Micro-financial Inclusion: Empowering Scavenger through Micro-financing System

Micro-financial Inclusion: Empowering Scavenger through Micro-financing System

Yogyakarta, IndonesiaSleman, Indonesia
Organization type: 
nonprofit/ngo/citizen sector
Project Stage:
$100,000 - $250,000
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

PALMAE focuses on environmental activities and majority consisted of student of Faculty of Economics and Business, Universitas Gadjah Mada.

About Project

Problem: What problem is this project trying to address?

Many poor people in the development countries get income from collecting and selling garbage. In the term of material cycle, they who called Pemulung (scavengers in English) in Indonesia are the bottom of urban waste recycle. More than one decade, they has been conducting recycle activities informally that help to reduce waste stream into dumping yard. Their life, however, will not get better because their activities only have small value added from output of which they could have produce and it affects their income as whole. Based on those conditions, they and their family will always life in a bad condition, without sufficient basic human needs (food, water, health care, and education).

Solution: What is the proposed solution? Please be specific!

We are trying to raise the value added of the scavenger’s output in Yogyakarta by organizing and accessing them into financial service using micro financing system. The financial services are expected to support each member’s activities, not for consumption loan, that consists on equipment facility loan to increase work effectiveness and cash money for waste transaction. We will focus on how to capitalize their business so the scavengers can collect higher volume of wastes and also focus on distribution issues of waste by linking scavengers up and down. This organization is expected to make a better relationship between scavengers to household (in order to collect wastes or down-link) and scavengers to waste collector (higher level of the pyramid of waste management recycle or up-link).
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

The organization will emphasize the scavengers into up and down link and financial access benefit. Organization structure is consisted of scavengers and they will mobilize the organization after it is established in the long-run. We have four steps in this program which are following: - Making database and organizing scavengers in Yogyakarta. - Making organization legal and professionally management, and build link to other stakeholders (up and down link process). - Running financial services (this system will be announced later) and provides support for scavenger’s activities (procurement process). - The scavengers is about to manage the organization by themselves (research team is only monitoring their program).

Marketplace: Who else is addressing the problem outlined here? How does the proposed project differ from these approaches?

Because of integrating upstream and downstream of material cycle as one of main issues, we will participate our competitors into our partners. The household and business sector as upstream stakeholder and the small trader and wholesaler as downstream stakeholder will become our main partner. Non Governmental Organization that already worked in same issues will ask for participating this activity. Local government and academicians will be the watch keeper to maintain sustainability in the long term.

Founding Story

Micro-financing system is popular at this moment for both formal and informal sector in Indonesia. Small and medium enterprises accessing fund from that system to capitalize and expand their business. Unfortunately, most of scavengers in Yogyakarta cannot meet the requirements of the system since they are considered to be a non-performing loan because scavenger’s activities are in uncertainty area. But, we will focus on the approach to scavengers first before running financial services as we have explained above. Organizing and contract will be an important step to establishing this micro-financing system.
About You
Palmae FEB-UGM
About You
First Name

Yudistira Hendra

Last Name


About Your Organization
Organization Name

Palmae FEB-UGM

Organization Country

, YO, Sleman

Country where this project is creating social impact

, YO, Yogyakarta

How long has your organization been operating?

More than 5 years

Has the organization received awards or honors? Please tell us about them


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How long have you been in operation?

Operating for less than a year

Which of the following best describes the barrier(s) your innovation addresses? Choose up to two

Cost, Transparency.

Social Impact
Please describe the goal of your initiative; outline what you are trying to achieve

We are expecting that scavengers will have stable income from their activities, social participation, and business relationship, so that make a better family life of scavengers in Yogyakarta. This goal can be considered as similar to cooperative’s goal of which all members are expected to actively participated in both organization and entrepreneurship area. This organization benefits scavengers for raising bargaining power on this business even though they are at the bottom level of pyramid of waste recycling process. Moreover, trade between scavengers and both up and down link can be fair and competitive. We are trying to minimize the environment issues (sanitation, waste, water, etc.) by creating a micro-finance system for waste recycling in the long-run.

Which barrier(s) to financial inclusion does your solution seek to address? (select all applicable)

Physical and other accessibility obstacles that prevent communities from reaching financial services, The lack of affordable financial products tailored to the needs of underserved and excluded communities,.

If you selected 'other' above, please specify which other barriers to financial inclusion you solution seeks to address:
For which underserved or excluded communities will your solution create access to valuable, affordable, secure and comprehensive financial services?

