The Role of Micro Waqf Bank in Supporting MSMEs through Productive Waqf

Micro Waqf Bank ( Bank Wakaf Mikro – BWM) is an Islamic Microfinance Institution registered and supervised by the Financial Services Authority (OJK), which aims to provide access to capital for small communities who do not yet have access to formal financial institutions. This study aimed to identify the roles of micro waqf banks in supporting MSMEs through productive waqf. It utilized a case study research design focusing on Micro Waqf Bank BWM Usaha Mandiri Sakinah (UNISA). Primary data were collected through interviews with the marketing manager, marketing staff, and BWM Usaha Mandiri Sakinah customers. The results of the qualitative data analysis show that BWM Usaha Mandiri Sakinah, as one of the micro waqf banks, has played an essential role in increasing MSMEs' income in Sleman Yogyakarta.


Introduction
Economic growth in Indonesia is mostly driven by the Medium, Small, and Micro Enterprises (MSMEs) sector (Kholidah & Hakim, 2018).Based on data from the Ministry of Cooperatives and Small and Medium Enterprises (KemenkopUKM) in March 2021, the number of MSMEs reached 64.2 million with a contribution to the gross domestic product of 61.07 percent or IDR 8,573.89trillion.MSMEs can absorb 97 percent of the workforce and collect up to 60.42 percent of the total investment in Indonesia (KemenkopUKM, 2021).It implies that MSMEs have an important contribution to the country's economy.
However, most MSME players still experience many problems, especially access to funding (Diana, 2019;Halim, 2020), as most business actors in Indonesia are unbankable (Zusryn, 2021).Although many financial institutions such as banks, cooperatives, BMT, and peer-to-peer lending (P2P) have provided business funding facilities, the problem still exists.One of the efforts made by the Government and the Financial Services Authority (OJK) in reducing unbanked people or increasing the number of people who can access financial institutions (bankable) is through Micro Waqf Banks (BWM) ( Micro Waqf Bank (BWM) is an Islamic Microfinance Institution registered and supervised by the OJK which aims to provide access to capital for small communities who do not yet have access to formal financial institutions.BWM plays a role in empowering communities around Islamic boarding schools by encouraging their business development by providing loan funds for productive community business groups.BWM is incorporated as a cooperative in each pesantren.The cooperative allows BWM to distribute funds to its members (customers) without requiring collateral (Micro Waqf Bank (BWM), 2020).
The presence of BWM is expected to reduce inequality and poverty in the community.BMW's funding aims to empower the real sector and strengthen the country's economy.The potential for the growth and development of BWM in Indonesia is expected to have significant benefits for the Islamic-based economy.The policy on "BWM as a sharia-based microfinance institution is intended so that BWM will become one of the pillars of strength in the Islamic financial industry (Disemadi & Roisah, 2019).
BWM has grown and developed in most provinces in Indonesia.2022) Special Region of Yogyakarta (DIY) is one of the provinces that has established BWM.Based on statistical data, there are 3 BMWs with a cumulative financing amount of 7 billion, a cumulative number of customers of 4.5 thousand, an outstanding financing amount of 1.2 billion, and a total of 924 outstanding customers ( Micro Waqf Bank (BWM), 2020).This study aimed to identify the role of micro waqf banks in supporting MSMEs through productive waqf.It has both practical and theoretical contributions.In practice, this study could be used as a reference for stakeholders in making strategic policy steps, especially related to the effectiveness of BWM.For theoretical contribution, the findings of this study may enrich the literature on the management of BWM.

