Waqf is an endowment made by muslims to a religious, educational, social or charitable cause. It is a permanent and institutionalized act of donation. Once a waqf is created the property cannot be donated, bequeathed, inherited or sold. While waqf traditionally covers real estate, cash waqf is a financing method to develop waqf property or to support and build institutions like schools, health centres and orphanages.
In the past 4 years, the proposal to bring together to waqf and crowdfunding in financing small medium enterprise could prove to be a power house. Taking the initiative, the waqf world will be focused on crowdfunding for health, education, microfinance, enterprise, humanitarian relief and religious projects.
They would act as global trustee of the Waqf (mutawalli) and authorize charitable bodies to gain access to funding.
They managed to raise funds for four projects in 2016, the modernization of motorboats for fisherman in Malaysia, the training of female Indonesian migrant workers, the third was the financing of broom craftsmen; and the last project was for livestock farming in Indonesia. The World Bank estimates the crowdfunding sector at $90 billion by 2020.
In the next phase of waqf development, more Muslim countries are encouraging trading in waqf and even today corporate waqf is used to generate income for the benefit of society in the form of cash, shares, sukuk (Islamic bond), ibdal (sale) and istibdal (exchange). Many waqf assets like Sukuk issuance, can be used to finance the development of waqf properties and both the investor and the property benefit besides public. The combination of waqf and sukuk in a single structure when added to blockchain technology makes global transactions available for financing and investing.
Such innovations are not restricted, and its potential can be explored in shariah complaint assets for sustainable development for all. Muslim countries have huge unknown estimated worth of waqf properties that remain locked to their potential development and benefit for all.
The need to develop clarity and collective understanding of the potential of blockchain technology for supporting the development of waqf on a global scale is the challenge undertaken at Finterra technologies.
Dr. Amnah Khalid
Amnah’s self-motivated and enjoys researching public policy, public opinion and new area politics and technology.