THE POTENTIAL OF MICRO WAQF BANK IN EFFORTS TO

STRENGTHEN THE NATIONAL ECONOMY

Rahma Jaziyatul Chikmiyah

Sharia Economy, Faculty of Economics and Islamic Business, State Islamic
University Of Sunan Ampel Surabaya
e-mail: rahmaajaziyatul@gmail.com

Abstract
Micro waqf banks must play an important role as an alternative to using cash
waqf. This journal will discuss the potential of micro waqf banks as a community
economic reinforcement and also explore how the business scheme of micro waqf
banks. Micro Waqf bank is intended to mean as one that is an interest free, not for
profit, and social bank the capital of which is dedicated mainly to social welfare,
provision of micro financing, and economic development of the poor and under
privileged. Financing of Micro Waqf Banks targets small communities and micro
and small business groups. Under the auspices of OJK, permission has been
issued to 41 Micro Waqf Bank. The presence of Micro Waqf Banks is believed
to increase financial inclusion. Financing is provided without collateral with a
maximum value of Rp 3 million and a profit sharing margin equal to three
percent. So, if the micro waqf bank grows large, the people's economy can run
well. Micro Waqf Bank are also proof that the government does not only take care
of the large investors in conventional banking. Using the literature review method
from various sources, this journal emphasizes that micro waqf banks have an
important role in efforts to improve the welfare of the community of micro, small
and medium enterprises (UMKM).

Keywords: Micro waqf Bank, Cash Waqf, Financing

1. INTRODUCTION
Waqf is an Islamic economic instrument that has not been optimally empowered
in Indonesian.While, in other countries such as Egypt, Saudi Arabia, Jordan, Turkey,
Bangladesh, Egypt, Malaysia and the United States, waqf has been developed as one
of the Islamic socio-economic institutions that can help various activities of the
ummah and resolve people's problems such as poverty. Waqf are highly
recommended as a form of concern for fellow human beings and rewards that will
continue to flow for people who have inherited their wealth or can be called wakif
even though the wakif has died. At present, one of the immovable waqf being
promoted by the government in Indonesia is a form of money waqf.
Waqf money can be interpreted as a form of immovable waqf in the form of cash.
Indonesia as a country with the largest population of Muslim communities in the
world has a huge potential for money waqf to strengthen the economy of the people
in Indonesia, but unfortunately this has not been optimally developed through micro
waqf banks as financing for micro, small and medium enterprises (UMKM). From

The Potential Of Micro Waqf Bank In Efforts To Strengthen The National Economy 1
this problem, the author initiated a journal entitled “The Potential Of Micro Waqf
Bank In Efforts To Strengthen The National Economy.”
The purpose of writing this journal is to describe the potential of cash waqf, micro
waqf bank in Indonesia, decipher business schemes at micro waqf banks and the last
is the potential of micro waqf banks in strengthening the people's economy in
Indonesia through financing the micro, small and medium enterprises (UMKM) of
the community.

2. METHOD
The method of journal writing used by the author comes from various literary
sources such as books, internet, journals, articles and others to look for a problem
and develop a solution to the problem, as well as a literature study that is used to
explore the basic theories related to waqf law and development of micro waqf bank
management in Indonesian.

