Background

Human civilization has entered the era of industry 4.0, but society still has negative perceptions towards women. For example, in Javanese, women are only considered konco wingking (life partners at home) as an effect of the patrilineal customs. Women will find it challenging to develop and have a career if they are stuck in strict patrilineal customs [1]. It also applies to women who have the intention to become an enterprise to get more income. Besides, in developing countries, including Indonesia, socio-culture also hinders women in developing their careers. Further, society's misconception of the religious concept of the "role" of women in life also affects it. Indeed, Islam honors women in various positions, both within and outside the family. Islam encourages women to do enterprise which is halal and does not violate Islamic sharia. Women's entrepreneurial skills can be following commonly practiced skills such as culinary, clothing, or handicraft sectors [2].

As the largest Muslim country in the world, Indonesia is an exciting setting to research the role of women. The projected total population of women in 2020 is 154.27 million out of a total population of 272.6 million [3]. Unfortunately, no official data from the government or professional institutions on the number of female Muslims in Indonesia. For example, 87% of the 134.27 million people are female Muslims and then there are 116 million female Muslims. However, if the misconception of patrilineal culture still exists in the community, it will create a gap between men's and women's roles. Inequality will continue to occur due to the assumption that the position of women is consistently below that of men for specific roles. Although currently, the role of women has changed, some groups of women choose to have careers as they are not satisfied with the household chores [4].

In Indonesia, the high potential for the quantity and quality of women has become a supporting factor for the development of the role of women in economic activities, especially in the globalization and technology era. This result is an opportunity for women to reach the peak of professional careers and increase access to self-actualization in society. Women are a potential national asset as a significant contributor to national development, both as agents of change and as development subjects. Initially, women's economic activities were only a side job to help the husbands to increase household income, but now they can be the main source of income [5].

It focuses on women's problems due to:

• The assumption that women are one of the human resources in development

• A large number of women, more than half of the population

• In terms of quality, women as successors of values and norms for future generations

Women's empowerment in micro small enterprises in Indonesia, including Semarang City, is still highly needed. It is because of complex problems both internal and external, faced by micro small enterprises. Moreover, the globalization era requires micro small enterprises to continue innovating their products and services, developing human resources, renew the technology, expanding marketing areas and strengthening capital [6].

Based on data obtained from the Ministry of Cooperatives and Small and Medium Enterprises of the Republic of Indonesia (2019), the number of women's micro small enterprises in Indonesia was 59,262,772 units (2015) increased to 6,761,208 units or an increase of 11.41 percent to 66,023, 980 units (2019). This increase significantly contributes to job opportunities in Indonesia to 113,579,550 or 97.30 percent (2019). In the Central Java Province or Semarang City, the number of micro small enterprises during that period had a positive trend or increase each year. This increase highly contributed to increasing job opportunities in Central Java Province and Semarang City. In practice, women's micro small enterprises experience some difficulties in running the businesses, with the central issue of capital because most of the capital comes from internal capabilities and the informal sector (mediators or acquaintances). Thus, it is important to support women's participation in the economic sector through the home industry policy. Two factors are causing difficulties for women to raise their businesses. First, access to knowledge for women is not as easy as for men. Women often experience a double burden in the household, making it challenging to access new skills and knowledge. Second, it is more difficult for women's enterprises to access capital due to a lack of collateral [7].

The limited capital of women's micro small enterprises is due to the difficulty accessing capital from the formal sector due to not understanding the procedure to obtain it. On the other hand, financial institutions with liquidity and can provide funds to micro small enterprises have difficulties achieving the targets [8]. In this case, there is a gap between the needs of micro small enterprise and formal financial institutions (Figure 1).

Women's micro small enterprises only get capital from the internal sector or the informal sector. Indeed, the opportunity for financing provided to women enterprises that need financial assistance is relatively potential due to the significant number of women enterprises in micro small enterprises in Semarang City and its high contribution to job creation and GDP and GRDP (Regional Development Planning Agency of Semarang City, 2015). In terms of access to finance, women also often find it challenging to get loans due to no collateral. Thus, a financing program based on the Murabahah contract for women's enterprise in Semarang City was established. The establishment collaborates with financial technology institutions to strengthen the screening process for potential beneficiaries and telecommunications companies that launch payment activities through mobile banking. 

Moreover, this program collaborates with BAZNAS regarding responsibility for the charged fees and loan administration fees through infaq funds. This program provides financial assistance and empowerment for micro small enterprises in Semarang City to make them economically independent and provide a multiplier effect for the surrounding environment. It is expected to reach more beneficiaries target in the future. It is in line with the Long-Term Development Plan of Semarang City for 2005-2025 and women enterprises are required to develop a household-based economy to be more competitive with large capital owners.

