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Kartu Prakerja Innovations Accelerate Digital Financial Inclusion In Indonesia


Kartu Prakerja Innovations Accelerate Digital Financial Inclusion In Indonesia

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The Kartu Prakerja Program, first launched in April 2020, has not only been providing skill development programs for its beneficiaries to gain wider opportunities in the job market, but it has also become a platform for social assistance disbursement from the government to the people (G2P). 

Physical distancing policy during the Covid-19 has limited social interactions and encouraged people to use digital payment systems. This is a unique challenge for Indonesian, considering many are still unfamiliar with such technology, even more so as a payment system. 


However, Prakerja’s incentive disbursement, with its digital end-to-end and direct Government-to-Person (G2P) system, allows for financial inclusion for people in the non-urban areas of the country, as well as training them in using electronic payment systems. This fact was disclosed during a CNN Webinar “Kartu Prakerja: Indonesia’s Digital Transformation and Financial Inclusion Breakthrough,” on Wednesday, June 15 2022.

Coordinating Minister of Economic Affairs Airlangga Hartanto praises this joint study conducted by the World Bank and the National Team for the Accelaration of Poverty Reduction (TNP2K). He points out how Prakerja is the Indonesian government’s success story in transforming public services. Digital technology and the innovative ways usually done in startups are implemented in Kartu Prakerja. “At first, President Jokowi had built a sky toll, which led to a vast extension of cellphone use and helped the information technology industry to grow significantly. Kartu Prakerja leverages this development. The partnership-based learning ecosystem in Kartu Prakerja is then built with hundreds of stakeholders involved,” Airlangga said. 

Airlangga explains, there are currently hundreds of stakeholders involved in the ecosystem and more than 12 million Kartu Prakerja beneficiaries from 514 regencies/cities have been able to apply, join training courses, receive certificates, look for job opportunities, and apply for a job – 100% online – without the limitations of time and space. 

Airlangga emphasizes that Kartu Prakerja is the pioneer of G2P payment through the financial technology and this is one of Kartu Prakerja’s roles in accelerating financial inclusion in Indonesia.  “The Kartu Prakerja Program is truly a digital transformation and financial inclusion breakthrough in Indonesia,” Airlangga said, who is also the Head of The Job Creation Committee, a committee responsible of making policies and in charge of the program. 

In the last quarters of 2021, the World Bank and TNP2K supported by G2Px Initiative Fund and Indonesia Human Capital Acceleration Multi Donor Trust Fund (IHCA-MDTF), conducted a study to learn the implementation of Covid-19 social assistance responses, understanding the adequacy of the responses in meeting the beneficiaries needs, and supporting further improvement of the G2P payment system. 

This study on Kartu Prakerja combined both quantitative and qualitative approaches. A phone survey was conducted by SurveyMETER in 6 – 25 October 2021 to 1,000 Kartu Prakerja beneficiaries across 50 subdistricts in 50 regencies and 25 provinces. 

These beneficiaries were selected into the program in Batch 7 – 11 (or enrolled between September to November 2020). During the same period, in-depth interviews were conducted by the program owner, the Project Management Office of Kartu Prakerja and PSPs at the central level to learn their experiences with the current G2P payment systems of Kartu Prakerja, including breakthroughs and challenges related to the G2P payment delivery. 

To confirm and explore further the quantitative results, the team also conducted Focused Group Discussion (FGD) and in-depth interviews with several groups of Kartu Prakerja beneficiaries. 

There are five key messages of the study: First, 9 out of 10 respondents had completed Kartu Prakerja program from selection until receiving the post-training incentives.  Among those eligible for the program, 95.7% bought the first training within 30 days 

Second, majority of the respondents were satisfied with their first Kartu Prakerja training. Driven by the intrinsic and/or post-training incentives to complete their first trainings.  Around 96.1% of the total beneficiaries of Kartu Prakerja are satisfied with their first training. 

