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Dr Noor Suhaida Kasri

(researcher at Int’l Shariah Research Academy for Islamic Finance (ISRA

Nur Sakinah Nabilah Nor Saeran

(Shariah Management trainee at International Shari’ah Research Academy for Islamic Finance (ISRA

Noor Suhaida Kasri (PhD)[i]

The United Nations (UN) latest report issued in January 2016 entitled “Too Important to Fail-Addressing the Humanitarian Financing Gap” showed a huge jump in the number of people seeking humanitarian aid. At present, US$25 billion has been spent to provide life-saving assistance to 125 million people affected by natural disasters and humanitarian crises. However, the amount spent is still insufficient. There still remains an estimated funding gap of US$15 billion. The United Nations is appealing to more countries and communities to come forward to help fund the aid needed; namely food, clean water, shelter, health care, education and protection (United Nations, 2015). This article takes a look at how waqf sukuk can be a possible panacea in addressing the humanitarian funding gap, focusing on two successful waqf sukuk issued in Singapore and Saudi Arabia.


Waqfis an Arabic word meaning to restrain (al-habs) and to prohibit (al-man’). Legally speaking, waqf means to prevent something from becoming the property of a third person (Al-Sarakhsi, 1986). In English, waqf can be translated as ‘religious endowment’. However, such translation may not convey the sense of devotion and grace with which waqf is associated with in Islam (Mohsin, 2009). Waqf has a long history in the Muslim civilization where it started since the 7th century AD (Kholid, Sukmana & Hassan, 2007). The first well-known waqf at the time of Prophet Muhammad (peace be upon him) is the Quba Mosque in Madinah in 622 C.E. The building of the mosque fulfilled communal religious needs as well as lessened the direct cost of providing religious services for the future generation (Kahf, 2003). The practice of giving waqf was also practised by the Prophet’s companions such as Umar ibn Khattab. He asked for the Prophet’s (peace be upon him) advice with regard to his intention to donate a piece of land that he owned. The Prophet (peace be upon him) advised him, “If you want you can block the capital and give its fruits as alms. However, the land cannot then be sold, given or inherited by descendants.” This means that the Prophet asked him to sequester the land and to give its revenues (fruits) to the poor (Krafess, 2005; Benthall & Bellion-Jourdan, 2003).

This practice of Prophet Muhammad (peace be upon him) and his companions continues until today where waqf plays an important role in the socioeconomic development of the Muslim world. The socioeconomic role of waqf system is proven through the construction of public facilities and housing projects in Istanbul, Turkey. The development includes the building of mosques, schools, madrasahs, hamams, roadhouses and bedestens (covered bazaars), water channel, and agricultural reforms. In fact, the construction of several cities such as Istanbul, Bursa, Edirne, Amasya, and Manisa were due to waqf facilities (Saduman & Aysun, 2009).

At present, several non-governmental organizations (NGOs) have innovated several mechanisms using waqf as its underlying principle for the purpose of addressing socioeconomic problems. For example, Islamic Relief which is a UK-based humanitarian aid organisation, has created cash waqf. The donations received by Islamic Relief are invested into Shariah-compliant shares and the money generated from such investment is channelled to long term projects with sustainable benefits such as constructing greenhouses as well as training aid recipients on how to cultivate fruits and vegetables. The proceeds will also be used to support Islamic microfinance in Bosnia and Herzegovina such as investing in livestock which provides employment opportunities, as well as giving agricultural equipment like seeds and tools to the families affected by floods in Bandipora and Baramulla districts in Jammu and Kashmir in India (Islamic Relief Worldwide, n.d.). Meanwhile, Awqaf South Africa has created endowment funds in South Africa. The income generated from the investment of these funds have funded a variety of communal development projects and programmes such as youth leadership and literacy upgrade, provision of books to libraries, study scholarship, study loans and bursaries, microfinance, building of mosques, madaris, and Islamic centres (National Awqaf Foundation of South Africa, n.d.). While the International Waqf and Zakat Foundation, founded by the World Zakat Organisation and established by the Government of Malaysia has channelled their waqf and zakat fund to food production, education, health care, affordable housing, and employment generation (International Waqf and Zakat Foundation, n.d.). Another example in Malaysia is Waqaf An-Nur Clinics and Waqaf An-Nur Hospital, which provide health care treatments and dialysis facilities to the general public particularly in the state of Johor, Malaysia (Johor Corporation, n.d.).

Waqf Sukuk

A number of researches have shown that waqf coupled with sukuk could be a panacea in solving the humanitarian funding gap. Waqf sukuk has become a “household name” for charity fundraising or humanity causes. This is because sukuk allows for mobilizing of large amount of resources. Additionally, sukuk has flexible characteristics, where it can be structured to meet medium to long-term financing requirements (Securities Commission Malaysia, 2014). Two successful examples are the issuance of sukuk for developing waqaf assets in Singapore and Saudi Arabia.

