Repositioning Waqfs in the New Economic Order

Abstract

With a sharp increase in number of studies in Islamic economics discipline lately, the economic dimension of the waqfs has been rediscovered by the contemporary scholars. A bibliography work by Abdul Azim Islahi (2003) includes a large number of works that deal with the economic dimension of the waqfs and the ways to modernise them. Today, there is a widespread agreement among Muslims over the need to revive the institution of waqf and give it the central importance that it had in the past. Discussions about reviving the waqfs and adapting them to modern conditions are also on an increase in the Islamic economics literature (Zaman, 2010, p. 52). Several new models have been proposed over the last few decades for reviving and modernizing cash waqfs which were the main financial instruments in the classical Ottoman era. The existing models for cash waqf include Waqf share scheme, deposit cash waqf scheme, compulsory cash waqf scheme, corporate waqf scheme and deposit waqf product scheme, while proposals for the newer forms of cash waqfs emerge every passing day (see Pitchay et al., 2018). Murat Çizakça has strikingly pointed out the economic role of waqfs stating, assuming that the efficiency problems are solved, the waqf system can significantly contribute towards that ultimate goal of every modern economist: massive reduction in government expenditure, which leads to reduction in the budget deficit, which lowers the need for government borrowing thus curbing the ‘crowding out effect’ and leads to a reduction in the rate of interest consequently reining a basic impediment for private investment and growth. (Çizakça, 1998, p. 44)