“The role of CBB Waqf Fund in sponsoring education”
15-Nov-2017


The concept of Waqf is popular in Muslim majority countries and has been well implemented even before the rise of the modern Islamic financial system in the 1970’s. Different types of Awqaf (plural of Waqf) have been developed throughout time. By its nature of outcome, Waqf can be split into two kinds: Waqf istithmari and Waqf mubashar. Waqf istithmari literally means investment. Here, assets are managed to produce income that will be used to develop or build estates. On the other hand, Waqf Mubashar literally means directly. This type of waqf directly benefits charity beneficiaries through education. With regards to Waqf dedicated to education, it is important to note that schools have played a major role for the development of the society especially in poverty alleviation.

 Some governments were even using Waqf to finance education. For example, the University of Al Azhar, which was founded in Cairo in 972, was financed by its Waqf revenues until the government of Muhammad Ali in Egypt took control over the Waqf. Like other Muslim countries, Kingdom of Bahrain has been recognizing the important role of Awqaf in the financing of education. A Waqf Fund (or called cash Waqf) was set up in 2006 under the auspices of the Central Bank of Bahrain (CBB) in partnership with Islamic Financial Institutions in Bahrain with the aim of financing education related initiatives, particularly Islamic economic and finance education. The fruits of this Waqf have benefited more than hundreds of people and will still benefit new beneficiaries in the future.

Over twenty Islamic Banks are registered with the CBB in Bahrain, operating either as a full-fledged wholesale Islamic bank or a retail Islamic bank. The full-fledged Islamic banks, made a one-time contribution to the Waqf Fund’s corpus which is invested in Islamic money market instruments such as short-term Sukuk (Salam and Ijarah) which are relatively safe and provide a stable return.  Any return on the investment is utilized to finance the fund’s various education related enterprises. The amount of the contributions has reached US$ 7.5 million by 2016. 

The aim of the Waqf Fund establishment is to continuously enhance and develop the Islamic finance in Bahrain through education. This aim takes form into three aspects, to provide Islamic finance educational programs, to give Islamic finance training and to develop Islamic finance from a Shari’ah standpoint. As an example of the first aim, providing Islamic finance educational programs, the Waqf Fund’s pioneering initiative was the provision of scholarships for eligible individuals to pursue a 9-month post-graduate diploma program at the Bahrain Institute of Banking and Finance (BIBF) naming it the Waqf Fund Graduate Sponsorship Program, which has been continuing until now. 

As an example for the aim of giving Islamic finance training, the Waqf Fund financed the development of a course on Business Ethics for Islamic Bankers. The Waqf Fund sponsored the development of this course through the BIBF and has made the course mandatory to take for all junior and intermediate level employees of Islamic banks to attend. As an example of developing Islamic finance from a Shari’ah standpoint, the Waqf Fund sponsored Shari’ah scholar sessions. In 2013, the Waqf Fund started a regular session with leading Shari’ah scholars in the Islamic financial industry whereby they address the Internal Shari’ah Reviewers of Islamic financial institutions in Bahrain on specific topics, followed by an extensive questions and answers session.

Based on the above explanation, it can be concluded that the Waqf Fund of the CBB can be a good model to be copied and implemented by other countries.

The author is Head of Business Administration and Humanities Department, University College of Bahrain


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