The sukuk musharakah issued in Singapore in 2002 was for the purpose of redevelopment of the waqf assets located at 11, Beach Road and Bencoolen Street, Singapore (Omar & Rahman, 2014). It is a joint venture project undertaken by Baitulmal, Majlis Ugama Islam Singapura (MUIS), Warees Investments Pte Ltd, and Wakaf fund, MUIS. It managed to raise SGD$60 million capital which was used to develop a mosque, commercial properties, 104 service apartments and a 6-storey commercial complex (Abdul Karim, 2010). The socioeconomic impact on the Singaporeans was enormous. Firstly, the larger capacity new mosque will inevitably instil and enhance the spiritual development of Singapore’s Muslim minority as they are able to hold congregational prayer and other large scale spiritual activities. Secondly, it has provided employment for many people in the service sector through the setting up of the service apartment. Thirdly, the beneficiaries consisting of the poor, needy and sick people have benefitted from the steady stream of income from the commercial properties.The benefits include payment for their medication, study scholarship, burial and other general charitable purposes. Fourthly, the Muslims investors have the opportunity to invest in a Shariah-compliant wealth creation fixed income securities such as mosques and Islamic institutions (Abdul Karim, 2010; Mohsin, personal communication, February 10, 2016).

The Saudi Arabia waqf sukuk which used the concept of Sukuk al-Intifa’a (time share basis bond) was issued in 2000 to develop the waqf land adjacent to the Grand Mosque in Makkah through the construction of ZamZam Tower (Omar & Rahman, 2014). The 31-storey building with 1,240-units of apartments was constructed by utilizing a BOT (Build-Operate-Transfer) contract for 28 years (Abdul Karim, 2010). A US$390 million Sukuk al-Intifa’a was issued for 24 years in order to finance the construction of the Towers. Investors who bought these sukuk were entitled to rent a space for a specific time and also to sub-lease it to others or to just sell the sakk to any interested buyer (Kholid, Sukmana & Hassan, n.d.; Karim, 2010). This sukuk was expected to contribute many socioeconomic benefits. Firstly, the rental benefits from the development on such waqf land will be distributed to the needy and the poor (mawquf ‘alayh) after the sukuk are redeemed (Omar & Rahman, 2014), Secondly, the Towers will help accommodate Muslims coming to perform their umrah and hajj. Thirdly, this project has created jobs for many categories of workers such as in construction, manufacturing, and in commercial areas (Mohsin, personal communication, February 10, 2016).

In conclusion, these two cases of waqf sukuk epitomise the extent of its contribution to global socioeconomic development. This proves the eligibility of waqf sukuk to meet the current need for humanitarian funding purposes which would cater for food aid, water supplies, shelter, health care, education and protection. It is worth mentioning the effort made by the Islamic Development Bank (IDB) to issue sukuk for the purpose of raising fund for countries suffering from humanitarian issues such as refugees and displaced individuals or communities (Haq, 2015; Omar, 2015; Islamic Research & Training Institute, 2015). Apart from that, Maybank Islamic Banking Group has started with the initial work towards the issuance of humanitarian sukuk as well as holding pilot project discussions with humanitarian organisations (United Nations, 2016). While from the non-banking sector, a non-profit organisation, Awqaf New Zealand in consultation with International Shari’ah Research Academy for Islamic Finance (ISRA), has plans to issue waqf sukuk. The proceeds will be used to purchase waqf farms in order to supply millions of livestocks globally for qurbani and relief or charitable purposes. However, we must be reminded that in reality, there are 125 million aid donees in need and that organisations like Islamic financial institutions can play a pivotal role in addressing the issue of humanitarian funding gap.


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[i]Noor Suhaida binti Kasri is Researcher at International Shari’ah Research Academy for Islamic Finance (ISRA). She is also the Head of ISRA’s Islamic Capital Market Unit. She can be contacted at noor@isra.my. Prior to joining ISRA in 2013, she was in Malaysian legal practice for twelve years as an advocate and solicitor as well as a Syarie lawyer. During her legal practice, she was appointed as one of the members of the Malaysia’s Investigating Tribunal Panel, Advocates & Solicitors Disciplinary Board and headed the Shariah Legal Clinic of Kuala Lumpur Bar Legal Aid Centre.

Noor received her Doctor of Philosophy in Islamic Banking Finance and Management from the University of Gloucestershire (in collaboration with Markfield Institute of Higher Education), UK. Her Master in Laws was from King’s College of London while her Bachelor of Laws was from the International Islamic University of Malaysia. She has written a number of research papers and articles and presented in conferences globally.