Volume V: Economy, Politics, and Environmental Governance

Building Economic Resilience through Digital Waqf: The Utilization of Circular Economy-Based CWLS for MSMEs

  • Ihrom Jaelani College of Islamic Studies Putra Galuh Ciamis, Indonesia
  • Misbahul Khoer College of Islamic Studies Putra Galuh Ciamis, Indonesia
  • Acim College of Islamic Studies Putra Galuh Ciamis, Indonesia

Keywords

Micro, Small and Medium Enterprises (MSMEs); Cash Waqf Linked Sukuk (CWLS); Digital Waqf; Circular Economics; Eco-theology.

Abstract

Micro, Small, and Medium Enterprises (MSMEs) are the backbone of the economy as well as the pillar of cultural and social resilience in Indonesia. However, this sector faces a massive financing gap estimated at US$235 billion due to limited access to formal banking systems. As a solution, the Cash Waqf Linked Sukuk (CWLS) offers a substantial funding potential of up to IDR 180 trillion annually. Unfortunately, the current utilization of CWLS yields remains heavily concentrated on one-off physical infrastructure developments and has not yet addressed the fundamental needs of the productive business sector. This conceptual article aims to formulate a novel governance framework that integrates Islamic social and commercial finance to overcome this structural barrier. Utilizing a theory adaptation approach, this study proposes a utilization model based on "circular economics," wherein sukuk yields are transformed into an interest-free revolving fund for MSMEs. To ensure precise targeting, waqf management institutions (Nazhir) must collaborate with Shariah-compliant Financial Technology (FinTech) platforms. Employing an Artificial Intelligence-based Alternative Credit Scoring system, MSME creditworthiness is evaluated not only on financial capacity but also on the assurance that the business is halal and environmentally sustainable, strictly aligning with the principles of eco-theology. Furthermore, this management framework is supported by an independent Digital Waqf 4.0 infrastructure utilizing blockchain technology to guarantee absolute transparency. Validated through the systemic approach of Maqashid al-Shariah, the provision of this equitable and eco-friendly capital represents a concrete measure to protect society from predatory lending practices. In conclusion, the optimization of CWLS through this circular economic scheme not only financially empowers MSMEs but also serves as a pivotal instrument in building economic resilience and safeguarding the cultural dignity of the society in navigating the challenges of the multipolar era.

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