3. RESULT AND DISCUSSION

Potential Of Cash Waqf
Given the considerable potential of cash waqf in Indonesia, The government has
accommodated this cash waqf development assistance by regulating the reverse
implementation of money waqf in Law No. 41 of 2004 and Government Regulation
No. 42 of 2006.
The law allows money waqf based on QS. Ali-Imron: 92
ٌ‫َّللاَ ِب ِه َع ِليم‬ َ ‫لَ ْه تَنَالُوا ْال ِب َّر َحتَّى ت ُ ْن ِفقُوا ِم َّما ت ُ ِحبُّونَ َو َما ت ُ ْن ِفقُوا ِم ْه‬
َّ ‫ش ْيءٍ فَإ ِ َّن‬
The Meaning: “You never get to the virtue (perfect), before you infuse
some of the treasures that you love And whatever you infest, then Allah
knows it.” (QS. Ali-Imron: 92).
Cash waqf funds will be managed professionally in advance and the management
results will be channeled to mauquf „alaih (recipients of waqf). The money that has
been represented should not be given directly to mauquf‟alaih (recipients of waqf),
but first invested by Nazhir, then the investment proceeds will be channeled to
mauquf „alaih (recipients of waqf) through financing businesses or micro, small and
medium businesses (UMKM) and in the form of working capital for the people of
Indonesia. This of course will be in accordance with the characteristics inherent in
the provisions of cash waqf funds namely, holding back the principle of then
channeling profits or surpluses to all parties which can later be used appropriately to
benefit the people of Indonesia.
Indonesian Waqf Agency (BWI) said the potential of cash waqf in the country
reached IDR 180 trillion in 2018. A total IDR 400 billion IDR 800 billion.1
Mustafa Edwin Nasution assumes that if there are 10 million middle-class
Muslims in Indonesia with an average monthly income of between IDR 500.000 and
IDR 10.000.000, the draft calculation can be made as follows:2

1
Umi Nur Fadilah, “Potensi Wakaf Tunai Capai Rp. 180 Triliun”
(https://www.republika.co.id/berita/dunia-islam/wakaf/18/10/16/pgovmd384-potensi-wakaf-
tunai-capai-rp-180-triliun, Accessed on May 26, 2019, at 09.41 WIB)

The Potential Of Micro Waqf Bank In Efforts To Strengthen The National Economy 2
 Table 1 The Potential Cash Waqf in Indonesia

Income level / month Total Waqf Potential Cash Potential Cash

Moslem Rates/month Waqf/month Waqf /year
IDR 500.000 4 million IDR 500.000 IDR 20 billion IDR 240 billion
IDR 1 million- 2 million 3 million IDR 10.000 IDR 30 billion IDR 360 billion
IDR 2 million- 5 million 2 million IDR 50.000 IDR 100 billion IDR 1.2 Trillion
IDR 5 million- 10million 1 million IDR 100.000 IDR 100 billion IDR 1.2 Trillion
Total IDR 3 trillion
It can be assumed that all Islamic societies in Indonesia have a high awareness of
charity and have information in the form of cash waqf. With a total population of 10
million Muslims with an average monthly income of IDR 500.000-10 million, it can
be estimated that cash waqf funds can be collected approximately worth 3
trillion/year.

Micro Waqf Bank In Indonesia

The establishment of Micro Waqf Bank is one of the OJK financial inclusion
programs in order to support government programs to overcome poverty and
incorporated as a cooperative with a business permit from a sharia microfinance
institution. The Micro Waqf Bank Program was launched in October 2017 and is
expected to be a solution in providing capital or financing access for people who are
not yet connected with formal financial institutions. Micro Waqf Bank is a platform
for Islamic microfinance institutions that provides financing and assistance, non
deposito taking, low yield maximum 3%/year, group-based, and without collateral.
Micro Waqf Bank focuses on empowering productive poor communities. Micro
Waqf Banks get funding from donors who donate their funds through amil zakat
(LAZ).
Micro Waqf Bank, has great potential in helping the development of the
national economy and can increase financial inclusion, especially in the community
and micro and small business actors (UMKM) to get capital ease. As the legal basis
for waqf is, the existence (permanence) of goods that are represented and their
existence can be enjoyed by the public at large. Similar to this micro waqf bank (cash
waqf), the community can use it for business capital, and return it within the agreed
time, and this can be enjoyed by not only one person but the entire surrounding
community. The institution is not permitted to take deposits from the community
because it has a focus on community empowerment through financing along with
business assistance.
The Indonesian Waqf Agency (BWI), states that the potential of land waqf is
above IDR 370 trillion, while cash waqf is IDR 180 trillion in 2018. This does not
include counting the potential land waqf that still has not yet emerged, which can
reach IDR 2,000 trillion. President Joko Widodo said, Micro Waqf Banks could

2
Mustafa Edwin Nasution dan Uswatun Hasanah , Wakaf Uang Inovasi Finansial Islam, Peluang
dan Tantangan dalam Mewujudkan Kesejahteraan Ummat, (Jakarta: PKTTI-UI, 2005), Pg. 43-
44.

