Dr. Md Akther Uddin :
The Sustainable Development Goals (SDGs) are a collection of 17 goals designed to be a blueprint to achieve a better and more sustainable free for all. The SDGs, set in 2015 by the UN General Assembly and intended to be achieved by the year 2030, are part of UN Resolution 70/1, the 2030 agenda. Since the SDGs came into force, all countries start mobilizing efforts to end all forms of poverty, fight inequalities, ensure universal education, develop green economy, tackle climate change and promote sustainable growth, while ensuring that no one is left behind.
UNCTAD estimates that achieving the SDGs by 2030 will require $3.9 trillion to be invested in developing countries each year. However, with current annual investment of only $1.4 trillion, the annual investment gap is $2.5 trillion. If we want to achieve the SDGs, we will require mobilizing the right scale and mix of financing, including incorporating all resources -domestic, public and private, and international. For a developing country like Bangladesh, managing such a huge investment gap is really a daunting task. It is high time we look for alternative financing source which will be sustainable in the long run.
Islamic finance has already crossed its $ 2.0 trillion benchmark and is projected to grow to $3.3 trillion by 2020. As the third largest Muslim-populated country in the world, Bangladesh has the competitive advantage in accessing and mobilising Islamic finance. One of the tangible products of Islamic finance is waqf in plural a waqf. Waqf is a voluntary donation: a running charity. Waqf literally means tying up of an asset (Real estate, cash, etc…) for some specific Shari’ah compliant objective in such a way that i) the principle remains intact and ii) only its usufruct (income/benefit) is spent on the named objectives. Unlike Zakat, the beneficiaries of the awaqf are diverse and inclusive. Its expenditure sector is not specific but guided by Islamic financing outlook. Public utilities such as mosques, schools, madrasas, colleges, universities, hospitals, bridges, graveyards, community centre, street lighting, passengers’ shed, public toilet and drinking water facilities can be set up by Waqf fund. UNDP also recognized Waqf as a social impact financing tool.
In some Muslim countries a waqf has reached 1/3rd or more of cultivable land. According to one estimate, total world a waqf assets could range from USD 100 billion to 1 trillion. For instance, the value of land and property waqf in Indonesia alone is estimated at around 4, 4-billion-meter square with the economic value of Rp370 trillion (US$27 billion). According to 1986 census of the Waqf estate, there are 150,593 Waqf estates in Bangladesh with total land of 606,107.23 acres. Income from these a waqf estates was only 70 crore. In 2015-16, the Waqf Administration, the government body managing registered waqf estates, collected Tk. 58.66 crore from 21,588 registered. Prominent economist Barakat estimated that the total waqf lands in Bangladesh are more than 20 lakh acres but mostly went under illegal occupation (New Age 2014).
It is not surprising that 24.3% people of our country are still living under the poverty line where 12.9% are extremely poor (BBS 2017). A number of reasons can be identified for such a dire situation, such as lack of resource, misdirected resource mobilization, policy deficiencies and poor implementation of social safety net programmes. In this situation, waqf can play a vital role in managing the finance needed to overcome the challenges. The waqf properties have a huge market value but currently have a little or limited impact on combating poverty, reducing inequalities, improving socio-economic infrastructure and developing human capital. These are mainly due to the apathy of waqf property trustees, lack of proper motivation and absence of workable national plan, strategy and honesty of purpose.
We need to manage huge amount of investment to achieve SDGs within 2030. There is substantial potential in deploying Islamic finance instruments to promote inclusive growth, reduce inequality and accelerate poverty reduction. Revival of waqf can be a real a game changer in this situation. For example, it might be possible to create a revolving investment mechanism through which the assets pooled under Waqf structures would be invested to support SMEs to generate revenues. Islamic banks in Bangladesh have already mobilized over 100 crore by using cash Waqf certificates. In order to realize the full potential of waqf, we need strong legal framework, decentralized the Waqf Administration, and control rampant corruption. Moreover, the vastly underutilized Waqf resource through formulating policies and strategies could effectively fulfil the targets of SDGs if the Waqf gets priority among policymakers, aware people adequately, realized the property from the illegal occupation, mobilized and enhanced.