Figure 1: The Flow of Women’s Micro Small Enterprises Financing

Sumber: [19]

Table 1: Principle of Empowerment

Source: [9]

Table 2: Definition and Criteria for Micro, Small and Medium Enterprises

Source: Law No. 20 of 2008 concerning Micro, Small and Medium Enterprises

Figure 2: The Gap of Women’s Micro small Enterprises Against Financial Institutions Financial Inclusion

Objective

The growth of integrated financial inclusion as a basis for strengthening the creative economy sector, women empowerment and regional excellence of Semarang city as a foundation for sustainable economic growth, increasing welfare and equal income distribution based on gender, this research aims to develop a model and formulate integrated financial inclusion strategies in financing sharia-based micro small enterprises run by women in Semarang City to be more productive. The strategies are expected to be realized by the Semarang city government through the Research and Economic Development Division of the Regional Development Planning Agency.

Literature Review

The concept of empowerment based on etymology derived from the word “power” means strength and ability. In this case, it means trying to facilitate the socio-economically vulnerable community groups in various ways, such as providing education related to developing their potential and training programs to be free from previous conditions of powerlessness [10]. The successful empowerment program can be reviewed from the fulfillment of the principles that must be met, (Table 1).

The context of empowerment for micro small enterprises has to be appropriate both technically and institutionally to contribute to the economy optimally. The word ‘empowerment’ comes from the English language. Empowerment literally can be interpreted as giving and increasing the power of weak or disadvantaged people. In addition, empowerment is a strategic tool for updating and improving performance, raising awareness, encouraging, motivating the potential of organizational, government and business actors including micro small enterprises [11]. Before determining the ideal concept of empowerment for women’s micro small enterprises, it is necessary to know the applicable definitions and criteria of micro, small and medium enterprises. 

However, there is no standard and universally applicable definition of micro small enterprises. The concept of micro small enterprises in Indonesia is based on Law No. 20 of 2008, concerning Micro, Small and Medium Enterprises based on net assets and sales (Table 2).

Financial inclusions are the focus of the two strategies: sustainable income growth and opportunities open to all parties to access formal financial institutions. This result was confirmed by Yohan et al. [1], for encouraging inclusive growth and it is necessary to encourage three comprehensive policy pillars, which are: 

• Good governance

• Strong institutions

• Protection for the community

From history, financial inclusion has been widely practiced and has been the focus of various governments and central banks in various countries, including Indonesia since 2000. According to Rozalinda [12], financial inclusion in India contributes significantly to the poor through easy access to the system low-cost financial and credit services that will increase its potential. India's financial literacy rate has increased over a decade from 35.5 percent (2011) to 58.7 percent (2020).

In Peru, financial access was expanded for the community, especially in the portfolio of products from financial services (loans, deposits, insurance, pensions, payment systems, financial education and consumer protection [13]. In Indonesia, financial inclusion is also at the forefront as a national strategy to encourage economic growth by distributing equitable income distribution, poverty reduction and financial system stability [14]. Bank Indonesia expressed the same thing (2014), the target of financial inclusion policies in Indonesia is to pay attention to the poor who have low incomes, the poor but productive and people who live far from access to financial institutions.

Social media has become a vital part of digital media. There are many definitions of this term. Social media are “a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0 and allow the creation and exchange of user-generated content”. Digital media is a platform that enables and facilitates information sharing and participation from media users to create and distribute content. Social media is activities and behaviors among communities of people who gather online to share information and knowledge using conversational media, making it possible to create and easily transmit content in words, pictures, videos and audio. Social media contains user-generated content that is created through interactions between users. Social media enables the easy creation and sharing of information and entertainment [15].

Social media can take on many forms, including social network sites, media sharing platforms and microblogs. Social network sites (e.g., Facebook, Linked In, or Google) are based on social structures made up of a set of individuals and organizations, creating relationships through interaction. Media sharing platforms (e.g., YouTube) enable users to host, upload, manage and share di_erent multimedia materials (e.g., audio, video, images). Microblogging (the most popular site is Twitter) is a broadcast medium that enables the exchange of micro-posts (a small element of content) in the form of short sentences, images, or video links. Social media sites, as web-based platforms, stimulate communication and sharing of information or content between individuals in virtual communities; however, there are privacy concerns. Social media platforms also give a wide range of benefits in many areas [16].

