Women’s Empowerment, Poverty Eradication and Pandemic Policy Responses in an Uncertain World: The Story of Indonesia’s Permodalan Nasional Madani

This article provides an assessment of Indonesia’s Permodalan Nasional Madani (PNM), the world’s most extensive, women-targeted, microfinance enterprise. It tracks the origins, growth, geographical reach, staffing, operational philosophy and ways in which it builds social capital in poor households all over Indonesia. The authors find that PNM, with its flagship programme Mekaar, has moved away from purely poverty alleviation, conditional cash transfers or basic-needs linked subsidies, towards adopting the latest thinking and research in poverty eradication and financial inclusion, centred on women’s empowerment. PNM’s rapid upscaling demonstrates an alternative pathway to microfinance expansion. In response to the COVID-19 pandemic, the Indonesian government used Mekaar as a key policy instrument. Adhering to its philosophy of leaving no poor woman behind, during the pandemic years, PNM approximately doubled the number of active customers, almost tripled the amount of loans disbursed and instituted a sympathetic approach to loan recovery, while maintaining robust productivity and financial healthiness indicators. The example of PNM provides on-the-ground evidence that group-based women microfinance, combined with business and financial literacy empowerment, can produce high social and economic impacts, in addition to resilience against major shocks.