Human Resources and Islamic Microfinance Sustainability: An Empirical Study of Baitul Maal wat Tamwil in Indonesia

Abstract

BMT plays an important organization established since the establishment in 1990s to assist microentrepreneurs in business by providing financing and support. It is categorized under Indonesia’s Micro, Small and Medium enterprises (MSMEs) which contributed to 98.9% of the country’s total enterprises. The BMTs have proved to be more viable and resilient in providing affordable financial assistance to Indonesia’s MSMEs even the country was hit by the economic crisis, especially in Indonesian multi-dimensional crisis in 1998. The purpose of this study is to investigate the adequacy of the human resource on the sustainability of Baitul Maal wat Tamwil (BMT) as a leading Islamic microfinance institution in Indonesia. There are about 5000 BMTs in the whole of Indonesia. However, some of them failed and become bankrupt due to their inability to resolve the issues that they currently faced in the operation. Some of the issues faced by them are lack of capital structure of funding, poor governance, lack of human resources, no product innovation and poor financing repayment. This study adopted a mixed method research design by triangulating quantitative and qualitative data collection and analysis. The quantitative data were collected via distributing questionnaire to 285 staffs. The findings of this study indicated that human resource adequacy has positive and significant impact on the sustainability of the BMTs. Hence, a good planning of training, seminar and other educational programmes are essential elements for the BMTs in order to enhance and upgrade the quality of human resources.