A Blockchain-Based Cash Waqf Model for Financing Ultra-Micro Enterprises in Indonesia
Abstract
Background: Ultra-micro enterprises in Indonesia continue to face limited access to formal financing because of inadequate collateral, weak financial records, irregular cash flows, and high administrative costs. Cash waqf has the potential to provide sustainable financing, but its implementation is constrained by fragmented institutional records, limited transparency, weak accountability, and low public trust.
Research Gap: The existing literature remains largely disconnected between Islamic microfinance, cash waqf governance, and blockchain applications. Limited discussion exists of a model designed specifically for Indonesia that brings together the protection of the waqf principal, institutional responsibilities, and permissioned blockchain governance for ultra-micro enterprise financing.
Novelty: This study develops a blockchain-based cash-waqf model that integrates institutional actors (waqif, LKS-PWU, registered nazhir, Indonesian Waqf Board, Micro Waqf Banks, Sharia supervisory boards, auditors, mentors, and ultra-micro enterprises) through a permissioned consortium blockchain. It distinguishes blockchain as governance infrastructure from cryptocurrency, separates financial settlement from recordkeeping, and incorporates privacy-by-design through off-chain data protection.
Method: A qualitative descriptive-analytical approach based on library research and document analysis was employed. Data were obtained from peer-reviewed publications, scholarly books, regulations, government documents, and institutional reports concerning cash waqf, Micro Waqf Banks, Islamic microfinance, blockchain, smart contracts, and financial inclusion. Data were analysed through descriptive, qualitative content, and thematic analyses.
Results: The proposed model uses a permissioned consortium blockchain where all financial transactions remain in Indonesian rupiah while blockchain records approvals, fund allocations, disbursements, repayments, mentoring, audits, and impact reports. Smart contracts support operational stages including programme approval, beneficiary screening, gradual disbursement, repayment tracking, and auditing. Sensitive personal information is stored separately in secure off-chain databases. The integration of these mechanisms enhances transparency, institutional coordination, accountability, and efficient fund distribution while preserving the principal value of cash waqf.
Conclusion: Blockchain can strengthen the governance of cash-waqf financing when supported by clear institutional responsibilities, Sharia supervision, data protection, cybersecurity, and regulatory compliance. The proposed model remains conceptual and requires expert validation, prototype development, and pilot implementation.
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