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Providing Financial Services to Poor Farmers through a Local Trader: An Indonesian

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This case study presents an agricultural microfinance model developed by Koperasi Serba Usaha – Swadaya Dian Khatulistiwa (KSU-SDK) in the Regency of Pontianak (West Kalimantan, Indonesia). KSU-SDK relies heavily on local traders to select borrowers, set loan terms and enforce loan repayments at the community level. Analysis of KSU-SDK’s approach is based on 10 Best Practices in Agricultural Microfinance formulated by Christen and Pearce (2005). This study shows that while local traders seem to be successful in managing loan portfolios since they do not default on their loans, many questions remain regarding the way they interact with the farmers.

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