(Dr. Md Akther Uddin, Assistant Professor, School of Business of University of Creative Technology, Chittagong, email: [email protected])
The Sustainable Development Goals (SDGs) are a collection of 17 goals designed to be a blueprint to achieve a better and more sustainable free for all. The SDGs, set in 2015 by the UN General Assembly and intended to be achieved by the year 2030, are part of UN Resolution 70/1, the 2030 agenda. Since the SDGs came into force, all countries start mobilizing efforts to end all forms of poverty, fight inequalities, ensure universal education, develop green economy, tackle climate change and promote sustainable growth, while ensuring that no one is left behind.
UNCTAD estimates that achieving the SDGs by 2030 will require $3.9 trillion to be invested in developing countries each year. However, with current annual investment of only $1.4 trillion, the annual investment gap is $2.5 trillion. If we want to achieve the SDGs, we will require mobilizing the right scale and mix of financing, including incorporating all resources -domestic, public and private, and international. For a developing country like Bangladesh, managing such a huge investment gap is really a daunting task. It is high time we look for alternative financing source which will be sustainable in the long run.
Islamic finance has already crossed its $ 2.0 trillion benchmark and is projected to grow to $3.3 trillion by 2020. As the third largest Muslim-populated country in the world, Bangladesh has the competitive advantage in accessing and mobilising Islamic finance. One of the tangible products of Islamic finance is waqf in plural a waqf. Waqf is a voluntary donation: a running charity. Waqf literally means tying up of an asset (Real estate, cash, etc…) for some specific Shari’ah compliant objective in such a way that i) the principle remains intact and ii) only its usufruct (income/benefit) is spent on the named objectives. Unlike Zakat, the beneficiaries of the awaqf are diverse and inclusive. Its expenditure sector is not specific but guided by Islamic financing outlook. Public utilities such as mosques, schools, madrasas, colleges, universities, hospitals, bridges, graveyards, community centre, street lighting, passengers’ shed, public toilet and drinking water facilities can be set up by Waqf fund. UNDP also recognized Waqf as a social impact financing tool.
In some Muslim countries a waqf has reached 1/3rd or more of cultivable land. According to one estimate, total world a waqf assets could range from USD 100 billion to 1 trillion. For instance, the value of land and property waqf in Indonesia alone is estimated at around 4, 4-billion-meter square with the economic value of Rp370 trillion (US$27 billion). According to 1986 census of the Waqf estate, there are 150,593 Waqf estates in Bangladesh with total land of 606,107.23 acres. Income from these a waqf estates was only 70 crore. In 2015-16, the Waqf Administration, the government body managing registered waqf estates, collected Tk. 58.66 crore from 21,588 registered. Prominent economist Barakat estimated that the total waqf lands in Bangladesh are more than 20 lakh acres but mostly went under illegal occupation (New Age 2014).
It is not surprising that 24.3% people of our country are still living under the poverty line where 12.9% are extremely poor (BBS 2017). A number of reasons can be identified for such a dire situation, such as lack of resource, misdirected resource mobilization, policy deficiencies and poor implementation of social safety net programmes. In this situation, waqf can play a vital role in managing the finance needed to overcome the challenges. The waqf properties have a huge market value but currently have a little or limited impact on combating poverty, reducing inequalities, improving socio-economic infrastructure and developing human capital. These are mainly due to the apathy of waqf property trustees, lack of proper motivation and absence of workable national plan, strategy and honesty of purpose.
We need to manage huge amount of investment to achieve SDGs within 2030. There is substantial potential in deploying Islamic finance instruments to promote inclusive growth, reduce inequality and accelerate poverty reduction. Revival of waqf can be a real a game changer in this situation. For example, it might be possible to create a revolving investment mechanism through which the assets pooled under Waqf structures would be invested to support SMEs to generate revenues. Islamic banks in Bangladesh have already mobilized over 100 crore by using cash Waqf certificates. In order to realize the full potential of waqf, we need strong legal framework, decentralized the Waqf Administration, and control rampant corruption. Moreover, the vastly underutilized Waqf resource through formulating policies and strategies could effectively fulfil the targets of SDGs if the Waqf gets priority among policymakers, aware people adequately, realized the property from the illegal occupation, mobilized and enhanced.
(Dr. Md Akther Uddin, Assistant Professor, School of Business of University of Creative Technology, Chittagong, email: [email protected])