Literature Review
Several studies on BWM have been conducted previously with various focuses such as the role, legality, effectiveness, welfare improvement, and implementation of BWM (Nur et al., 2019;Rahman & Widayanti, 2021;Safitri & Sukmana, 2020;Salsabilah, Ilma & Rahmawati, 2021).Assegaf and Mursyid's research (2019) investigated the implementation of productive waqf in the Denanyar Jombang sharia micro waqf bank.The findings show that the productive waqf was distributed to the Indonesian Pesantren Surrounding Community Business Group (KUMPI).
Another research was also conducted by Sulistiani et al. (2020), who elaborated micro waqf banks as New Islamic Financial Instruments in Indonesia.The study's results explained that micro waqf banks stand as Islamic cooperatives, but naming them using the term waqf does not make them waqf institutions.Hidayat and Makhrus (2021) reported the role of BWM Amanah Berkah Nusantara Purwokerto in empowering the community's economy by providing business capital facilities based on profit-sharing and qardhs agreement.Additionally, there is business assistance through religious media and business development.
Research by Mugiyati et al. (2021) also examined the presence of BWM and its relationship with MSME financial inclusion.The study results show that BWM can increase financial inclusion, especially for lowincome people and MSE actors in Islamic boarding schools.The presence of BWM strengthens capital and empowers the community through MSMEs.The profit-sharing system is a capital funding option carried out by BWM with MSMEs.Another research was conducted by Qurrata et al. (2021), analyzing the effectiveness of cash waqf management in improving community welfare.The study concluded that good waqf management could be achieved through transparency and separate fund management with donations or other community assistance schemes.Whereas from the external side, there is a need to reinforce the understanding that cash waqf does not have to be in significant amounts for it to create benefits.
Cahyaningrat & Mongid (2022) conducted a study to reveal business processes, business characteristics, and benefits of empowerment programs carried out by Sharia Microfinance Institutions with a model Micro Waqf Bank located in Jombang Regency, East Java Province.The results show that although business processes and business characteristics are the same as other cooperative lenders, the economic empowerment perceived by customers is unique.Beneficiaries benefit greatly from economic empowerment.These institutions also benefit the surrounding community.The existence of lending institutions under this pesantren improves the economic welfare of the surrounding community.Rizki et al. (2022) conducted a study to find out how to improve the ability of BWM to help micro and small businesses in Central Lombok.The results of the study show that strategies that can be implemented include increasing the sense of responsibility between members of the customer group, strengthening the support in marketing while providing an understanding of the law of usury, developing attractive programs that are in high demand by customers or the public, displaying customer products in front of an audience, and decorating the office in a fun way.

Research Method
This study utilized a qualitative approach with a case study design, focusing on BWM Usaha Mandiri Sakinah.Primary data were collected through interviews with the general marketing manager, marketing staff, and BWM Usaha Mandiri Sakinah customers.For customers, the interviewees were chosen from the actors of MSMEs in consumption, have been operating for a minimum of one year and with a maximum turnover of 3 million Rupiah.Furthermore, the data validity test uses a triangulation technique that includes sources, methods, and time.Qualitative data analysis was applied to achieve the research objective.It is done by reducing dan presenting the data that allow the researchers to draw a conclusion and reflection.

Profile of BWM Usaha Mandiri Sakinah (UNISA)
One of these financial institutions has grown in the midst of Yogyakarta society, namely the BWM Usaha Mandiri Sakinah (UNISA hereafter), affiliated with Aisyiyah University Yogyakarta.This BWM was established at the initiation of the central government through the OJK and also by several communities such as the Aisyiyah Central Leadership (PPA), Aisyiyah University (UNISA), Muhammadiyah Branch Leaders (PRM), Aisyiyah Branch Leaders (PRA), Muhammadiyah Youth Branch Leaders (PRPM), and Nasyiyatul Aisyiyah Branch Leaders (PRNA) which focuses on financing small communities with a group system, and in this case, the OJK also collaborates with the National Amil Zakat Institution (LAZNAS) in forming microfinance institution to realize the welfare of society.
BWM UNISA obtained a business license from the OJK on May 16, 2018, and is the first Micro Waqf Bank established outside the Islamic boarding school.BWM is the second Micro Waqf Bank to be inaugurated in DIY after the Almuna Berkah Mandiri Krapyak Micro Waqf Bank, Bantul.The establishment of BWM UNISA is in line with the OJK Memorandum of Understanding in the context of developing Islamic finance and empowering the women's economy, which is expected to have great potential to increase family income and also helps encourage the improvement of the national economy.The operational areas of LKMS BWM UNISA are presented in Figure 1.Since the establishment of BWM UNISA in 2018 until 2022, now BWM UNISA has around 400 cumulative customers, most of whom are traders, such as wholesalers, traders in Pundung Market, food sellers in "Sunmor UGM" and batik traders in Malioboro.BWM UNISA beneficiaries based on their business type are more fully listed in Table 2.The activities carried out by BWM include four main things, namely lending or financing, business assistance, training, and motivation.Financing services are defined as providing capital for the business to female MSME actors around UNISA to areas that are still in the Gamping area with the lowest ceiling of one million Rupiah and the highest of three million Rupiah.In this financing, the contract used is a qardh contract, where the customer only returns the financing within a certain time without being charged interest on the loan.
The lending program to small micro-enterprises in BWM UNISA is carried out through several stages.The stages that must be passed are identification, socialization, due diligence, and Group Compulsory Training (PWK).After all these processes have been successfully carried out properly, the disbursement of new funds can be carried out and followed by a meeting called the Weekly Gathering (SILMI).
During the initial identification phase, BWM managers will visit the customer's place of business.The goal is to let BWM know what business customers are running.At this stage, the manager will also ensure that prospective customers meet the requirements as customers of BWM Usaha Mandiri Sakinah.One of the basic rules is that the distance of the place of business is a maximum of five kilometers from the office of BWM UNISA.
After identification, the next stage is socialization.This stage is the implementation of administrative requirements, such as filling out attendance sheets and delivering the stages of the BWM program for prospective customers.Next is an eligibility check to check the correctness of the prospect's details.But Gamping (subdistrict)

