Myriad challenges still hamper MSME financing: ministry

Jakarta (ANTARA) – Financing is an important aspect in maintaining the stability and growth of micro, small and medium-sized enterprises (MSMEs) despite various challenges in financing MSMEs, said Suminto, expert staff from the Ministry of Finance for macroeconomics and international finance.

“Financing challenges vary, ranging from limited access to finance, high transaction costs, collateral issues, imbalanced information, limited access to markets and trade networks,” Suminto said during the Annual Islamic Finance Conference (AIFC), quoted in an official statement. here Friday.

Suminto underscored the need for the government to effectively integrate the finance framework into MSME development.

He called for considering four keys to empowering MSMEs through Islamic finance, including the need for a comprehensive and robust empowerment framework, regulatory support, incentives and the position of Islamic finance. in the MSME ecosystem, involving youth and women in efforts to empower MSMEs and lead MSME development in a formal and clear way.

On the same occasion, DinarStandard Director Sayd Farook said that financial companies based on Islamic technology are growing quite rapidly, especially for financing MSMEs.

The amount of fintech funding for MSMEs is expected to increase from US$79 billion in 2021 to US$179 billion in 2026.

“Currently, the countries with the biggest developments in technology-based Islamic finance are Saudi Arabia, Iran, Malaysia, United Arab Emirates and Indonesia,” he noted.

Meanwhile, Ethis Group Co-Founder and Managing Director Umar Munshi also highlighted the importance of digitalization in waqf crowdfunding, zakat, alms and working capital distribution with the qard hassan scheme, or without interest or additional charges.

Related news: Access to finance for MSMEs must be continuously improved: minister

Related News: Some 17.2 million MSMEs have entered the digital market by January 2022

Michael J. Birnbaum