Previous Studies

Digital media has many benefits to women when such media can support them working around patriarchal social norms to start or expand their micro-enterprises. The seven key potential advantages of women's usage, learning and gaining of digital media: increased self-confidence, social status, independence and alternative representation and channels for self-expression, new opportunities in the public sphere and new channels of engagement. The digital media training can provide rural Indonesian women with better social status, bargaining position and influence in village policies. However, several structural factors can limit whether or not women use ICT or digital media and how they use them, such as social (no literacy skills), material (no money to buy or use ICT devices) and psychological (unable to learn digital ICT skills) barriers [11].

Social technologies have provided new opportunities for business support and changed the way employees and business owners communicate, provide customer service, gain exposure and create awareness about products or companies, gain new customers, market or brand products and businesses, network and build relationships and recruit employees. These platforms have made a difference to the bottom line for businesses savvy enough to implement social technologies into their strategic plans [2]. Digital technologies can support female empowerment and these studies provide evidence that social media platforms such as Facebook and Twitter are used broadly by women to create awareness, marketing, or building relationships. Women also experience benefits from using these digital technologies at almost the same level as men; however, education was deemed to be a key factor for success in this area [6].

The type of data used was a combination of primary data from results and secondary data that supports studies in formulating financing and empowerment modeling in the sharia-based leading women’s micro small enterprises sector through this sharia-based financing program. Data sources in this case study research were obtained through observation (field research), interviews and other literature studies:

Figure 3: Conceptual Framework of the Sharia-Based Financing Program

Figure 4: Financing Scheme of Sharia-Based Financing Program

• Direct observation technique, the researcher directly observed the state of the object which was the practice of women’s micro small enterprises in Semarang

• Interview technique, which was done with depth interview both from the manager of the sharia-based financing program as well as women’s micro small enterprises as a target when researcher conducted direct observations

• Observation and literature techniques, which were obtained from several reports issued by agencies involved in the implementation of the sharia-based financing program and some literature

The study used Business Model Canvas for analysis as it is appropriate to design a business model, including formulating a sharia-based financing model initiated by the Semarang City Government for potential women’s micro small enterprises [17]. The Business Model Canvas illustrates the rationale for how organizations create, deliver and capture values. Business Model Generation explains how companies respond quickly to customer desires by providing the best values ​​in the company. Business Canvas explains how companies make money through 9 building blocks arranged into one unit [18,19]. This model divides the business model into nine main components, on the right side (showing creativity) and the left side (showing logic), including (see Figure 3 and Table 3):

• Customer segment

• Value proposition

• Customer channel

• Customer relationship

• Revenue structure

• Key resource

• Key activities

• Key partners

• Cost structure

General Overview of Sharia-Based Financing Program

Semarang City Government through its Research and Economic Development Division of Regional Development Planning Agency initiated a financing assistance program for women enterprise in sharia-based micro small enterprises (Murabahah contract) by collaborating with some other agencies such as the Sharia Financing Bank in Semarang, BAZNAS, Semarang Sharia Economic Community (MES), Cooperatives and Micro Enterprises Office of Semarang City, telecommunications companies, branchless banking agents and financial technology institutions. The general description of the Sharia-Based Capital solution can be seen in Figure 4.

Notes

• Women’s micro small enterprises apply for financing to the BPRS by completing the required document (see Table 5), mobile phone numbers and opening a BPRS account for micro small enterprise who do not have an account that can be accessed directly using handphones.

• 2A. The Financial Technology (Fintech) Institution conducts a screening process of prospective customer data and then they become the government's recommendation source in distributing Sharia-Based Financing Program. This validation process is to determine the eligible micro small enterprises to get assistance from Sharia-Based Financing Program.

• 2B. The government through the Cooperatives and Micro Enterprises Office of Semarang City provides recommendations for eligible micro small enterprises for financing and then submitted to branchless banking agents. Besides, it is necessary to evaluate the performance of branchless banking agents by micro small enterprises via short messages. If a branchless banking agent gets a good score, the agent will get a commission, while those with a bad score will receive a warning or even getting their operational license revoked.

• BPRS provides financing assistance for Sharia-Based Financing Program through branchless banking agents to micro small enterprises that have been given feasibility recommendations that can be accessed using handphone.

