DOWNSTREAM DEVELOPMENT OF RURAL-OWNED ENTERPRISES (BUMDes) THROUGH DIGITAL FINANCIAL TECHNOLOGY TO ENHANCE RURAL ECONOMIC PERFORMANCE

Abstract

This research aims to analyze the downstream development of Rural-Owned Enterprises (BUMDes) through the utilization of digital financial technology to improve rural economic performance in Pangkep Regency. BUMDes are rural economic institutions that play a strategic role in managing local potential, strengthening rural economic self-reliance, and improving community welfare. However, the management of BUMDes still faces various challenges, such as limited managerial capacity, low transparency in financial management, and limited access to modern financial systems. Therefore, the application of digital financial technology is viewed as a strategic innovation to improve business management efficiency, expand market access, and strengthen the governance of rural economic institutions. This research uses a mixed methods approach with a sequential explanatory design, which combines quantitative and qualitative methods in sequence. The first phase involved a survey of BUMDes managers, rural officials, and local business operators in Pangkajene and Kepulauan Regency, South Sulawesi, Indonesia, using a structured questionnaire to measure variables related to the adoption of digital financial technology, business management capacity, business innovation, and rural economic performance. Quantitative data were analyzed using descriptive statistics and regression analysis to determine the relationships among variables. The second stage involved in-depth interviews and focus group discussions (FGDs) with BUMDes managers and rural stakeholders to deepen understanding of the enabling factors and constraints in the implementation of digital financial technology. The research findings indicate that the adoption of digital financial technology and the downstream development of BUMDes businesses have a significant and positive impact on rural economic performance, particularly in enhancing financial transparency, operational efficiency, and expanding the marketing network for rural products managed by BUMDes. Qualitative findings also reveal that the success of BUMDes digitalization is heavily influenced by human resource capacity, support from rural government policies, and the availability of digital infrastructure. Thus, the development of BUMDes downstreaming based on digital financial technology can serve as an innovative strategy to strengthen rural economic performance and promote sustainable rural economic development.