The Potential Of Micro Waqf Bank In Efforts To Strengthen The National Economy 3
solve problems that banks could not solve, because when small business people want
to borrow from a bank, they must have collateral and new collections to the bank.3
Banks charge considerable interest to debtors. Meanwhile, Micro Waqf Banks
only charge operational costs and administrative costs of 3%/year. So, a small
amount of capital loans can be obtained by the community through this micro waqf
bank. The presence of this micro waqf bank originated from poverty and inequality.
It is known in 2017, the number of poor people in Indonesia is 26.6 million or around
10.12%. This is followed by a still high imbalance, which is at the level of 0.310.
The Financial Services Authority (OJK) has issued licenses for 41 micro waqf
banks until November 2018. This is a form of OJK commitment to expand the
provision of financial access for small micro entrepreneurs who have not been
reached. In November 2018, licenses were issued for 38 micro waqf banks which had
provided funding to 8,373 customers with a total of IDR 9.72 billion.4
The financing scheme through the Micro Waqf Bank is financing without
collateral with a maximum value of IDR 3 million and a profit sharing margin equal
to 3%. In addition, in the Micro Waqf Bank financing scheme, entrepreneurship
training and assistance are also provided and funding patterns are made per group.

Micro Waqf Bank Business Scheme

Characteristics of micro waqf banks:
a. Providing Financing & Mentoring
In addition to financing, Training and Mentoring is the key to the success of
community business. Mentoring is carried out for a minimum of 6 months
b. Non Deposit Taking
Not managing public funds, in the form of deposits, savings, deposits and similar
products. Micro Waqf Bank focuses on empowering productive poor
communities through mentoring and microfinance. The source of income for
Micro Waqf Banks comes from profit sharing of Islamic deposits, yields on
financing, and other service revenues.
c. Low Yield, equivalent to 3%
Micro Waqf Banks only charge operational costs and administrative costs of
3%/year. So, a small amount of capital loans can be obtained by the community
through this micro waqf bank.
d. Group Based
Selection of prospective customers through compulsory group training for 5 days
with material discipline, cohesiveness, solidarity and courage to try.
e. Without collateral
Micro Waqf Bank is financing without collateral with a maximum value of IDR 3
million and a profit sharing margin equal to 3%.

3
Lavinda,”OJK Beri Izin Uasaha 20 Bank Wakaf Mikro”
(https://www.cnnindonesia.com/ekonomi/20180310064906-78281918/ojk-beri-izin-usaha-20-
bank- wakaf-mikro , Accessed on May 26, 2019, at 09.41 WIB)
4
Ambarani Nadia, “OJK Terbitkan Izin 41 Bank Wakaf Mikro”,
(https://ekonomi.kompas.com/read/2018/12/18/190548926/hingga-desember-2018-ojk-terbitkan-
izin-41-bank-wakaf-mikro, Accessed on May 26, 2019, at 11.02 WIB)

The Potential Of Micro Waqf Bank In Efforts To Strengthen The National Economy 4
 Customers can pay installments for 52 weeks with a monthly installment of only
IDR 20,000. Unlike bank products in general which are not able to facilitate small
communities, in financing Micro Waqf Banks (BWM), customers can increase the
amount of the loan as long as the installments are smooth.

