic business landscape.

Gender disparity remains a significant factor in financial access. While women-led businesses account for 64.5 percent of Indonesian MSMEs, they continue to face hurdles such as limited collateral and credit history. Data from Kredivo indicates a shift toward digital credit as an alternative, noting that 48 percent of individuals accessing credit for the first time through their platform are women.