Financial Instruments and Cash Waqf : Bridging Islamic Finance with Sustainable Development Goals

The book, organized in three parts, offers a guide to constructing financial instruments based on cash waqf in alignment with the Sustainable Development Goals. The first part discusses the alignment between the Shari'ah economic objectives and the SDGs, the Islamic social finance concept, its instruments and institutions and the intersection between Islamic finance and Islamic social finance. The second part presents a product structure that is based on cash waqf and is targeting the SDGs specifically. Some of these product structures involve zakat collection. The third part of the book presents the methodology to gather all these product structures in a national cash waqf ecosystem that is targeting SDGs. The aim of this ecosystem is to increase the impact of the various initiatives and instruments. In addition to this, the third part of the book presents the concept of Waqf offshore centers and the methodology to conceive and implement them. The aim of these Waqf offshore centers is to connect national cash waqf ecosystems and individuals with investment opportunities bringing more impact. This book will be of interest to academics, researchers, and practitioners of not only Islamic finance but sustainable finance. Ahmed Tahiri-Jouti is the Managing Partner and Founder of Green for South, a specialized firm in consulting in sustainable development, impact finance, fintech and building sustainable financial ecosystems. He is the former Managing Partner and CEO at Al Maali Group (Dubai and Casablanca), a consulting firm specialized in Islamic finance. Dr. Ahmed is an associate editor of the ISRA International Journal of Islamic Finance and has published several papers and book chapters in his fields of expertise. He is also a AAOIFI working groups member to issue new governance standards for the Islamic industry. Dr. Ahmed has conceived a training manual entitled 'Islamic Banking Qualification', which has been granted to more than 1500 people in North Africa, West Africa and Europe since its launch. He is also an international speaker and trainer Contents List of Figures List of Tables 1 Introduction Reference Part I The Alignment Between Islamic Social Finance and Sustainable Development Goals 2 Sustainable Development Goals and the Shari’ah Economic Purposes Chapter Introduction The Sustainable Development Goals: Main Concepts and Classifications The Main Concepts Related to the SDGs The Classification of Sustainable Development Goals The Main Shari’ah Economic Purposes Increasing the Production of the Nation Equitable Distribution of Wealth and Streng thening of the Middle Class The Islamic Economic Model Main Features The Alignment Between Sharīʿah Economic Purposes and Sustainable Development Goals Economic Inclusion and Increasing the Production of the Nation Equitable Distribution of Wealth and Reducing Inequalities Environment Protection and Building Sustainable Communities Chapter Conclusion References 3 The Islamic Social Finance: From Instruments to Institutions Chapter Introduction Islamic Social Finance: Main Concepts and Underlying Principles From Social Finance to Islamic Social Finance Ecosystems Social Finance Concepts Islamic Social Finance Concepts Islamic Social Finance Ecosystems Islamic Social Finance Instruments The zakat Instrument The Waqf Instrument Islamic Social Finance Institutions Zakat Institution A Central Zakat Institution with Compulsory Contributions A central zakat institution with Voluntary Contributions No Central Zakat Institution New Trends and Best Practices in zakat institutions Waqf Institution The Limited Performance of Waqf in Moslem Countries The New trends of the waqf Practice Chapter Conclusion References 4 Impact Investing Involving Islamic Finance and Islamic Social Finance Chapter Introduction Islamic Finance and Islamic Social Finance: Paths of Collaboration The Main Objections and Difficulties Facing the Islamic Finance Industry The Main Paths to Differentiation of the Islamic Finance Industry The Paths of Collaboration Between Islamic Social Finance Institutions and Islamic Financial Institutions SDG Impact Management in the Context of Islamic Financial Institutions and Islamic Social Finance Instruments Setting the Strategy to Embed Sustainable Development Goals Integrating Impact Management into Its Management Approach and Optimizing It Reinforcing Impact Management and Measurement Processes and Governance Chapter Conclusion References Part II Cash Waqf Based Financial Instruments Meeting Sustainable Development Goals 5 Cash Waqf Investment Accounts Meeting Sustainable Development Goals Chapter Introduction The Financial Structure of the Product Investment Accounts: Principles and Concepts The General Scheme of the Product The Prerequisites of the Product The Advantages of the Product The Applications of the Product Example 1: Health and Well-Being Example 2: Quality Education The Implementation Methodology Identify the Sustainable Development Goals to Target Identify the Sustainable Development Goals Financial Products and Services to Launch Define the Investment Accounts’ Allocation Define the Investment Accounts’ Categories Select Charities Meeting SDGs Chapter Conclusion References 6 Cash Waqf Liquid Guarantees Meeting Sustainable Development Goals Chapter Introduction The Financial Structure of the Product Liquid Guarantees: Principles and Concepts The General Scheme of the Product The Prerequisites of the Product The Advantages of the Product The Applications of the Product Example 1: Education The Implementation Methodology Identify the Sustainable Development Goals to Target Define the Guarantees’ Formulas to Offer Identify the Investment Instruments Meeting Sustainable Development Goals Create the Cash Waqf Investment Fund