Mustafa Omar Mohammed

Integration of waqf-Islamic microfinance model for poverty reduction: The case of Bangladesh

Purpose - – This paper aims to develop an integrated waqf-based Islamic microfinance (IsMF) for poverty reduction in Bangladesh. Microfinance institutions (MFIs) have been constrained by the high cost of funds, high interest rate charges and poor human resource quality of the recipients. Islamic MFIs have recently evolved with the hope of overcoming these financial, ethical and human capital deficiencies faced by the conventional financial institutions. Moreover, a good number of integrated models have been proposed to enhance the role played by Islamic MFIs. Most of these models, however, lack empirical justifications. Design/methodology/approach - – The research uses survey techniques. A total of 381 respondents were included in the survey. The integrated waqf-based Islamic microfinance model (IWIMM) was earlier on developed using literature and intellectual discussions. There are six constructs presenting the IWIMM, namely, waqf resources, IsMF, takaful, project financing, human resource development and poverty alleviation. In the survey instrument, 45 items represent the six constructs, but only 26 items have been retained after factor analysis. Structural equation modelling has been adopted to examine the relationship among the constructs. Findings - – The results show that there are significant relationships between IsMF and takaful, waqf resources and human resource development, takaful and human resource development, IsMF and human resource development and, waqf resources and project financing. The results also indicate that poverty alleviation is possible through the integration of these constructs. Research limitations/implications - – Though the paper has studied conventional and Islamic MFIs in Bangladesh, one of the populated Organisation of Islamic Cooperation (OIC) member countries and also where poverty incidence is high, further studies need to be conducted in other OIC member countries to adopt the model in line with practical and regulatory environment of those countries. Similarly, the study is based on the perception of the respondents, which limits the generalization of the result. Practical implications - – The paper proposed a model that has the potential of being applied for poverty alleviation programmes in most of the OIC member states. Originality/value - – The present paper has developed an IWIMM for poverty reduction.

Developing cash waqf model as an alternative source of financing for micro enterprises in Malaysia

Purpose This paper aims to attempt to offer a viable alternative model of source of financing which is known as integrated cash waqf micro enterprises investment (ICWME-I) model for micro enterprises in Malaysia. Design/methodology/approach The literature on the issues of accessing to finance faced by micro enterprises and cash waqf are reviewed critically and used in the attempt of proposing an alternative model. Findings The paper has developed ICWME-I model as a source of financing for micro enterprises. This model is expected to provide financial services by using cash waqf fund and involved the participatory contract between non-profit organization and micro enterprises. In addition, with the proposed model, there will be no collateral requirement, interest rate and other stringent requirements which usually imposed by existing conventional financial institutions. Research limitations/implications The paper is based on conceptual explorations of literature in the area of micro enterprises and cash waqf. This is a conceptual paper, so it did not use any empirical analysis. Practical implications The findings of this paper will provide micro enterprises with an alternative source of financing to start-up or expand their business by using cash waqf fund. The present study also has implications for government and policy makers. With the involvement of non-profit organization that is proposed in this model, it helps the government to reduce its expenses for the development of micro enterprises. Originality/value This paper offers an additional literature on cash waqf especially from the Malaysian context. Furthermore, this paper adds to the literature on waqf and cash waqf. The paper proposes a viable alternative model for micro enterprises as a source of financing by using cash waqf fund. This model incorporates Musharakah Mutanaqisah (diminishing partnership) as a financial arrangement between non-profit organization and micro enterprises.

Abandoned housing projects in Malaysia and the prospect of DP: an overview

Owning a house is a dream that every individual cherishes. In Malaysia, both the banking sector and the government have expended relentless efforts to ensure Malaysians have access to financing and affordable houses. These efforts are however being derailed by alarming cases of abandoned housing projects (AHPs) that have affected a substantial number of house buyers. Several reasons have been cited for the AHPs. The issues of the Islamic banking debt based home financing products have remained prominent. The literature argues that these products such as BBA and Tawarruq have embedded features of transferring risks and liabilities to home buyers. This problem becomes acute in cases of AHPs. Musharakah Mutanaqisah or Diminishing Partnership (DP) is suggested as the superior option for Islamic home financing schemes. However, there is hardly any work that has investigated the extent to which DP can provide remedy to address the problem of abandoned housing projects. The present paper adopts content analysis and it shows that DP has a bright prospect of mitigating the problem of abandoned housing projects. The paper is concluded with suggestions for future research.

The problems facing the agricultural sector in Nigeria and the prospect of Muzara’ah and supply chain model

Purpose - – The purpose of this paper is to develop a Muzara’ah–supply chain model for the purpose of enhancing agricultural financing and productivity in Nigeria. Design/methodology/approach - – In this paper, an expert survey approach was employed to validate the newly developed model. Findings - – A survey result on the model reveals that majority of the respondents agreed with the Muzara’ah–supply chain model and preferred it to the existing models. Research limitations/implications - – The main limitation of this study is limited number of respondents. Practical implications - – With this newly developed financing model that is based risk sharing principles, the application of this model could help to reduce moral hazard and enhance agricultural productivity. Originality/value - – To the best knowledge of the researchers, such kind of study for financing agriculture does not exists in the case of Nigeria.

