The Intersection of Islamic Microfinance and Women’s Empowerment: A Case Study of Baitul Maal Wat Tamwil in Indonesia

Ninik Sri Rahayu

doi:10.3390/ijfs8020037

Abstract

It is largely assumed that Islamic microfinance institutions (IMFIs) deal with family empowerment instead of women’s empowerment. However, women are the main beneficiaries of Baitul Maal Wat Tamwil (BMT), Indonesia’s first IMFIs. This paper aims to explore the origins, the initiators, and the visions of BMTs and the extent to which they intersect with women’s empowerment. Employing a qualitative approach, this study selected four BMTs in Yogyakarta as a case study. It found that four critical groups that have a significant role in the development of Indonesian BMTs: ICMI (Association of Indonesian Muslim Intellectual), Islamic mass organizations, NGOs, and local governments. The issues of loan sharks and poverty alleviation were the primary factors driving the inception of BMTs. Despite women being crucial clients, none of the studied BMTs explicitly invoked women’s empowerment in their organizational vision. To conclude, the BMTs’ preference for women is not based on an understanding of gender inequality, but rather motivated by pragmatic business considerations, particularly the self-sustainability paradigm that underpins their practices.

Highlights

Microfinance has been acknowledged as a powerful instrument for women’s empowerment and poverty alleviation in the developing world
This study argues that there is a gap between the theoretical concept of Islamic microfinance and the empirical situation of Baitul Maal Wat Tamwil (BMT) in Indonesia
Four BMTs were chosen for this study, namely BMT Bina Insanul Fikri (BIF), BMT Al-Ikhwan, BMT KUBE Sejahtera (BKS) 19, and Koperasi Syariah GEMI (GEMI Islamic Cooperative)

Summary

Introduction

Microfinance has been acknowledged as a powerful instrument for women’s empowerment and poverty alleviation in the developing world. Women are more likely to spend their income on their families’ welfare, and to act as central actors in the family structure (Woller et al 1999; Mayoux 2006). For those reasons, microfinance has become a key strategy for simultaneously promoting poverty alleviation and women’s empowerment since the 1990s (Tanima 2015). Economic independence grants women higher bargaining power in their households and their communities, and subsequently imbues them with the prestige, self-esteem, mobility, networks, self-confidence, and knowledge they need to escape the poverty cycle (Cheston and Kuhn 2002; Ahmed et al 2011; Roxin et al 2011; Sarumathi and Mohan 2011; Kato and Kratzer 2013). Promoting women’s empowerment through microfinance is crucial for both poverty alleviation and gender equality

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Results