• During the financing process, MES provides assistance, guidance and education on financial technology to micro small enterprises to increase the competitiveness and usefulness of Sharia-Based Financing Program

• 5A. Women’s micro small enterprises are subject to pay the loan principal of the financing from BPRS. This payment can be made via mobile banking without coming to the BPRS. Besides, before the deadline, micro small enterprises are given a warning to pay it (if the balance is sufficient) or top up the balance (if the balance is insufficient). Thus, BPRS cooperates with telecommunications companies that can assist in the payment process.

• 5B. BAZNAS of Semarang City is responsible for the charged fee and administration fee using infaq funds.

• BPRS and sharia banks work together to manage Sharia-Based Financing Program funds

Table 4: The criterias and Requirements for the Administration of Women’s Micro small Enterprise to Join the Sharia-Based Financing Program

Source: Department of Cooperative and Micro Enterprises (2019), modified

Table 5: Business Canvas Model in Sharia-Based Financing Program

The women’s micro small enterprise who can join this financing program must complete a number of required administrative requirements, including (Table 4).

The advantage of Sharia-Based Financing Program is that the Semarang City Government does not charge any additional fees to the beneficiaries, namely micro small enterprises. The BAZNAS fully covers the administrative and collateral fees from infaq and alms funds. For returning the capital, women’s micro small enterprise can pay it a maximum of 10 times. In the first stage, micro small enterprises enterprise can apply for capital financing of Rp. 1,000,000 to Rp. 10,000,000 regardless of the type of business. If they can pay off their capital financing, they can reapply for the second stage with an increase of Rp. 1,000,000 to Rp. 5,000,000 for each stage. The legal basis for this program is the memorandum of understanding between the stakeholders involved (Table 5).

The Sharia-Based Capital solution is arranged and developed to optimally provide financing to micro small enterprises in Semarang City, both quality and quantity. The beneficiaries or micro small enterprises are expected to maximize the funds for business development from micro to small, medium and even large-scale enabling them to realize the multiplier effect. The road map of the Sharia-Based Capital solution comes from integrating stakeholders involved such as the government, formal financial institutions and academics. They discussed the technical implementation, regulation as a legal umbrella and other supports. Then, the involved stakeholders performed their roles and responsibilities following the memorandum of understanding. The first step in implementing this program was mapping the problems and empowering micro small enterprises in Semarang City. 

The women’s micro small enterprises that have applied to BPRS to get financing assistance were selected by financial technology institutions and then submitted to the Cooperatives and Micro Enterprises Office to issue a letter of recommendation to realize their business plans and development. The Sharia-Based Capital solution provides not only financing assistance for initial capital and business expansion but also technical and managerial assistance enabling micro small enterprises to develop their economic condition.

The Semarang City Government initiated the Sharia-Based Capital solution, especially the Semarang City Regional Development Planning Agency, Research and Economic Development Division, which collaborated through a memorandum of understanding (MoU) with several other stakeholders, including the Semarang City Baznas, the Sharia Financing Bank in Semarang, the Sharia Economic Community in Semarang, the Department of Cooperatives and SMEs in Semarang, telecommunications companies, financial technology companies, Islamic banking and branchless banking agents. This program is a concrete form of support in empowering women's micro small enterprises through financial assistance with sharia principles and technical and managerial assistance. It is expected that micro small entrepreneurs who receive these benefits can develop to become more prosperous, independent and cultured based on religious values.

The seriousness of each stakeholder determines the success of Sharia-Based Capital solution in carrying out their roles and responsibilities as well as possible. Sharia Financing Bank plays a role in providing funds to micro small enterprises in Semarang. Semarang City BAZNAS plays a role in bearing other costs arising from the Sharia-Based Capital solution so that women's micro small enterprise does not bear these costs. The Department of Cooperatives and SMEs in Semarang issues a letter of recommendation for financing feasibility to potential women's micro small enterprises. In comparison, the Semarang City Sharia Economic Community plays a role in keeping the Sharia-Based Capital solution in the Sharia corridor and provides assistance, guidance and training to women's micro small enterprise. Then the financial technology company provides a feasibility assessment of the distribution of funding to women's micro small enterprises through machine learning, big data and advanced analytics.

For future research, it is hoped that more parties will be able to contribute to encouraging the role of capital financing institutions in the women's micro small enterprise sector. Besides, the women's micro small enterprise sectors require efforts to improve facilities or infrastructure, either physical or non-physical infrastructure, to produce and show a compelling performance. It is hoped that the improvement of the women's micro small enterprise sector will reduce inherent high-risk perception. Meanwhile, in financing institutions, sides necessary to reform the capital solution and it can make for women's micro small enterprise to obtain capital easier, so they do not have to come to moneylenders.

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