We are trying to give an access for scavengers in Yogyakarta, especially for the lower income group of scavengers.

Could your solution work in other geographies or regions? If so, where?

This solution can be applied in other geographies area according to needs of waste recycling. As stated before, this model is similar to cooperative system which is popular in Indonesia. In other side, waste problem is a main issues for almost city ini Indonesia, so you will meet pemulung working in there.

If your solution is dramatically successful, how will things be different in 10 years?

Focus of this project is on economy, social and especially environment for a better life of scavengers. This organization contributes on raising social status of scavengers in society if they become a success entrepreneur. Then, a better life for scavengers will be achieved which is better education for their child and better health care. In the broader aspect, we are expecting that waste recycling process can be an established enterprise Indonesia and Pemulung is main actor for whole waste recycling process. The end of pipe for those activities is better environment for next urban condition that must be more challenging for people.

What will have had to have changed to make this happen?

Scavengers in Indonesia usually work individually in waste collecting process and it is not effective since they are not organized as well. It affects on their income level because they have a high transportation cost in collecting waste. This mindset should be changed for an effective work by organizing them so all information can be shared for all scavengers in organization.
Perfect information and awareness of better life are keywords for organization vision. Hence, organizing scavengers will be the first step of our project before financial services is about to be shared among members. We will use a culture approach to scavengers and it may take a personal communication in the process of creating database. Then, family income, health care, and good education will be shared among member.

What has been the impact of your solution to date?

Several million waste pickers worldwide play a significant role for recycling waste and run a profitable small business. Based on researches in some developing countries (Africa, Asia, Latin) formalization of scavenging can promote grassroots development, empowerment, poverty reduction, as well as protect the environment and improve industrial competitiveness. According to that, now it is the best time to begin a significant activity that can overcome environmental and economic problem simultaneously.

What is your projected impact over the next five years?

We try to raise the income of over 500 families, to be able to manage their income, get a better education for their children and have a saving to ensure healthcare.

What barriers might hinder the success of your project? How do you plan to overcome them?

Rejection from” the boss” of scavengers, it is usually the small scrap dealers who buy the recyclable materials directly from scavengers. It is because of psychological feeling of fear if they will compete with the scavenger. So, we will try to participate them first and convince them that they and scavengers are beneficial partner.

Winning entries present a strong plan for how they will achieve and track growth. Identify your six-month milestone for growing your impact

Creating the scavengers organization by collecting their data and making it legal and professionally management

Identify three major tasks you will have to complete to reach your six-month milestone
Task 1

Establishing the scavengers database in Yogyakarta. For your information, there is no data for scavengers in Yogyakarta because

Task 2

Organizing all scavengers on our database (making an organization structure) and facilitating them.

Task 3

Creating relationship between scavenger organization and stakeholders.

Now think bigger! Identify your 12-month impact milestone

Running all concepts of organization (enterprises and financial services) by both members and research team. Month 1 : Explaini

Identify three major tasks you will have to complete to reach your 12-month milestone
Task 1

Making a real time scavengers data

Task 2

Making scavengers organization into a legal organization

Task 3

Making an agreement between scavengers and stakeholder about the business role

Tell us about your partnerships

We work with small and medium scrap dealers who buy the recyclable materials directly from scavengers. NGO and community are parties that help us to promote recycle activity to citizen. Academicians become the organization advisor to maintain its sustainability. Government is our ruler to make all scavengers’ activities do not against the law. Those parties work with the organization to promote the important of scavenger for waste recycle process, also increase social status of scavengers.

Are you currently targeting other specific populations, locations, or markets for your innovation? If so, where and why?


What type of operating environment and internal organizational factors make your innovation successful?

PALMAE focuses on environmental activities and organized by student in Faculty of Economics and Business Universitas Gadjah Mada. It is fully supported by faculty’s structure in order to improve student soft-skill on community development, especially on environmental issues. PALMAE works on observation, exploration, and research and reporting which support this project, such as database and community approach.

Please elaborate on any needs or offers you have mentioned above and/or suggest categories of support that aren't specified within the list

Human Resources/Talent: We will train the scavengers to optimize and improve their skill of business expansion. Financial system which we will build is a mediator for scavengers to reach the goals, sustainable organization and micro-enterprises. Moreover, this scavenger’s organization relate to other stakeholder, either up-link and/or down-link, to improve the effectiveness of their business.