Digitalizing and integrating Islamic finance could help Southeast Sulawesi’s MSMEs move up

A fisherman on the coast of Kendari needs capital to repair his boat. A homemaker in Konawe wants to expand her home business. Both have markets and the determination to grow, yet both face the same obstacle: access to financing.

Bank Indonesia data show that Islamic banking accounts for only 9.88 percent of total banking assets in Southeast Sulawesi. The figure points to a sector with room to expand, especially among small businesses that remain outside formal financing channels.

MSME credit in the province reached 15.31 trillion rupiah in the first quarter of 2026, representing 33.39 percent of total bank credit. Islamic banking assets stood at 5.09 trillion rupiah, while its financing reached 4.37 trillion rupiah, or about one-tenth of total financing. The quality of that financing remains strong: the nonperforming-financing ratio was 1.27 percent, well below the 5 percent alert threshold.

The national picture shows a similar gap. The 2026 National Survey of Financial Literacy and Inclusion recorded Islamic-finance literacy at 43.07 percent and inclusion at 13.24 percent. In other words, 43 out of every 100 people understand Islamic finance, but only 13 hold an Islamic-finance account. Overall financial literacy reached 69.57 percent, while overall inclusion stood at 93.61 percent.

The authors identify two resources that have largely operated separately. Islamic social finance includes zakat, infaq, sadaqah and waqf. National zakat potential is estimated at 327 trillion rupiah a year, equal to 66.2 percent of the state budget’s social-protection spending. BAZNAS has shown that interest-free loans can help beneficiaries who cannot access banks. Commercial Islamic finance includes banking, insurance and pawnshops, while Islamic fintech can reach borrowers through profit-sharing peer-to-peer finance and digital wallets. The proposed bridge would move social funds beyond consumption assistance and help commercial providers serve people who lack financial histories.