Identify the Compensation Mechanisms of the Cash Waqf Investment Fund Manager Chapter Conclusion 7 Cash Waqf Based Microfinance Meeting Sustainable Development Goals Chapter Introduction The Financial Structure of the Product Microfinance Operations: Principles and Concepts The General Scheme of the Product The Prerequisites of the Product The Advantages of the Product The Applications of the Product Example 1: No Poverty Example 2: Quality Education The Implementation Methodology Partner with an Islamic Financial Institution Promoting Cash Waqf Identify the Sustainable Development Goal(s) to Target Create an Investment Cash Waqf Fund Create a Free Loan Based Cash Waqf Fund Identify the Microfinance Instruments to Achieve SDG(s) Chapter Conclusion Reference 8 Takaful Funds Meeting Cash Waqf Requirements and Sustainable Development Goals Chapter Introduction The Financial Structure of the Product Takaful: Principles and Concepts The General Scheme of the Product The Prerequisites of the Product The Advantages of the Product The Applications of the Product Example 1: Health and Well-Being The Implementation Methodology Define the Takaful Funds Surplus Donation Mechanisms Create a Cash Waqf Investment Fund Establish a Micro-Takaful Fund Targeting Financial Inclusion Identify the Investment Instruments Meeting SDGs and Waqf Identify the Pricing Methodology for the Micro-Takaful Funds Chapter Conclusion 9 Islamic Social Based Crowd Funding Platforms Meeting Sustainable Development Goals Chapter Introduction The Financial Structure of the Product Crowd Funding: Principles and Concepts Islamic Crowd Funding: Specificities The General Scheme of the Product The Prerequisites of the Product The Advantages of the Business Model The Applications of the Product Example: Industry, Innovation and Infrastructure The Implementation Methodology Identify the Sustainable Development Goals to Target Identify the Waqf Loan Categories Identify the Waqf Loans Re-allocation Mechanisms Identify the zakat Fund Mechanisms to Support Projects in Difficulty Implement Nudging Mechanisms for Projects Chapter Conclusion Reference 10 Cash Waqf Mutual Funds Meeting Sustainable Development Goals Introduction The Financial Structure of the Product Mutual Funds: Concepts and Principles Shari’ah Principles Underlying Islamic Mutual Funds The General Scheme of the Product The Prerequisites of the Product The Advantages of the Product The Applications of the Product The Implementation Methodology Identify the Investment Universe in Line with the Shari’ah and SDGs Requirements Identify the Sustainable Development Goal(s) to Target by the Mutual Fund Define the Categories of Mutual Funds Define the Commitment of the Asset Manager in Terms of Portfolio Allocation Identify the Charities to Support Conclusion 11 Cash Waqf Ṣukūk Meeting Sustainable Development Goals Chapter Introduction The Financial Structure of the Product Ṣukūk: Concepts and Principles The General Scheme of the Product The Prerequisites of the Product The Advantages of the Product The Applications of the Product Example 1: Build Resilient Infrastructure, Promote Inclusive and Sustainable Industrialization and Foster Innovation Example 2: Clean Energy The Implementation Methodology Identify a Project Targeting a Specific Sustainable Development Goal Define the Structure of the Ordinary Ṣukūk Issuance Define the Structure of the Cash Waqf Ṣukūk Issuance Identify the Charities to Serve Identify the Re-Allocation Mechanisms of the Funds Invested After the Ṣukūk Issuance Duration Chapter Conclusion 12 Cash Waqf Venture Capital Funds Meeting Sustainable Development Goals Chapter Introduction The Financial Structure of the Product Venture Capital: Concepts and Types Venture Capital: Shari’ah Principles The General Scheme of the Product The Prerequisites of the Product The Advantages of the Product The Applications of the Product Example 1: Responsible Consumption and Production The Implementation Methodology Identify the Investment Universe in Line with Shari’ah and Sustainable Development Goals’ Requirements Define the Categories of Shares in the Venture Capital Fund Identify Charities and Other Entities to Support Identify the Re-investment Mechanisms Identify the Conversion Mechanisms Chapter Conclusion Part III From Instruments to Ecosystems 13 The National Ecosystem of Cash Waqf Meeting Sustainable Development Goals Chapter Introduction The Main Features of the National Cash waqf Ecosystem Meeting Sustainable Development Goals Feature 1: Gathering Different Profiles of Investors Feature 2: Supporting Different Categories of Businesses, Projects and Initiatives Feature 3: Supporting Charities and Social Purpose Entities Feature 4: Diversifying the Risk Profile of Instruments and Their Underlying Formulas. The Methodology to Set Up the National Cash waqf Ecosystem Meeting Sustainable Development Goals General Scheme of the National Cash waqf Ecosystem Meeting Sustainable Development Goals Classification of the Sub-ecosystems Priorities in Terms of Sub-ecosystems Implementation Steps to Implement a National Cash Waqf Ecosystem Chapter Conclusion 14 Waqf Offshore Centers and Cross-Border Waqf Operations Chapter Introduction Waqf Operations in an Offshore Center Definition of an Offshore Financial Center Waqf Operations vs. Offshore Financial Centers Labuan International Waqf Foundation Waqf Offshore Center Main Features The Methodology to Implement a Waqf Offshore Center Creating a Waqf Offshore Authority or Department in the Offshore Financial Center Endorsing the Appropriate Regulations and Sharīʿah Governance System Connecting with the National Cash Waqf Ecosystem Signing Partnerships with Other Jurisdictions and Financial Offshore Centers to Generate More Deals Drafting a Global Investment and Waqf Donation Map Chapter Conclusion References Summary References Index