Disrupting Waqf
The world right now is on a path formed by disruptions brought forth by influential forces. Individuals have had to adapt to the ways we live, work and socialize while industries have been forced to adapt to revolutionary technology due to the fear of lagging behind their competitors in the market. One such technology revolutionizing the market is Blockchain, which came into the picture with the potential of impacting every industry, including the financial industry. To put it simply, Blockchain is a decentralized ledger that allows transactions between two or more parties to be recorded in a permanent manner through authentication of peers within the network. The technology offers enhanced security to real-time transactions conducted within digital ecosystems. Now, during its early days, most market powers, especially in the financial industry were hesitant in the authenticity of this technology. In fact, the technology had an inauspicious start due to some utilizing the technology for illegal activities. However, as the digital economy grew and jurisdictions started to utilize the product to offer security and authenticity to real-time transactions, the demand for Blockchain rose significantly. So much so that all financial institutions are rushing to employ this technology in their framework to offer much more secure and revolutionary services and products to gain a competitive edge in the market. As such, Blockchain has become one, or if not, the most disruptive force the financial industry has faced over the years.
But how is this related to Waqf? Well, mainly because, Waqf itself is in serious need for a disruption in order to realize its fullest potential. There are millions of dollars locked in Waqf assets across the world, without producing income that can be routed to beneficiaries such as the poor and needy in the community. And in order to address this, a truly unique and innovative development is needed. In actuality, it can be argued that the current practice of Waqf also emerged from a move of disruption. Prior to the establishment of a Ministry of Waqf Affairs in later years of the Ottoman Empire, there is no evidence of any central authority that controlled Waqf affairs[1]. This means that prior to this, the management of Waqf was very much decentralized where the mutawallis (trustees) assigned to administrate the Waqf managed affairs related to the Waqf. As per research, it has been noted that the reason for centralizing Waqf management under the Ministry was due to the dishonest behavior of the mutawallis. Due to this, Sultan Mahmud II felt that the best way to rid of such corruption was to centralize Waqf management with the aim to standardize these practices as well. With the establishment of this Ministry, Mutawallis were held accountable and responsible of all of their actions in all matters related to Waqf through established requirements and standards.
But today, the biggest hindrances faced by Waqf development is mismanagement of assets and lack of accountability and transparency. This means that once again, the same issues have come back halting Waqf from offering social and developmental benefit to communities throughout the world. So, how can this be addressed? With the discussion of Blockchain, it has been understood that this technology does offer a brand new, revolutionary avenue for institutions to be more accountable and transparent whilst assuring standardized management of transactions. It also allows entities to properly manage their assets through Smart Contracts.
One platform that has identified this potential and thus linked Waqf and Blockchain is Finterra’s WAQF Chain platform. The WAQF Chain allows social entities such as Non-Governmental Organizations (NGOs) to create social Waqf causes to which contributors such as individual members, corporate CSR and trusts and foundations can contribute through the platform. The system also allows a unique opportunity for the contributors to keep track of their contributions through usage of Smart Contracts which are immutable and tracks all the necessary details of the transactions conducted. WAQF Chain has been developed as such that all the issues currently facing Waqf is being addressed; so maybe, this is the disruption that Waqf needs to gain back its glory as one of the strongest Islamic social finance tools available for community development.
[1] Sadique, M.A (2014) Family waqf deserves a better deal. In: Issues in Waqf Laws & Management (with focus on Malaysia). IIUM Press, Kuala Lumpur, pp. 34–47 (http://irep.iium.edu.my/41238/1/Chapter_3.pdf)
