Syariah Microfinance In UMKM Development From The Perspective Of Syariah Economic Law

Abstract

Micro, Small, and Medium Enterprises (MSMEs) hold a strategic role in Indonesia’s economic development, particularly in job creation and promoting equitable economic distribution. Despite their importance, MSMEs frequently face barriers to accessing financial services, especially from formal financial institutions that often require collateral and complex procedures. In response to this challenge, Sharia Microfinance Institutions (LKMS) have emerged as inclusive financial entities that uphold Islamic principles such as justice, mutual assistance, and blessing-oriented transactions. This study aims to examine the role and financing schemes of sharia-based microfinance in supporting MSME development from the perspective of Islamic Economic Law. Using a qualitative library research approach, the study analyzes primary sources such as the Qur’an, hadiths, and fatwas from the National Sharia Council of the Indonesian Ulema Council (DSN-MUI), along with secondary literature including academic books, journals, and legal regulations. The findings highlight the dual role of LKMS—not only as financial intermediaries through contracts like mudharabah, musyarakah, and murabahah but also as agents of social empowerment via zakat, infaq, and sadaqah funds. Moreover, the study underscores the legal foundation of LKMS operations, such as Law No. 1 of 2013 on Microfinance Institutions and Law No. 25 of 1992 on Cooperatives. This research contributes conceptually to the development of applicable Islamic economic law by integrating economic functions and normative legal frameworks, thereby strengthening sharia microfinance as a strategic instrument for empowering the ummah and achieving economic justice.