Awqaf-led Islamic Social Finance

Innovative Solutions to Modern Applications

Mohd Ma'Sum Billah, Mohd Ma'Sum Billah

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000176216
• Edition: 1
• Topic: Business
• Subtopic: Islamic Banking & Finance
• Index: Business

This book provides an authoritative and comprehensive overview of Waqf (endowment), addressing specific issues, models, solutions, structures and practices. As Islamic finance has gained in significance, so too has the institution of Waqf, working towards creating an enterprising and an entrepreneurial community across the globe, in order to meet the underlying objectives of the sustainable development goals (SDGs) by targeting the low-income group in particular.

The book analyses the historical context of Waqf as well as its revival in the digital era. It addresses the laws and policies affecting the management of Waqf, such as Maqasid al-Shari'ah, law and policies, law and fiscal reform, regulations applied within Muslim countries, judicial procedures and dispute resolutions and covers the core issues concerning the formalities of Waqf, its management and corporate governance questions. The book includes a series of specialised chapters focusing on the products and services of Waqf, covering product innovation, product development, and then assesses the risk factors in Waqf and Waqf Takaful. Finally, it focuses on the challenges of Waqf and offers recommendations for the way forward.

A timely and practical guide, comprising a literature review and future research directions, as well as a number of international case studies, this will be a key reference for academics, students, researchers, practitioners and policy makers.

Part I
Awqaf
Its world view

1 Emergence of Awqaf development centre
A mind-mapping idea¹

Mohd Ma’Sum Billah

Central idea

While the contemporary world is dominated by debt-based economy along with selfishness of the habitual capitalist culture in ignoring the basic eco-social rights of those destitute, poor and helpless ones, the Islamic economic renaissance tries to create some possible ways to care about those underprivileged ones based on the holistic principles of “just distribution” through the institutions of Zakat, Waqf, Hibah and others. Despite the earlier fact, the divine institutions of Zakat and Waqf are growing more under the umbrella of conceptual solutions far from the desired practical solutions in the socio-economic reality of today. It is undeniably understood that if the institutions of Zakat and Waqf are effectively organized, the socio-economic distress in the Third World particularly among those underprivileged ones may diminish for a better lives.

It is thus timely to initiate an effective strategic action plan to design the institution of Waqf with result-oriented products and services in order to create an enterprising and an entrepreneurship-based community across the world aimed at rescuing those underprivileged ones from socio-economic curse and sufferings.

Considering the global track-record of the rapid growth of Islamic financial or professional activities in developing and promoting the contemporary Islamic economics and finance with no exception of Awqaf thoughts and with utmost appreciation through research, teaching and sharing, it is thus the right time to establish “Waqf Development Centre”, also named as “International Awqaf Development Center (IADC)”, to develop the comprehensive research, solutions and practical models for global players, operators, policymakers, students and future researchers in order to make the Waqf institution as an effective vehicle to help those underprivileged ones to enjoy their basic socio-economic rights.

Rational outlook

Followings are the underlying objectives:

1. 1 To develop the institution of Waqf through professional research, teaching and sharing by considering the socio-economic demands today.
2. 2 To standardize the Waqf Model for the benefit of all.
3. 3 To create the institution of Waqf as a practical model to upgrade the socio-economic status of the underprivileged ones in particular.

Concerned issues and problems

The institution of Waqf (endowment) is not merely a religious entity, but is an important socio-economic chapter, which has influence on the individual, domestic, spiritual, economic, community, political, social and educational concern. Waqf covers a wide range of issues from socio-economic to the human capital; it can be attributed as one of the instrumental platforms to uplift one’s pride and dignity within the Divine supremacy. Hence, the issue of Waqf cannot be free to run itself on the whims without adhering to the standard policies (Shari’ah), rules and acceptable management systems within Maqasid al-Shari’ah (Shari’ah objectives). Application of the standard management systems and principles along with modern practical mechanisms and the institution of Waqf may provide the basis for excellence of operations to achieve the overall efficiency and result-oriented outcome.²

The appropriateness in the management of Waqf with its true Islamic spirit was hindered due to some historical reasons, which were mainly attributed to the Western influence on Muslim countries. Thus, it is timely to address the effectiveness of Waqf management systems in OIC including the factors influencing proposals for further improvement of the overall performance. Referring to the experience of practitioners and researchers in the field of Waqf in OIC nations, the management of the institution of Waqf in OIC nations faces numerous challenges. The main problem starts with the State Islamic Religious Council of OIC nations, which is the sole trustee of all Waqf in OIC countries.³ Once the Religious council is entrusted with Waqf property, it should be managed by qualified, knowledgeable and professional managers who are well acquainted with Islamic as well as country laws to manage the institution rightfully.

People involved in managing the Waqf properties are Mutawalli (waqf manager) who are in some situation found not to be qualified with required skills and professionalism. Even in some cases the Waqf lands are managed by non-Muslims who are not really competent to run the venture. It is curious on how an authority can trust one who does not have faith in Islam. Hence, Waqf property should be granted to the right Mutawalli by considering their sound footings in ability, willingness and beliefs to utilize the asset with trust and confident. Furthermore, in the management of Waqf asset the properties in issue are left idle due to some complexity in the management process. The notable factors that lead to the complexity consist of properties given out orally without any registration and documentation, and thus, one’s accounting practices are not in compliance with the Shari’ah standard. Moreover, the problem in the possession of Waqf properties puts restrictions on their sale and purchase, while in leasing and renting these properties are often devalued. There is instance where the land is leased to a man for $250 who afterwards rented it to another person for over $2,500.⁴ Such a difference between the leased value and the market value of the properties may open the door for the opportunists.

