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

Ascarya, A.

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.