Letter to readers: ‘Edfintech’ could shape Indonesia’s future

Dear readers,

I hope you’ve had a restful Christmas break so far.

It’s a good chance to enjoy the present – and also to think about the future.

As a parent, I try to treasure moments with my wife and kids. But I often get to thinking about my kids’ education. Am I teaching them the right things? What schools should they go to? Is every school really a good school?

One of our writers spent time thinking about education too, but on a systemic level.

Image credit: Siddharth Bishnu

Indonesia’s education system is plagued with problems, and that will have knock-on effects on its future.

The country has a lot of catching up to do, and edtech could help close the distance.

But here’s the problem: Edtech, or even just education, remains unaffordable for the people that need it the most.

“Edfintech” firms in Indonesia hope to bridge the gap. In a nutshell, these firms provide loans to parents and students to help them afford the education they need.

In return, the students pay these companies back when they start working.

It’s not an easy problem to solve, however, as providing credit in emerging economies can be costly. This leads to high interest rates and debt, which could end up worsening the poverty cycle.

But edfintech firms are betting that as the space matures, interest rates will go down, making their services more viable.

Edtech in Indonesia is a space we’ve been following avidly of late.