Transforming Social Assistance into Entrepreneurial Empowerment: UMi as a Public Sector Innovation in Indonesia

The Ultra-Micro (UMi) financing program represents a significant public sector innovation in Indonesia’s approach to poverty alleviation and financial inclusion. Initially conceived as a social assistance initiative, UMi has evolved into a strategic government intervention designed to transform impoverished individuals into entrepreneurs. This shift reflects a policy innovation that redefines the role of the state from passive welfare provider to active enabler of economic participation. Despite ambitious goals, its implementation and impact face scrutiny. This study employed an exploratory qualitative approach through individual interviews with elite participants and debtors of UMi. The data used triangulation from documentation, observation, and in-depth interviews with key informants, selected through purposive sampling. Findings indicate that the program’s implementation—anchored in government regulations and executed through non-bank financial institutions (NBFIs)—demonstrates innovative service delivery. In this study, UMi exemplifies how public sector innovation—through policy reform, institutional collaboration, and community engagement—can drive inclusive economic growth. The study provides valuable insights for policymakers, practitioners, and scholars seeking to advance financial inclusion and sustainable economic development.