Integrating waqf and Islamic finance

Abstract

The chapter presents the ways in which the waqf and Islamic financial sectors can be integrated in order to create synergies that can promote social welfare. The interaction of the waqf and Islamic finance can be viewed in two broad ways. The first is to examine the potentials of using the Islamic financial sector as an input to promote and develop the waqf institutions. This can be done by investing in the development of waqf assets to increase their capacities through direct financing by Islamic financial institutions and raising funds from the Islamic capital market and retail donors. The financial sector can also enhance the efficiency and effectiveness of waqf assets by providing professional management services. A waqf management entity can professionally manage existing waqf assets and also help create new ones by providing services of will writing and estate management. The second way in which the two sectors can be integrated is to use waqf as input in the Islamic financial sector to expand financial inclusion. Among others, waqf can be used to develop models of microfinance, takaful and guarantees to provide financial services to the poorer sections of the population.