Integrating Waqf, Islamic Microfinance and Entrepreneurship: A Hybrid Financing Framework for Financially Excluded MSMEs

Abstract

Aim: This study aims to develop a hybrid financing framework that integrates Waqf, Islamic microfinance and entrepreneurship to support financial inclusion, enterprise development and sustainability among financially excluded MSMEs. Methodology: The study adopts a qualitative, conceptual and analytical research design based on a critical review and thematic synthesis of classical and contemporary literature on Waqf, Islamic social finance, Islamic microfinance, entrepreneurship, financial inclusion and MSME development. Relevant literature was analysed to identify financing constraints, institutional complementarities and entrepreneurial support mechanisms. The resulting relationships were synthesised into an integrated hybrid financing framework. Findings: The analysis indicates that Waqf can potentially function as a foundational social-finance layer within a hybrid financing ecosystem, while Islamic microfinance can provide complementary working and growth capital. Entrepreneurship development—including training, mentoring, financial literacy, digital capability, business incubation and market linkage—can connect financing provision with productive enterprise development. The proposed framework consists of five interrelated dimensions: Waqf capital mobilisation, Islamic microfinance provision, entrepreneurial capability development, institutional and market integration, and enterprise sustainability and social impact. The framework further suggests that partnerships among Waqf institutions, Islamic financial institutions, universities, government agencies, private-sector actors and community organisations can strengthen institutional coordination and expand access to productive finance. Conclusion: Integrating Waqf, Islamic microfinance and entrepreneurship provides a potentially coherent pathway for addressing multiple dimensions of MSME financial exclusion. Rather than treating financing as an isolated intervention, the proposed framework combines sustainable social capital, Shariah-compliant finance and entrepreneurial capability development within a single institutional architecture. However, the framework remains conceptual and has not been empirically validated. Future studies should test its applicability, effectiveness and scalability across different MSME and socioeconomic contexts.