The role of Islamic social finance during Covid-19 pandemic in Indonesia’s economic recovery

Abstract

Purpose This study aims to propose Islamic solutions to the Covid-19 health and economic crises, specifically using Islamic social finance (ISF) instruments, including zakat, infaq and waqf. Design/methodology/approach This study applies the qualitative content analysis method, guided by a model of composite approaches of poverty alleviation in Islam, integrated Islamic commercial and social finance (IICSF) and crisis management of Umar bin Khattab, to construct various programs and/or policy actions toward economic recovery in Indonesia. Findings The results show that ISF with its instruments, especially zakat, infaq and waqf could help the government and the economy to recover from the crisis. The proposed solutions include: save lives, including medical assistance using zakat-infaq and health-care waqf using waqf; save households, by creating a social safety net and graduation program using zakat-infaq; save businesses, especially micro-small enterprises (MSEs), through financial and business assistance (especially digital marketing) leveraging zakat-infaq-waqf and save financial institutions, especially micro-small financial institutions, by the development of cash waqf and the adoption of fintech and IICSF, especially in Islamic financial institutions targeting MSEs. Research limitations/implications This study is exploratory in nature, which needs further investigations using more sophisticated qualitative and/or quantitative methods. Practical implications If the above programs using ISF instruments are implemented, the economic surplus would be re-established and the acceleration of economic recovery can be realized. Social implications The successful adoption of ISF could at the same time reduce poverty, accelerate MSEs development and improve equitable well-being. Originality/value The Covid-19 pandemic has caused health, economic and social problems, which must be solved holistically, including ISF within IICSF.

Determination of Had Kifayah zakat among pre-graduate students at University Sains Islam Malaysia (USIM)

“…Movement are limited, yet there are some students still allowed to stay in the campus. The Kifayah Limit for these students (asnaf) has been determined by the authority (PWZ) according to the suitability as well as the current need based on the current cost of living (Ascarya, 2021). There are types of expenses that are more inclined to the will, but record a relatively high amount.…”

“…Zakat is very important in playing a role as financial mechanism with some key functions related to social security, social assistance, food subsidies, education, healthcare, housing, and public transport in a country (Ahmad & Haq, 2021;Mahmood et.al, 2021;Jasni Sulong, 2012;Hairunnizam Wahid, 2004, 2009. Had Al-Kifayah means the minimum adequacy line for an individual's basic needs and responsibilities based on the current cost of living (Ascarya, 2021). According to the Islamic point of view, it is the minimum rate for basic needs in one's life.…”

Developing an integrated model of Islamic social finance: toward an effective governance framework

“…The goals of Islamic social finance are reducing unemployment and poverty ( Abduh, 2019 ; Jouti, 2019 ; Hamed, 2020 ; Faturohman et al., 2021 ), helping to build the socio-economic condition of the poor groups, realizing social justice, distributing fair income and wealth, and growing the economy ( Ascarya, 2021 ; Kuanova et al., 2021 ), as well as filling the humanitarian funding gap through Islamic social finance instruments. Besides, Islamic social finance has also been used by several countries as an instrument in solving socio-economic problems, including Malaysia, Pakistan, Indonesia, the UK, and Saudi Arabia.…”

Integrating Green Sukuk and Cash Waqf Linked Sukuk, the Blended Islamic Finance of Fiscal Instrument in Indonesia: A Proposed Model for Fighting Climate Change

“…In dealing with the economic impact of the Covid-19 pandemic, Pridityo (2020), Ascarya (2020Ascarya ( , 2021, Bashori (2020), Juwaini (2020) and Hassan, Muneeza, & Sarea (2021) highlighted that the Islamic social finance sector, which includes zakat, infaq, sadaqa, and waqf, is one of the cornerstones in supporting the provision of social safety nets for affected communities, provide a helping hand to those in need without incurring debt, play an active role in economic recovery --especially for micro-small enterprises (MSEs)--and can help the government to recover from the crisis.…”