Relationship Between Intention and Actual Support Toward the Construction of Modern Waqf-Based Hospital in Uganda

This chapter makes use of the theory of planned behavior to identify factors that motivate intention toward Waqf giving. The chapter examines the relationship between intention and actual support toward the construction of modern Waqf-based hospital in Uganda. The study adopted factor analysis, principal component analysis, and Structural Equation Modeling (SEM) to analyze data from 300 valid questionnaires. The findings reveal that three motivating factors, namely attitude, moral duties, and religious duties significantly and positively influence Muslim community’s intentions to provide actual financial and non-financial support for the construction of modern Waqf-based hospital in Uganda. Accordingly, Muslim religious authorities and relevant parties should use these three motivating factors to influence Muslim community decision to support Waqf-based projects for their socioeconomic development.

The problems facing agricultural sector in Zanzibar and the prospects of Waqf-Muzar’ah-supply chain model: The case of clove industry

Purpose This paper aims to identify the appropriate model to address the financial challenges in agricultural sector in Zanzibar. Since the middle of 1960, clove production has continually and significantly decreased because of some problems and challenges that include financial ones. The financial intermediaries such as banks, cooperatives and micro-enterprises provide micro-financing to the farmers with high interest rates along with collateral requirements. The numerous programmes, measures and policies adopted by the relevant parties to find out the solutions to the dwindling clove production have failed. Design/methodology/approach The authors will review and examine several existing financial models, identify the issues and challenges of the current financial models and propose an appropriate Islamic financing model. Findings The numerous programmes, measures and policies adopted by the relevant parties to find out the solutions to the dwindling clove production have failed. This study, therefore, proposed a Waqf-Muzara’ah-supply chain model to address the financial challenge. Partnership arrangement is also suggested in the model to mitigate the issues of high interest rates and collateral that constrains the financial ability of the farmers and their agricultural output. Originality/value The contribution of the agricultural sector to the economic development of Zanzibar Islands is considerable. As one of the important agricultural sectors, the clove industry was the economic backbone of the government of Zanzibar. This study is believed to be a pioneering work; hence, it is the first study that investigates empirically the challenges facing the clove industry in Zanzibar.

Currency Exchange, Its Illah and Implications

Foreign exchange is among the most important transactions in any economy. It can affect positively or negatively the relative price of domestic and foreign goods, which in turn has an effect on the country’s economic growth, employment rate, inflation and balance of payments, among others. Yet, foreign exchange has remained a contentious issue among Muslim jurists and scholars. There are those who approve spot transactions but regard forward transactions as unlawful. Conversely, some scholars and jurists do not see any problem with the forward transactions if they are used for hedging purposes. In the context of the contemporary business environment, this contention requires pertinent research in need of revisiting the illah (effective cause/reason) for determining whether a given foreign exchange transaction is Shari’ah compliant. The present study has critically reviewed the major literature and fatwas issued in relation to foreign exchange. It has adopted content analysis to categorize these various views on the subject and preponderated the major ones relevant to modern business. The authors have concluded that the only possible illah to be considered for modern paper money is a thummuniyah (means of payment). The study concludes with recommendations and suggestions for future research.

Intention to use the Islamic micro-investment model in Nigeria: empirical evidence

Microfinance was celebrated as an effective tool for poverty alleviation. However, evidence shows that it has been charging high interest rates and exploiting poor income earners. Islamic microfinance, on the other hand, appears too expensive and pursues debt-like contracts that are tantamount to riba. In the case of Nigeria, conventional microfinance has failed to serve the needs of majority poor. Developing an Islamic micro-investment model (IMIM) based on genuine partnership contracts is deemed an appropriate option to overcome the challenges of the existing microfinance institutions. This study develops and tests the Islamic micro-investment model [IMIM based on the theory of reasoned action (TRA)]. The study uses structural equation modelling to examine the applicability and acceptance of the model in Kano State, Nigeria. The result shows that the model fits the data well and that attitude is the major determinant of intention to accept the IMIM among users.

An Analytical Framework to Examine Shari'ah - Compliant Mortgage Financing by Financial Cooperatives in Malaysia

This paper utilises an analytical framework to explore and critically examine issues and challenges of offering Shari’ah-compliant mortgage financing by financial cooperatives in Malaysia. Concepts from five distinct theories (Theory of Credit Cooperative, Transaction Costs Theory, Agency Theory, Stakeholder Theory, and Theory of Credit Rationing) are modified and integrated to form a hybrid, layered framework. This is then used as a ‘lens’ to highlight the issues pertaining to business models and strategies, good governance, regulation and supervision, risk management, human resource management, which may influence the success of mortgage financing. This analytical framework is useful for relevant stakeholders on how to manage the issues, challenges, and harnessing the prospects of Shari’ah-compliant mortgage financing products.