Micro Waqf Bank Business Scheme 5

Donators

Accompaniment

LAZ
Establishment Capital and
Working Capital

Micro Waqf
Banks

Financing Empowerment

The poor are productive

Micro Waqf Bank Scheme is financing without collateral with a margin equal to
3%. In accordance with sharia principles, Micro Waqf Banks doesn’t charge interest.
Throughout its development, BWM has indeed been established around Islamic
boarding schools that already have a business community. Through the Micro Waqf
Bank, the santri and the community within the boarding school that have
collaborated can obtain a maximum business loan of IDR 3 million.
Micro Waqf Bank focuses on empowering productive poor communities through
mentoring and microfinance. The source of income for Micro Waqf Banks comes
from profit sharing of Islamic deposits, yields on financing, and other service
revenues. Donors in micro waqf banks are all Indonesian people who have excess
funds, especially entrepreneurs or large companies that have a concern for the
empowerment program of the poor and alleviating inequality in Indonesia. The target
of financing customers is the productive poor people who cannot access formal
financial institutions.
The productive poor are meant:
a. Poor people who have been able to fulfill basic needs for survival
b. Poor people who already have productive businesses or have the willingness and
enthusiasm to work
c. The poor are committed to participating in empowerment programs
5
Otoritas Jasa Keuangan, Bank Wakaf Mikro Program Pemberdayaan Masyarakat melalui
Pendirian Bank Wakaf Mikro LKM Syariah, (Jakarta: Forum Merdeka Barat: 2018), Pg. 10

The Potential Of Micro Waqf Bank In Efforts To Strengthen The National Economy 5
 Accompaniment In the Financing Customer Community6

Accompaniment

Micro Waqf The

Banks customers

1. The Process of Establishing 1. Dissemination of the Concept of

Legal Entities and Business
Permits for LKM sharia
2. Training of Managers
3. Operational assistance for
business activities for a
minimum of 6 months
Empowering Sharia MFIs through
2. Assistance and Financing
3. Compulsory group training for
consecutive 5 day
4. Weekly meetings

Ready to Manage Ready to be a Productive

BWM Operations Society

Micro Waqf Bank Monitoring is carried out by the OJK in coordination with the
Ministry of Cooperatives, Islamic Boarding Schools, and Trustworthy Community
Leaders.

The Potential Of Micro Waqf Bank In Efforts To Strengthen The National

Economy
Since it began in October 2017, the Micro Waqf Bank program has grown to 41
units spread across Java, including attack, lebak, cirebon, bandung, ciamis, kudus,
yogyakarta, surabaya, jombang, klaten, and kediri. n the Plenary Meeting of the
National Islamic Finance Committee (KNKS) on February 5, 2018, the Micro Waqf
Bank was one of the proposals for the Quick Wins Islamic finance sector. This year,
the expansion of Islamic Microfinance Institutions with the branding of Islamic
Boarding School-based "Micro Waqf Banks" can certainly cover the entire territory
of Indonesia. In the future, OJK will work with Islamic boarding schools or Islamic
schools to establish more Micro Waqf Banks to channel funding in Islamic boarding
schools. With almost 29 thousand Islamic boarding schools spread throughout
Indonesia, the government believes BWM has great potential to empower people and
play a role in eroding economic inequality especially in the communities around the
Islamic boarding school environment. The Indonesian Waqf Agency (BWI), the
potential of waqf is above IDR 370 trillion, while cash waqf is IDR 180 trillion in
2018. This does not include counting the potential land waqf that still has not yet

6
Ibid, Pg. 14

The Potential Of Micro Waqf Bank In Efforts To Strengthen The National Economy 6
emerged, which can reach IDR 2,000 trillion. President Joko Widodo said, Micro
Waqf Banks could solve problems that banks could not solve, because when small
business people want to borrow from a bank, they must have collateral and new
collections to the bank.

In 2018, the President of the Republic of Indonesia Joko Widodo has just spread
capital of IDR 594 billion to 33 micro waqf banks spread in various Islamic boarding
schools. This capital is provided to facilitate micro community financing. In order to
facilitate access to public finance in the rural environment, President of the Republic
of Indonesia Joko Widodo distributed capital of IDR 8 trillion to each Micro Waqf
Bank (BWM) in all 33 regions in Indonesia.7

Potential and Opportunities for the implementation of micro waqf banks in

Indonesia are very large. Especially because there are no obstacles in a positive legal
or Islamic law that prohibits the formation of a model like this micro waqf bank.
Indonesia as a country with the largest Muslim population in the world certainly also
has a great opportunity to support the progress of micro waqf banks which will later
impact on the maximum potential of cash waqf in Indonesia. And coupled with the
flexibility of waqf institutions that make it possible for non Muslims to take on the
role of wakif (waqf provider) as well as those who get assistance from the results of
cash waqf management through financing and also their business assistance.