Third, the use of e-money as one the payment methods contributed positively to the financial inclusion goal. The study also found that 76.6% beneficiaries prefer to use their e-money accounts to receive their post-training incentive, while the rest use bank accounts.

Fourth, most beneficiaries immediately cash out their incentives after receiving through their payment accounts. Majority of the respondents use the incentive to purchase food and/or for working capital.  Once the incentive is received in their chosen accounts, 69% of the beneficiaries cash-out their incentives while the remaining 31% only partly or do not cash-out their incentives at all. 

Fifth, expansion of more bank provider options to receive the post-training incentives would increase bank account use. The inclusion of one private bank this year is a welcome addition to the notion.  Almost 90% of the beneficiaries claim that Kartu Prakerja has provided enough PSP options. 

Denni Puspa Purbasari, Executive Director of PMO Kartu Prakerja Program said, as an economist, she believes in “the more, the better” principle. This has been the heart of Kartu Prakerja program, including in providing the recipients freedom to choose their own preferred accounts to cash-out their incentives. Whether they want to use bank or e-money account. “With so, people can choose according to their own preferences,” she said. 

Furthermore, referring to various literatures on financial inclusion, there’s a unique challenge of being a bank customer. Some of them being the numerous regulations to open an account and the need for customers having to be physically present for the process.  “With the fact that so many Indonesians using smartphones, it allows us to develop financial inclusion by collaborating with the growing fintech firms. This is also related to the condition during the peak of the pandemic and Delta wave where most public service offices and banks are closed,” Denni explains. 

Praise is also coming from Satu Kahkonen, World Bank Country Director for Indonesia and Timor Leste. “Kartu Prakerja is the first active labor market policy and social assistance program in Indonesia that has implemented a beneficiary centric G2P payment system. This is something very innovative.” Kahkonen said.

There are three main keys highlighted by the World Bank.  First, it is important to offer a menu of bank account options to ease the access. Second, the majority of users tend to cash out their social assistance payments immediately. There is thus a need to provide more use of cases options and encouragements to promote digital payments.  Third, there is scope to promote financial inclusion by providing tailored financial literacy programs for G2P payment programs users. 

The Executive Secretary of TNP2K, Suprayoga Hadi, emphasizes how innovations from the Kartu Prakerja Program, that used an integrated ecosystem with end-to-end digital implementation and multi-channel Government to Person (G2P) payment, might show concrete evidence of how digital and financial technology affect the efficiency and effectiveness of the program, but also improve the experience and financial inclusion of the beneficiaries. 

In the same event, Director of Payment System Policy Department of Bank Indonesia Fitria Irmi Triswati reveals that apart from encouraging financial inclusion, the Kartu Prakerja Program also encourage the expansion and acceleration of digital finance and transparency for social assistance. 

Head of Economic Department of Centre for Strategic and International Studies (CSIS) Indonesia, Yose Rizal Damuri, points out interesting facts from the study on how most of the Kartu Prakerja recipients didn’t have an e-money account at the beginning. About 50% of them open their e-money account and almost 9% of them open their bank accounts for the first time.  “From this finding we can see how financial inclusion have shown progress and with the introduction of Kartu Prakerja, especially its initiative to use G2P digital payment mechanisms, can actually help a lot in financial inclusion aspects.”

Vice Chairman II of The Indonesia Fintech Association (AFTECH) Aldi Haryopratomo highlights what Kartu Prakerja is doing is enabling the entire industry to collaborate to target financial inclusion of the poorest households. 

“According to the World Bank study, 44 percent of the Prakerja recipients are among the 40% poorest households.  It provides a real foundation for e-money players and other fintechs and even other financial technology companies to then grow, and adopt and target these users,” he explains. 

By the end of the discussion, Tiziana Bonapace, Director of Information and Communication Technology and Disaster Risk Reduction Division UN ESCAP, congratulates the breakthrough achievements of the program.  “Having reached out to more than 11 million beneficiaries, this program is a testament to the concrete, “on the ground” dividends that digitalization can bring,” she concluded.

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