Banyuraden village
previously, BWM determined the group based on the proximity of the residences of ten to twenty members in each group, which would be useful to facilitate these clients in the future.The provisions for the number of members of each group are based on the total number of customers as a whole.
After that, the manager calculates each customer's estimated income and ability to pay each week.Managers also consider business conditions designed for productive rather than consumptive purposes, including the character of potential customers.As mentioned in the January 9, 2023 interview by MS as the supervisor of BWM UNISA related to the criteria considered before providing a loan, namely that a business or business must be productive, there are no bad debts in other banks or cooperatives, ready to take responsibility, and willing to participate in regular weekly meetings.
After due diligence, BWM will continue funding based on group members' reviews and decisions because group members are more able to assess each member's responsibilities and whether they can continue or not.The submission of decisions to group members is carried out as a form of handing over full commitment and responsibility to the group regarding the ability to pay installments.The supervisor of BWM UNISA said that the stages of financing are as follows: "The first phase is given financing of one million rupiahs in installments for fifty weeks.If it is smooth, it will be continued to the next stage of financing two million rupiahs in installments for fifty weeks.If it is smooth and the business develops, it will be continued to the last stage, which is three million rupiahs in installments for fifty weeks" (MS, interview, 09 January 2023).
The same thing is said by BWM UNISA customers, "Before getting the loan, we have to pool first for five groups, like training first.Because we don't use guarantees, we have to attend the group.then you can only get a loan that is in the first phase first one million, then it has been up to fifty weeks, then it has been paid off and then moved up to the next stage of two million to a maximum of three million" (ANW, interview, January 19, 2022).
The customer criteria determined by BWM when initially joining BWM are not difficult, namely as long as they have a productive business and are able to be responsible in the group, such as meeting attendance at meetings held by BWM.One of the customers said regarding the customer criteria at BWM UNISA.

