Indonesia’s eFishery encounters clear skies on rough lending seas

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Lending has become something of a banana peel for agritech companies in Southeast Asia’s largest economy, Indonesia.

Agri-focused peer-to-peer (P2P) lenders Tanijoy and TaniHub found themselves in hot water with lenders. The former grappled with allegations of fraud, while the latter angered lenders for the bad loans caused by failed harvests and postponed payments.

So, it comes as something of a surprise that aquaculture behemoth eFishery opted to dip its feet in the lending segment through Kabayan, a pay-later program for fish farmers. The catch, however, is that any credit obtained through the program can only be used to buy products through eFishery.

Today’s featured piece highlights how the Bandung-based startup is providing financial flexibility for fishers, who are among the nation’s poorest, to grow their businesses in the archipelago. These fishers often face high risks and lack collateral, which makes it difficult for them to access formal financial services through banks.

Today we look at:

• The foray of Indonesia’s eFishery into farmer financing
• A potential courtroom battle between Amazon and a Vietnamese manufacturer
• Other newsy highlights such as an Alibaba co-founder cutting his stake in the tech giant and Indian SaaS firm Freshworks laying off 2% of its global workforce

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Plenty of fish to feed

Image credit: Timmy Loen

Forty percent. That’s the interest rate per annum charged by intermediaries and loan sharks for financial services provided to fish farmers, according to eFishery. That figure makes the hefty 18% per annum rate Kabayan charges farmers look like a steal. It is little wonder that the product has already drawn close to 30,000 farmers in Indonesia within two years of its launch.

• Turning heads: The firm forayed into financing in 2020 after identifying access to financial services as a key pain point for farmers looking to grow their businesses. Now, the growth of Kabayan has attracted the attention of P2P players like Alami, Amartha, Investree, and Kreditpro, as well as reputable banks such as OCBC NISP and DBS.
• Enabling its ecosystem: eFishery is currently not monetizing directly from the funding it facilitates, but it does benefit from more farmers using its feed product. This ultimately helps eFishery grow its feed business, which contributes up to 30% of the company’s total revenue.
• Stay the course: Collecting commissions from each financing would carve out a notable new revenue stream for eFishery and potentially rake in thicker margins through in-house financing options. However, eFishery believes that by sticking to its current model, the company can eventually garner larger financial gains.

Read more: Indonesia’s eFishery revels in farmer financing foray, but there’s a catch

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Going to court

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