Opportunities and Challenges of Sharia Microfinance Institutions in the Pandemic and Recovery Period

Abstract

This paper discusses the opportunities and challenges of Islamic microfinance institutions during the pandemic and recovery. The focus of the discussion was: the state of MFIs during the Covid 19 pandemic, as well as the opportunities and challenges of MFIs during the pandemic and recovery. The research was conducted with a qualitative approach and a descriptive method. The sources of data collected are primary and secondary, with data collection techniques through observation, interviews, exploration with documentation studies, and related literature studies. The result of his research is the state of MFIs during the Covid-19 pandemic from their financial performance; although some aspects have decreased, they have generally increased. From the service aspect, MFIs improve access and digital-based services. The opportunities during the pandemic and recovery are as follows: the financial performance of MFIs is quite good; support for the entire Islamic financial ecosystem and the government; the potential of a Muslim-majority population; the role of MFIs in MSMEs and the informal sector;  and easily accessible physically and financially. Challenges include economic growth under pressure; public savings and financing have declined;  declining business activities in the real sector, including MSMEs and the informal sector; assistance to debtors in the fields of sharia business and financial science and practice, sharia marketing, and online technology; primary on-the-counter and digital services, including human resources competence and technological readiness; building communication through inclusion and literacy; cooperation with other LKS; and product and service innovation. This research has implications for management to formulate business policies, such as determining the business development of MFIs, determining their profits and financing assistance to MSMEs.