Psychological Aspects
According to Widiasari (2009), the psychological aspect is an aspect of motivation along with encouragement that comes from within and outside the individual to affect the psyche and help the individual adapt to a situation.Psychological aspects include adaptation or self-adjustment, emotional or related to whether or not they are happy with something, and motivation or prejudice for the fulfillment of the need for well-being as expected.
Researchers found findings from the psychological aspects of customers, namely related to their underlying motivation to join BWM is largely due to interest in its capital loan services, but another reason is also that BWM does not apply usury or interest, "There is a loan that does not use interest...." (JM, interview, December 19, 2022).
As for capital reasons, it is said, ".. look for additional capital, find capital to develop trading" (RPW, interview, December 19, 2022) Apart from being viewed from the sharia side, interest-free loans, in practice, are able to ease refunds and are not burdensome compared to loans that apply interest.
"For the results, it's small, it means it's not big, it's not burdensome.The initial is also one million first, meaning that you can get a loan of one million, continue to be paid in fifty weeks, so it will be lighter" (ANW, interview, December 19, 2022) "It is easy to get a loan, so to develop, to increase capital", continued ANW.
In addition, the financing stages at BWM are considered easy, the requirements are not complicated, and most customers agree on the convenience provided by BWM related to business capital financing.Business capital is very important for business actors for the sustainability of their business so that it can continue to run and even develop, and in accordance with conditions in the field that the main obstacle for small micro business actors is usually caused by the difficulty of obtaining business capital.In addition to capital and religious aspects, some customers are also motivated to join BWM because of the large number of business partners in arms so as to trigger a higher enthusiasm to jointly run a business when finding many friends in the same field, each positive energy will influence each other, as well as if there is an unpleasant experience from business actors, it can be used as a joint learning, the broader one can learn from each other based on each other's experiences.
In the psychological aspect of this study, it was also found that there was loyalty from MSME actors to BWM UNISA.When informants who are customers of business actors at BWM UNISA were asked about the desire to move to other financial institutions in terms of capital, apparently the answers of all informants simultaneously answered that there was no desire to switch from BWM UNISA.Most of them put forward the reason because BWM has provided comfort, convenience, and service is satisfactory enough that customers trust and can rely on BWM in terms of capital and business development.
"Nothing, because it's easy here... for more reliable business development" (ANW, interview, 19 December 2022) Another reason arises because of the strong initial motivation to join, for example, related to the sharia BWM system and suitable customer partners, so they are reluctant to switch from BWM UNISA.The motivation to participate in being part of BWM is still based on capital needs.This reason is the first and most important reason according to business actors who are also customers.This reason is reasonable if it is related to the reason for the establishment of BWM, one of which is to provide access to business capital for MSME actors.However, in addition, it is feared that this motivation can cause customers to tend to be inactive in participating in training and all activities from BWM if the motivation is only limited to the capital.
The accessibility of micro-entrepreneurs in the Gamping District is based on the presence of BWM UNISA administrators, which leads to various community associations.Groups that are often attended are RT, recitations, and other women-only meeting places.In this psychosocial aspect, there are findings regarding BWM interactions with MSME actors and interactions between MSME actors and fellow customers.
In order to introduce BWM to the community, it is necessary to have interaction between BWM and the community itself.Since the inception of BWM UNISA, the administrators have been aggressively visiting various community forums, especially women's forums, as a starting approach.This was conveyed by the supervisor of BWM UNISA who said that the introduction or promotional media of BWM was carried out in the following way, "through the events of the Muhammadiyah and Aisyiyah Association, spreading BWM brochures during major events, socialization or coming directly to the meeting of PKK" (MS, interview, 09 January 2023).
The concept of getok tular itself since 2019 has been applied by BWM UNISA.Thus the number of customers eventually increases.This concept is made possible by creating a team that is both well-maintained and thriving.This group is presented as a representation of BWM empowerment for women entrepreneurs.With the cultural approach of the community as well as the getok tular, many women began to recognize the existence of BWM.
Most customers know the presence of BWM from their neighborhood friends, which starts from the presence of BWM UNISA administrators in the midst of the mothers' association.From this information, the presence of BWM spread to the ears of the public as information provided by several informants related to the dissemination of BWM information, "There's a chairman who keeps getting close friends to be clients."(ANW, interview, 19 December 2022).
In addition, because BWM grows in the midst of rural communities whose reach is not too wide, the information on BWM's presence quickly reaches the community, especially BWM administrators and managers who are aggressively attending various associations, which has the opportunity to become known to the public faster.

