A BRIEF ABOUT THE DEVELOPMENT OF ISLAMIC MICROFINANCE IN INDONESIA

Abstract

Microfinance sectors in Indonesia had continuously developed and rapidly increased from 1945 to 2020. Particularly, after the declaration of the Indonesian year of microfinance in 2006 by President Susilo Bambang Yudoyono (SBY), the number of institutions, funds approved and funds’ size had also increased, including the Islamic microfinance sectors, such as Bayt al-Mal wa al-Tamwil (BMT) institutions. In 2020, the Ministry of Cooperatives and SMEs in collaboration with Pusat Inkubasi Bisnis Usaha Kecil (PINBUK) or Center for Micro Enterprises Incubation, registered 175,102 microfinance institutions all over Indonesia which brought total assets of 77,514,341.36 million Rupiahs. This reflected the strong demand of Indonesian people to uphold the economic and financial system as one of the important structures of the country’s development. Thus, this study will focus the development of microfinance in Indonesia and how the Islamic microfinance such BMT as an Islamic microfinance institution, established by Muslim society in Indonesia takes initiatives to help micro entrepreneurs as a strategy for eradicating rural poverty especially in villages or traditional markets in Indonesia.