4. CONCLUSION
Cash waqf funds will be managed professionally in advance and the management
results will be channeled to mauquf „alaih (recipients of waqf). The potential of cash
waqf in the country reached IDR 180 trillion in 2018.
The Micro Waqf Bank Program was launched in October 2017 and grown to 41
units spread across Java and is expected to be a solution in providing capital or
financing access for people who are not yet connected with formal financial
institutions. Micro Waqf Bank provides financing and assistance, non deposito
taking, low yield maximum 3% per year, group based, and without collateral.
Micro Waqf Bank Scheme is financing without collateral. Customers can pay
installments for 52 weeks with a monthly installment of only IDR 20,000. Unlike
bank products in general which are not able to facilitate small communities, in
financing Micro Waqf Banks customers can increase the amount of the loan as long
as the installments are smooth.
Potential and Opportunities for the implementation of micro waqf banks in
Indonesia are very large. Especially because there are no obstacles in a positive legal
or Islamic law that prohibits the formation of a model like this micro waqf bank.
Indonesia as a country with the largest Muslim population in the world certainly also
has a great opportunity to support the progress of micro waqf banks which will later
impact on the maximum potential of cash waqf in Indonesia
7
Miriam Fajria, “Pemerintah Kucurkan Pembiayaan bagi 33 Bank Wakaf Mikro,
(https://www.finansialku.com/bank-wakaf-mikro/, Accessed on May 27, 2019, at 07.17 WIB)

The Potential Of Micro Waqf Bank In Efforts To Strengthen The National Economy 7
SUGGESTION
1. The management institution of the Micro waqf Bank which was
inaugurated by the government in several cities in Indonesia should be
developed. Because this concept is an effort to improve the economy, so
that micro and small businesses owned by the poor can be strong and
developing
2. The government can make regulations on the operations of Micro Waqf
Banks so that in practice they do not clash with banking regulations
3. Academics to be able to make similar studies in order to add a collection
of scientific treasures specifically to the science of micro waqf bank
management
4. The general public can participate in supporting the micro waqf bank
program by donating some of their money

The Potential Of Micro Waqf Bank In Efforts To Strengthen The National Economy 8
5. REFRENCES
(Books)

Mustafa Edwin Nasution dan Uswatun Hasanah. 2005. Wakaf Uang Inovasi
Finansial Islam, Peluang dan Tantangan dalam Mewujudkan Kesejahteraan
Ummat. Jakarta: PKTTI-UI

Otoritas Jasa Keuangan. 2018. Bank Wakaf Mikro Program Pemberdayaan

Masyarakat melalui Pendirian Bank Wakaf Mikro LKM Syariah. Jakarta:
Forum Merdeka Barat

(News Article)

Umi Nur Fadilah. 2018. Potensi Wakaf Tunai Capai Rp. 180 Triliun
https://www.republika.co.id/berita/dunia-islam/wakaf/18/10/16/pgovmd384-
potensi-wakaf-tunai-capai-rp-180-triliun, (Accessed on May 26, 2019, at
09.41 WIB)

Lavinda. 2018. OJK Beri Izin Uasaha 20 Bank Wakaf Mikro

https://www.cnnindonesia.com/ekonomi/20180310064906-78281918/ojk-
beri-izin-usaha-20-bank- wakaf-mikro. (Accessed on May 26, 2019, at 09.41
WIB)

Ambarani Nadia. 2018. OJK Terbitkan Izin 41 Bank Wakaf Mikro.

https://ekonomi.kompas.com/read/2018/12/18/190548926/hingga-desember-
2018-ojk-terbitkan-izin-41-bank-wakaf-mikro. (Accessed on May 26, 2019,
at 11.02 WIB)

Miriam Fajria. 2018. Pemerintah Kucurkan Pembiayaan bagi 33 Bank Wakaf

Mikro, https://www.finansialku.com/bank-wakaf-mikro/. (Accessed on May
27, 2019, at 07.17 WIB)

The Potential Of Micro Waqf Bank In Efforts To Strengthen The National Economy 9