Spiritual Aspects
According to Rosito (2010), the spiritual is related to finding and maintaining something meaningful in life.The understanding of meaning will favor positive emotions in the process of search and preservation.A hard effort to find it will bring encouragement, including a willingness to reach goals, even if facing obstacles from the outside and inside.
In this study, there are findings of the spiritual aspect, namely, BWM UNISA has an attraction related to activities in it.Because in BWM, activities are not only in the form of capital and training.Moreover, spiritual motivations are also held around religious science, and shari'a customs are also applied in BWM.One of the things that researchers managed to observe was during the Weekly Gathering (SILMI) on December 19, 2022, at one of the homes of BWM UNISA customers.The event ran for about half an hour, starting with the opening, filling out the attendance list, reading the pledge together, recitation of Asmaul Husna together, recitation of sholawat together, followed by the announcement of the next SILMI schedule by the BWM manager along with other important info and finally closed with a prayer.
From these regular weekly meetings, BWM customers are automatically accustomed to establishing friendships so that activities are more meaningful and valuable when there is spiritual deepening in them.Regarding spiritual benefits, the client said, ".. read sholawat, there is this reading Asmaul Husna, it will add knowledge, add knowledge, add rewards."(JM, interview, December 19, 2022).
In addition, such regular meetings can strengthen the relationship between all BWM members , as expressed by customers regarding the good impact obtained from BWM. "... feel facilitated, yes more grateful, get friends, friendship" (RPW, interview, December 19, 2022).
Then the main aspect of the BWM system is to be far from the practice of usury while freeing business actors from the entanglement of loan sharks.As stated by the chairman of the BWM board that one of the goals of BWM UNISA is to exempt business actors from capital loans to loan sharks.As for the advantages of BWM without usury, customers also disclosed, "There is no usury, so pick up one million back one million..." (RPS, interview, December 19, 2022).

Aspects of Knowledge
Knowledge, according to Notoatmodjo (2007), is the result of human understanding that occurs after humans give the perception of an object.Sensing occurs by involving the five senses consisting of sight, hearing, smell, and taste.
In addition to providing access to capital, BWM actively carries out empowerment in the field of education.The goal is to raise awareness of social, economic, and political issues, so that a nominated group has the ability to improve their position in society.With empowerment, it is hoped that BWM will be able to overcome the obstacles faced by MSMEs.These obstacles include limited market access, lack of knowledge about technology optimization, and lack of skills.Regarding the knowledge that has been obtained at BWM UNISA, the customer explained, "the name, like online, selling online is right from here, taught what it is, how to run an online business."(ANW, interview, 19 December 2022) In addition to online business, skills or knowledge can be maximized for customer business development in quantity and quality.Quantity is related to capital growth as well as increased income.While quality is associated with products made by customers.This also includes the quality of the power supply.The human being itself includes religious qualities, the formation of consciousness, and an independent and creative personality.
In In addition to material about online business, customers are also equipped with knowledge about marketing.Marketing is a system of business activities in planning, deciding prices, promotions, and distributing goods or services to consumers (Ramli, Musa, & Hasan, 2019).In marketing, the activity of creating, providing, and exchanging goods to obtain the required return.In the field of marketing, BWM UNISA helps expand the customer market from simple things to network needs by involving customers in every campus work program.This is realized through the bazaar program.
"There is a lot of help, for example, the MSME info, bazaars, or training as well."(ANW, interview, December 19, 2022).
BWM also takes a customer-friendly approach.Many members use Whatsapp as a medium of communication for the marketing of their respective products.BWM also trains the use of Tokopedia to market products due to the increasing prevalence of online marketing, so it is important to improve product quality and marketing.

Experiential Aspects
According to Gazalba (1990), experience is knowledge or learning through one's own actions or reactions, skills or knowledge gained in doing things, knowledge from experiments, experiences , and the application of life through an event and emotion.
In its activities, BWM UNISA organizes a member meeting called the Akbar Gathering.The meeting was an event that brought together all BWM UNISA customers, which was intended to strengthen social relations between BWM members and BWM administrators.
At the Akbar Gathering on December 27, 2022, researchers made direct observations by attending the event at the UNISA Yogyakarta campus.The event started at nine a.m. and was attended by about two hundred customers.The Akbar Gathering has only been held for the past few years, unable to be held due to the constraints of the Covid pandemic.At the event, the speaker Hj.Dyah Suminar conveyed creativity and motivation to innovate to develop a business.Furthermore, it is conveyed about the use of products, known as recycling and reuse.Then it was conveyed about the business inspiration that developed so that it gave rise to motivation for other business actors to participate in applying the knowledge they had gained so that the business continued to grow.
In this category of experience, researchers found several findings other than those presented above, namely related to business success factors according to customer perceptions, as well as customer constraints and results from BWM UNISA services.

