Can we get US$2 Trillion through Waqf? Why not?
By: Nashwa Badeeu
One of the biggest steps the world had taken for a sustainable future was seen in the historic United Nations Sustainable Development Summit held at New York in 2015, where world leaders adopted the 17 Sustainable Development Goals (SDGs) with the aim to work hand-in-hand to end all forms of poverty, fight inequalities and tackle climate change through the 2030 Agenda for Sustainable Development. The SDGs developed are quite unique, integral and aims to tackle almost all social disparities faced around the world, whether in the areas of education, health, social protection, job opportunities or other such matters whilst ensuring that the protection of our plant for future generations.
But achieving these ambitions can be easier said than done, especially for developing countries. Why? Because reaching these goals require huge sums of money. To be more precise, we need an estimate of US$ 5 to 7 trillion annually over the next 15 years if we are to achieve these SDGs. And according to the United Nations, even with the combination of the current government resources available and private funding allocated for SDGs, this figure cannot be reached without additional investments. So, where can these additional investments come from? And can Islamic Finance be the key?
The answer is yes; Not only because the growth of Islamic Finance has been unprecedented, with its assets reaching US$ 2 trillion in 2015 and being estimated to reach US$ 3.2 trillion by 2020. It is also because Islamic finance is a well-rounded system that involves not only Banking but many areas that can be utilized to ensure the distribution of wealth amongst all quantiles of the society to reach social justice. These tools include Zakat (alms), Waqf (endowments) and Sadaqath (charity) which can be extremely efficient tools that can be utilized to achieve SDGs, specifically in the areas of alleviating poverty, education, healthcare, creating job opportunities and more. Currently, Zakat is utilized by jurisdictions such as Indonesia to achieve SDGs, with one example being the construction of Micro Hydro Power Plants in Jambi which was financed through the Zakat fund which benefitted close to 4,500 people directly and indirectly. Similarly, Waqf can be utilized in order to address key social issues faced in the society, especially by the poorer income quantiles.
But before that, what is Waqf? In, Islamic Finance, Waqf is an endowment of property for specific purposes that are in accordance to principles of Islamic Law (Shariah). Such endowment can either be in the form of cash or land, and is an act that was encouraged by Prophet Muhammad (PBUH) as a mean to support future generations. And this is exactly what SDGs are striving to achieve, hence it shows that the goal of Waqf is closely aligned with that of SDGs. However currently, Waqf is not being used to its potential by the Muslim world, with several Waqf lands being left idle across the globe. One main reason for this is due to the lack of funding routed to the development of Waqf land. In Malaysia itself, an approximate of 13,400 hectares Waqf land has been left idle[1] and is in requirement of funding in order to restore the lands to productive assets. With the development of Waqf lands, beneficiaries such as the homeless, and the poorer income quintile can get access to affordable housing, education, healthcare, etc leading to Waqf having a strong social impact on the society. So, the question is, where can funding be acquired to restore these idle Waqf lands and how can this contribute to the achievement of SDGs?
From little research, a company called Finterra has developed the WAQF Chain which provides a unique solution to this problem by offering a platform for Waqf campaigns to raise funds through crowdfunding amongst members of the community. With the utilization of the innovative technology of Blockchain, the WAQF Chain platform ensures full transparency, reducing the risk of fraud and increases the level of trust between the donors and institutions acquiring the funding. Finterra’s platform can be utilized by Non-Profit Organizations (NGOs) and Corporations who are looking to raise funds for social Waqf projects, such as building of educational facilities, providing healthcare to rural areas, construction of affordable housing and more. Development of projects as such are in alliance with several of the SDGs outlined, which reduces the burden governments have in allocating funds through State Budgets to develop the SDGs. In the golden years of the Ottoman Empire, Waqf was used as one of the primary vehicle for financing, thus this tool needs to be utilized to its full potential to reach the SDGs by 2030. And Finterra aims to aid in recognizing this dream through the world’s first WAQF Chain platform.
[1] Mahomed, Z. (2019). Financing Waqf Land: Significant Waqf Contribution in Islamic World. INCEIF KMC, https://www.inceif.org/kmimpact/2019/03/25/financing-waqf-land-significant-waqf-contribution-in-islamic-world/
