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SAUDI ARABIA: Deeply rooted in
the traditions of Islam, Waqf not only serves as a potentially effective
wealth management instrument but also holds significant prospects for
large-scale social development and poverty alleviation. Yet, despite the
promises Waqf may bring, the sector has been slow to take off as it suffers
from mismanagement due to legal complexities as well as the lack of
standardization and a skilled talent pool. However, this is gradually
changing with industry players and regulators realigning their focus to
give greater emphasis to Waqf.
Just yesterday, Saudi Arabia’s Alkhabeer Capital announced that it will be
providing advisory services on structuring and managing Waqf assets,
becoming the first Capital Market Authority-licensed entity in Saudi Arabia
to be advising on this segment. Targeting educational and charitable
organizations, family offices, high-net-worth individuals and
philanthropists, the firm’s CEO and executive director Ammar A Shata said
the company will offer services “in structuring Waqf entities, enabling
Waqfs to invest in all types of assets without any geographical limitation,
under an independent portfolio, free of administrative complexities.”
Several countries have also implemented the legal infrastructure to develop
their Islamic endowments. India for example, created the National Waqf
Development Corporation last year to facilitate and mobilize resources to
develop Waqf properties. This comes following the enactment of the Waqf
(Amendment) Act 2013 which aims to create more transparency in the
management of Waqf properties. While Islamic finance and banking have not
received the full support from the Indian government, the emerging economy
giant recognizes the significant contributions Waqf could realize. It is estimated
that India could generate some INR120 billion (US$1.88 billion) annually
from Waqf properties, predicated on a projected 10% return.
Earlier in February, Malaysia’s Labuan International Business and Financial
Center released guidelines on the establishment of Labuan International
Waqf Foundation, a Shariah compliant foundation aimed at the international
community, using common and civil law foundation and trust Acts. While in
the African continent the Senegalese parliament last month passed a law on
Waqf which will serve as the foundation of a framework to develop the
segment. The Maldives is also renewing its focus on the segment with the
Ministry of Islamic Affairs initiating the Darul Eman project, a real
estate investment to sustain the mosque cash Waqf fund last year.
The challenges surrounding Waqf may be many and complex; however, it is
encouraging to see players from both the regulatory and market spheres
making a conscious effort to realize the true potential of Islamic
endowments.
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