Business uccess factors
In this case, the researcher asked each informant the same thing about the business success factor, whether it was only influenced by capital or there were other important things, and it turned out that all informants replied that business success is not only influenced by capital, but there are other things such as environmental factors, weather, market climate, behavior and ethics of business actors, science and engineering around business, communication, and interaction with fellow business actors, guidance from experts, human resources, and others.
"There is capital is not necessarily successful, in my opinion, if you get together, you can interview, exchange ideas, ask each other, exchange knowledge.(US, interview, December 19, 2022)."There are other things, there are guidances.You can ask how to develop a business."(RPW, interview, December 19, 2022) "Depending on the environment, the weather is also the same.If it rains, it's quiet" (DY, interview, December 19, 2022)."Capital, labor is also, continued marketing also affects continue to be rich, it is equally consistent" (RPS, interview, December 19, 2022) That means that the initial motive of each customer joining BWM must be deepened again, not just capital which is the reason for the interest in joining BWM UNISA, especially since they know that the business success factor is not only influenced by capital.

Customer constraints and BWM UNISA service results
Various programs held by BWM are adjusted to the limitations faced by MSME actors.These limitations include market access, access to formal financial institutions, lack of business capital, or conditional matters that include their respective business trips, mainly due to low human resources.There are also other obstacles in the form of communication tools.Although the development of technology is now very rapid, apparently, there are still parties who experience limitations in owning these devices.Not to mention the lack of knowledge about social media so that it is not utilized optimally for business development.
Related to this, one of BWM's efforts is to provide training on the use of social media and marketplaces for product marketing.The rest of each customer is encouraged to continue to try to minimize the obstacles experienced.Then the permission not to attend the association becomes an obstacle for some customers, "There is no bad impact unless there is censorship" (RPS, interview, December 19, 2022) For licensing, BWM applies discipline and responsibility to all its customers, especially since the association that is held does not take much time and has become a consequence that must be borne as a customer member of BWM UNISA itself.The permit can still be accepted by BWM if the permit is carried out based on shar'i needs."... increase my capital to buy this, buy this is not a challenge" (JM, interview, December 19, 2022)."... capital financing especially that, other sciences such as mutual friendship, close brotherhood.. the sales are increasing" (US, interview, December 19, 2022).
Regarding the results of BWM services, customers convey, "... means that they look at my product, my packaging, I want to make the stamp to but not yet, not finished.But I also want to put up a banner" (RPS, interview, December 19, 2022).
Since its establishment, BWM has played a role in developing women's MSMEs in Gamping.BWM has provided various funding, training, and support to business actors.Based on interviews with several customers, the results of BWM UNISA's services include access to capital, business development, science, benefits from friendship, increased sales, marketing developments, and other things about motivation to continue to do creativity in running a business so that it continues to experience an increase in quantity and quality.
BWM UNISA has carried out its role in helping increase the income of MSMEs in Sleman Yogyakarta.UNISA's BWM customers are dominated by business actors who have joined for four years since its inception until now, and it has experienced an increase in income.
Financial Services Authority Regulation Number 62 / Pojk.05 / 2015 concerning Amendments to the Financial Services Authority Regulation Number 13 / POJK.05 / 2014 concerning the Implementation of Microfinance Institutions Business, 2015; Law of the Republic of Indonesia Number 1 of 2013 concerning Microfinance Institutions, 2013).

Figure 1 .
Figure 1.Operational Area of LKMS BWM UNISA Source: bwmunisa.id Table 1 presents the national data of BWM in Indonesia based on several indicators at the end of 2022.

Table 2 .
BWM UNISA Beneficiary this case, BWM also teaches about making a Business License Number (NIB) or business license, teaches about bookkeeping and halal labels, "For the permit, those of us who used to not think about making a permit, that's what it is called by being given to know that BWM is right, so you know" (ANW, interview, December 19, 2022)."Making business licenses.. BWM is taking care of it" (ANW, interview, December 19, 2022)