There is also complication faced in the spontaneous development process of the Waqf properties. For example, the Waqf properties are beyond the control of MAIN that gives rise to subsequent problems such as defaulting land tax and other kinds of tax related to charges against the Waqf properties. As a result, the Waqf land is seized by land office and duly sealed by local authorities like a caveat. Among other problems in the Waqf management are revenues generated in the Waqf management are insufficient to suffice the operational cost, Waqf properties have no self-generating income and are unproductive, delay in the earning of the compensation in the acquisition of Waqf properties and irregularity in receiving the benefit of the Waqf properties by the mauquf alaih (beneficiaries).⁵

There is inconsistency between the expectation and the existence of presence of all factors that make the Waqf systems ineffective. It is thus understood that due to the earlier mentioned diverse problems Waqf management systems are facing various challenges to make it dynamic, transparent, productive and innovative in the utilization of the Waqf properties that deserve attention to reorient the total systems.⁶ Thus, the following sections provide possible recommendations in improving the management and administrative systems of Waqf properties in OIC nations.

Flagships

There are five flagships that the total master plans to the establishment of an “Awqaf Development Center” may be achieved (Figures 1.1–1.5):

Figure 1.1 Flagship: research and publication.

Figure 1.2 Flagship: academic development.

Figure 1.3 Flagship: professional development.

Figure 1.4 Flagship: industrial solutions.

Figure 1.5 Flagship: industrial models/products.

Strategic plan

Two (02) strategic plans are suggested, namely, short-term plan, which can be treated as a pilot scheme for the academic year of 1438H, and long-term plan, which can be launched and duly achieved during 1439–1441H. Activities of both plans are outlined as follows (Figures 1.6 and 1.7).

Figure 1.6 Strategic plan: short term.

Figure 1.7 Strategic plan: long term.

Conclusion

It is thus understood that the institution of Waqf is undoubtedly a holistic vehicle in caring about the socio-economic well-being of the underprivileged society through a cooperative care and concern. Among the OIC countries, the government, corporate and the people generally are seriously concerned with the development, management and achievement of the true goal of Waqf through verities of its products, activities and services today, namely, land, properties and assets, cash Waqf, Sukuk Al-Waqf and corporate Waqf. Yet, there are some shortcomings encountered in the dynamic management of Waqf in Waqf property due to the influence of traditional mechanisms that are adapted particularly in the management of Waqf land besides being hampered by insufficient skills and professionalism within the management itself. Hence, it is timely for the authorities, operators and experts to work hand in hand towards reforming the Waqf management standard particularly on the Waqf properties so as to ensure the right benefits bestowed for the beneficiaries within the Maqasid al-Shari’ah.

Notes

1. 1 This chapter shall not be treated as a research paper, because it is a mere mind-mapping idea on the emergence of an International Awqaf Development Center in view of promoting the idea of Awqaf with a socio-economic impact, which may open up the door for future research. The original idea was shared by the author a couple of years ago during an academic meeting held at the Islamic Economics Institute, King Abdulaziz University, Saudi Arabia.
2. 2 Chowdhury, M.S.R. et al. (n.d.). “Problems of Waqf administration and proposals for improvement: a study in Malaysia” Journal of Internet Banking and Commerce (ISSN: 1204-5357), at p. 2.
3. 3 Ibid.
4. 4 Ibid.
5. 5 Abdullah, M.S. (2010). Malaysia needs transformation of Waqf management, Travelodge PhD Wakaf @ MohamadSallehAbdullah, blog entry, Malaysia needs transformation of Waqf management. Retrieved from: http://sallehabdullah.blogspot.com/2010/01/artikalmalaysia-perlukantransformasi.html (accessed 27 February 2011).
6. 6 Chowdhury, ibid.

References

1. Abdullah, M.S. (2010). Malaysia needs transformation of Waqf management, Travelodge PhD Wakaf @ Mohamad Salleh Abdullah, blog entry, Malaysia needs transformation of Waqf management. Retrieved from: http://sallehabdullah.blogspot.com/2010/01/artikalmalaysia-perlukantransformasi.html (accessed 27 February 2011).
2. Chowdhury, M.S.R. et al. (n.d.). “Problems of Waqf administration and proposals for improvement: A study in Malaysia” Journal of Internet Banking and Commerce (ISSN: 1204-5357), at p. 2.

2 Awqaf-led neo-endowment in supporting socio-economic development

Mohammed Fawzi Aminu Amadu and Mohd Ma’Sum Billah

Introduction

Islamic endowments (Awqaf) have played as a force for socio-economic developments for many centuries¹ and can still be made relevant in light of existing socio-economic challenges that governments and their economies face around the world. Given that there is vast information on Awqaf (plural for Waqf) and how they have been used for socio-economic intervention, it would be a wise decision that the concept of Waqf be revisited to understand how it was used and how it can be used given today’s dynamics. The recent publica...