How AwanTunai is solving a critical challenge for Indonesia’s neighbourhood stores

In many of the world’s fastest-growing developing countries, family-owned neighbourhood stores dominate the fast-moving consumer goods sector. In Indonesia, the country’s 3.5 million corner shops, known as warungs, command 70% of the market for grocery sales.¹

Despite their often modest appearances, these shops are pillars of their local communities and can stock an impressive array of products, from packaged food and beverages to toys and medicine.

Managing inventory, however, can be a big challenge for warungs, many of which rely on cash and lack access to formal financial services. According to financial technology firm AwanTunai, Indonesia’s inventory purchase financing gap for micro, small, and medium enterprises (MSMEs) stands at around USD50 billion.²

AwanTunai is working to close that gap by combining digital solutions with access to financing to help these small retailers operate more efficiently and more profitably.

Its AwanToko platform allows warung owners to check stock conditions and prices at hundreds of wholesalers and make orders online. Crucially, through the AwanTempo service, they can also receive funding of up to IDR500 million (USD30,740) to purchase inventory.³

By using machine learning to analyse the data it captures through the AwanToko app, AwanTunai is able to mitigate credit risks, keeping its non-performing loan ratio to a minimum.⁴ This model is now used by fintechs around the world to support financial inclusion, enabling loans to be extended to previously marginalised groups.

To support AwanTunai’s expansion, HSBC arranged a IDR300 billion (USD18.5 million) senior secured asset-backed facility to finance the procurement of inventory for MSME end-borrowers. HSBC acted as structuring bank, bilateral lender, facility agent, security agent and account bank on the facility.

The financing was structured to give AwanTunai the flexibility it needs to grow, with a security package tied to the performance of the loan book rather than financial covenants on the company as a whole.

“HSBC’s support is critical in order to scale up our innovation in scaling unsecured MSME lending,” said AwanTunai CEO Dino Setiawan.

“We look forward to a long strategic partnership with HSBC, which has the vision and commitment to enable financial inclusion at scale. We hope to open up the challenging-to-serve MSME segment in Indonesia and across wider emerging markets with HSBC’s global support,” said Setiawan.

The bespoke financing is a first in Indonesia’s FMCG sector and a first for HSBC, underlining the bank’s growing support for early-stage technology companies across Southeast Asia.

HSBC recently established a dedicated USD1 billion ASEAN Growth Fund to help corporates and non-bank financial institutions scale their businesses to the next stage. It provides access to corporate lending for companies that have a proven track record in generating a sustainable cashflow stream, even if the overall group may be loss-making.

“The global financing gap for formal and informal MSMEs is estimated at a staggering USD8 trillion.⁵ Banks and fintechs need to work together to solve this critical impediment to economic growth and development, job creation, poverty alleviation and improving quality of life across the developing world.”